<PAGE>
[Logo] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
MFS(R) WORLD TOTAL
RETURN FUND
SEMIANNUAL REPORT o APRIL 30, 1998
NOW TWO MFS(R) IRA CHOICES (see page 35)
<PAGE>
IN MEMORIAM
A. KEITH BRODKIN
1935 - 1998
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT(SM)
[Photo of A. Keith Brodkin] On February 2, 1998, Keith Brodkin, a friend and
leader to everyone at MFS, died unexpectedly at
age 62. His thoughtful letters to shareholders on
the markets and economy have been an integral
part of MFS shareholder reports like this one for
many years.
Keith joined MFS in 1970 as the firm's first fixed-income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and four
years later became Chairman and Chief Executive Officer. During his stewardship,
MFS has achieved significant growth in total assets under management, rising
from some $25 billion in 1991 to the over $80 billion today entrusted to us by
three million individual and institutional investors worldwide. Under Keith's
leadership, MFS has carefully but steadily built its domestic and international
investment capabilities through the introduction of a range of new products and
a still-growing staff that now numbers over 100 equity and fixed-income
professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 2
A Discussion with the Portfolio Manager ................................... 4
Portfolio Manager's Profile ............................................... 7
Fund Facts ................................................................ 8
Performance Summary ....................................................... 8
Portfolio Concentration ................................................... 10
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 26
Now two MFS(R) IRA choices ................................................ 35
The MFS Family of Funds(R) ................................................ 36
Trustees and Officers ..................................................... 37
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HIGHLIGHTS
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o FOR THE SIX MONTHS ENDED APRIL 30, 1998, CLASS A SHARES OF THE FUND PROVIDED
A TOTAL RETURN AT NET ASSET VALUE OF 12.20%, CLASS B AND CLASS C SHARES
11.83%, AND CLASS I SHARES 12.50%. (SEE PERFORMANCE SUMMARY FOR MORE
INFORMATION.)
o FOREIGN STOCK FUNDS HAVE GENERALLY PERFORMED BETTER IN 1998, RELATIVE TO
DOMESTIC STOCK FUNDS, THAN THEY HAVE FOR SOME TIME. PART OF THIS IS THE
RESULT OF A RECOVERY BY FOREIGN MARKETS AFTER A PERIOD OF UNDERPERFORMANCE,
WITH EUROPE, IN PARTICULAR, PERFORMING VERY WELL.
o AMONG COUNTRIES, KEY CONTRIBUTORS INCLUDE PORTUGAL, CANADA, THE UNITED
KINGDOM, GERMANY, SWEDEN, FRANCE, AND THE NETHERLANDS. STOCKS INCLUDE
SCANDIA, MANNESMANN, COMPASS, PINAULT- PRINTEMPS-REDOUTE, AND AVIS OF
EUROPE.
o AFTER CONCENTRATING THE FUND'S BOND PORTION ON HIGHER-YIELDING MARKETS IN
EUROPE, AND THUS BENEFITING FROM THE CONVERGENCE OF YIELDS LEADING TO
EUROPEAN MONETARY UNION, WE RECENTLY BEGAN MOVING ASSETS BACK TO THE U.S.
AND GERMAN MARKETS, WHERE WE ARE FINDING BETTER VALUE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders:
With the U.S. stock market well into its fourth year of record-breaking
advances, it is necessary to take a cautious outlook. By most commonly accepted
measures, equity valuations appear to have risen to a point at which the stock
market has become more vulnerable to changes in the investment environment such
as rising inflation and interest rates or a slowing economy. As a result, while
we continue to hold a favorable long-term outlook for the equity markets, we
also believe that a market correction is possible in the near term. In such a
correction, equity prices would remain relatively flat or decline, possibly for
an extended period.
Currently, equity investors seem to be primarily focused on interest rates,
which have been relatively stable for several months as inflation has remained
low. In an environment of low interest rates, stocks become more attractive than
most fixed-income investments, while low inflation helps control companies'
costs, such as for raw materials, wages, and benefits. The near-term outlook for
a continuation of this environment appears relatively favorable. However, this
year has seen a marked slowdown in corporate earnings. This means that as equity
prices continue to rise, price-to-earnings (P/E) ratios, or the amount an
investor pays for a stock in relation to the company's earnings per share, also
go up. A year ago, the average P/E ratio for stocks in the unmanaged Standard &
Poor's 500 Composite Index stood at approximately 21; this spring, the average
P/E was 33% higher, at about 28. In some cases, such as with some of the newer
companies associated with the Internet, P/Es have soared to levels that are
unlikely to be sustained.
As long as interest rates remain low and the economy continues to grow, it is
possible that some of these valuations can be supported. We expect corporate
earnings to grow 8% to 10% this year. However, just as no one can predict market
cycles, so too no one can predict economic cycles -- except to say that these
cycles do exist and that an economic slowdown at some point is inevitable.
Given this reality, we believe it is prudent to remind investors of the need to
take a long-term view and to diversify their investments across a range of asset
classes, including mutual funds that focus on bonds and international
investments as well as on the U.S. stock market. The likelihood of an eventual
market correction also makes it important for us to use original, bottom-up
research to find companies that we think can keep growing or gain market share
in the face of the occasional downturn. To help achieve this, and to provide the
broadest possible coverage of industry sectors and individual companies, MFS
continues to increase its number of full-time research analysts. These analysts
thoroughly investigate each company's earnings potential and position in its
industry as well as the overall prospects for that industry.
MFS also uses active portfolio management on the fixed-income side, taking
advantage of our extensive research and credit analysis to help reduce the
potential for price declines and enhance the opportunity for appreciation. Every
year, both fixed-income and equity managers meet with thousands of credit
issuers and companies. They also attend many presentations, closely follow
sources of industry research, and keep track of competitors.
We believe that applying this discipline of thorough, bottom-up research to both
the equity and fixed-income markets is the best way to provide favorable
long-term performance for our shareholders -- regardless of changes in the
overall market environment.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management
May 14, 1998
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JEFFREY L. SHAMES, A GRADUATE OF WESLEYAN UNIVERSITY AND THE MASSACHUSETTS
INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT, JOINED MFS IN 1983. AFTER
FOUR YEARS AS AN INDUSTRY ANALYST AND PORTFOLIO MANAGER, HE WAS NAMED CHIEF
EQUITY OFFICER IN 1987 AND PRESIDENT AND A MEMBER OF THE BOARD OF DIRECTORS IN
1993. MR. SHAMES WAS APPOINTED CHAIRMAN AND CHIEF EXECUTIVE OFFICER IN FEBRUARY
1998.
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<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGER
[Photo of Frederick J. Simmons]
Frederick J. Simmons
For the six months ended April 30, 1998, Class A shares of the Fund provided a
total return of 12.20%, Class B and Class C shares 11.83%, and Class I shares
12.50%. These returns include 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 (MSCI) World Index and 40% of the
J.P. Morgan Global Government Bond Index (the Morgan Index), which returned
11.67% for the same period. The MSCI World Index is a broad, unmanaged index of
global equities, while the Morgan Index is an aggregate of actively traded
government bonds issued by 13 countries, including the United States, with
remaining maturities of at least one year. The Fund's returns also compare to a
10.51% return for the Lipper Global Flexible Fund Index as determined by Lipper
Analytical Services, Inc., an independent firm that reports mutual fund
performance.
Q. COULD YOU TALK ABOUT SOME OF THE REASONS FOR THE FUND'S PERFORMANCE RELATIVE
TO ITS BENCHMARKS IN THE PAST SIX MONTHS?
A. In general, foreign stock funds have performed better this year, relative to
domestic stock funds, than they have for some time. Part of this is due to
their simply catching up after a period of underperformance by foreign
markets. Europe, in particular, has done very well. Some of this is also the
result of some markets performing well not only in local currency terms but
also in dollar terms. The Fund benefited from the fact that the weighting in
the Far East, especially in Japan, was relatively light.
Q. COULD YOU TALK ABOUT SOME REGIONS AND STOCKS THAT HAVE HELPED PERFORMANCE?
A. There doesn't seem to be any pattern in terms of sectors or countries, but
we can say that Europe in general has performed well, while the Far East has
done poorly. The United States did reasonably well, although not as well as
Europe. Even in Europe, however, it has definitely been a stock picker's
market, one that stresses individual company selection over country
selection. The list of holdings that were key contributors includes stocks
from Portugal, Canada, the United Kingdom, Germany, Sweden, France, and the
Netherlands. Stocks include Scandia, Mannesmann, Compass, Pinault-
Printemps-Redoute, Avis of Europe, and Williams.
Q. IS THIS EMPHASIS ON STOCK PICKING TYPICAL OF THE WAY YOU MANAGE THE FUND OR
A REFLECTION OF THE ENVIRONMENT?
A. That's the way the Fund is run, but the nature of the markets right now is
probably encouraging everybody to work that way because there don't seem to
be any major groups that stand out.
Q. YOU SAID THAT THE FUND'S ALLOCATION TO THE FAR EAST WAS QUITE SMALL. NOW,
HOWEVER, ARE YOU BEGINNING TO FIND SOME OPPORTUNITIES THERE?
A. We have found a few. For example, Wing Hang Bank in Hong Kong looks
promising, as does Singapore Press. In Japan, there are Sony and Rohm, among
others. They are strong exporters with well-known brand names and global
franchises.
Q. THE FUND'S BIGGEST INDUSTRY WEIGHTING IS IN FINANCIAL SERVICES. WHAT DO YOU
LIKE ABOUT THIS SECTOR?
A. That's really a catch-all that includes banks, insurance companies, and
miscellaneous financial companies. It's been an area of very strong
performance for a very long time. In fact, I believe we might be getting
close to the end of this run for some of these companies. These stocks
benefit from declining interest rates, and I think we have come most of the
way with that phenomenon.
Q. ANOTHER BIG SECTOR IS CONSUMER STAPLES. WHAT CAN YOU TELL US ABOUT THAT?
A. Again, that's a function of stock picking. It wasn't a conscious decision to
find defensive stocks. For our consumer staples holdings, we look for
companies that we view as having stable earnings histories. That includes
companies like Wella, a cosmetics company in Germany; Foster's Brewing, a
beer company in Australia; Kirin Beverage in Japan; and Ahold, a Dutch
multinational supermarket operator.
Q. IN THE LAST REPORT, YOU MENTIONED THAT YOU WERE CUTTING BACK THE U.S.
PORTION OF THE FUND. IS THIS STILL THE CASE?
A. Yes. We've been slowly decreasing the Fund's holdings in the United States
in favor of Europe. Primarily it's because of valuations. We think the U.S.
equity market is getting a little expensive. Also, the United States now
accounts for almost 50% of the world's market capitalization, which is
significantly higher than a few years ago and indicates to us that it's gone
about as far as it can go.
Q. WHAT ABOUT THE BOND PORTION?
A. After concentrating on the higher-yielding bond markets in Europe for the
past 18 months, and thus benefiting from the convergence of yields leading
up to European monetary union, we recently began switching these assets back
to the U.S. and German markets. We believe most of the European convergence
is behind us, and the U.S. bond market offers better relative value based on
both real (inflation-adjusted) and nominal rates. While most economies in
Europe are recovering, the United Kingdom is beginning to falter due to an
overvalued currency and relatively high interest rates. As a result, we have
increased our bond holdings in the United Kingdom. Globally, inflation
remains quite benign and, in some countries, is actually falling. We feel
this will help maintain the constructive tone in most bond markets.
Q. AND HOW ABOUT THE CURRENCY POSITION?
A. During the past three years, the U.S. dollar has been quite strong versus
both the German mark and the Japanese yen, primarily due to a stronger
economy and higher interest rates. Consequently, most nondollar currency
positions that were unhedged during this period had a negative impact on
nominal returns for the Fund. However, with European monetary union fast
approaching and economic growth picking up in these countries, the German
mark, in particular, has recently appreciated versus both the dollar and the
yen. This has positively impacted the Fund's performance. Due to the
prolonged economic weakness and lack of fiscal reform in Japan, we remain
negative on the yen, especially versus the German mark.
Q. WHAT DO YOU SEE AS SOME OF THE BIGGEST RISKS GOING FORWARD?
A. The biggest risk would be a worldwide slowdown in profit growth, which we
think is possible because of what happened in the Far East. The second thing
that should be of some concern is interest rates. We've had a secular
decline in rates for several years now, so we may have gone down as far as
we're going to go. If profits start to slow or interest rates go up, or
both, it could certainly have a negative impact on stock prices.
Q. LOOKING AHEAD, WHAT KIND OF ENVIRONMENT DO YOU SEE, AND HOW MIGHT YOU BE
POSITIONING THE FUND FOR IT?
A. We still think that if we can pick the right stocks, we'll do all right. We
don't think we're at the stage at which all equities are going to do poorly.
It's not like the last major bear market, in 1973 and '74, when companies
were selling at price-to-earnings multiples in the 50s and we were hit by
rising energy costs, which drove inflation and interest rates higher. Today,
the picture is more mixed. The economy isn't growing as fast as it was, but
it's still growing, and inflation is under control. For example, the price
of oil, which is one of the key indicators of inflation, has virtually
collapsed. So while we may see a slowdown in equity markets worldwide,
overall, the long-term outlook appears positive. [Graphic Omitted] Frederick
J. Simmons Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
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PORTFOLIO MANAGER'S PROFILE
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FREDERICK J. SIMMONS IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(SM)
AND PORTFOLIO MANAGER OF MFS(R) WORLD TOTAL RETURN FUND, MFS(R) INTERNATIONAL
GROWTH AND INCOME FUND, MFS(R) MERIDIAN(SM) WORLD TOTAL RETURN FUND, AND THE
WORLD TOTAL RETURN AND INTERNATIONAL GROWTH AND INCOME SERIES OFFERED THROUGH
MFS/SUN LIFE ANNUITY PRODUCTS.
MR. SIMMONS JOINED MFS IN 1971 AS AN INVESTMENT OFFICER IN THE RESEARCH
DEPARTMENT AND WAS NAMED AN ASSISTANT VICE PRESIDENT -- INVESTMENTS IN 1974, A
VICE PRESIDENT -- INVESTMENTS IN 1975, AND A 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(R) 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.
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. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS TOTAL RETURN: ABOVE-AVERAGE CURRENT INCOME
(COMPARED TO AN ALL-STOCK PORTFOLIO) AND OPPORTUNITIES
FOR LONG-TERM GROWTH OF CAPITAL AND INCOME.
COMMENCEMENT OF
INVESTMENT OPERATIONS: SEPTEMBER 4, 1990
CLASS INCEPTION: CLASS A SEPTEMBER 4, 1990
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $306.1 MILLION NET ASSETS AS OF APRIL 30, 1998
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including reinvestment of dividends.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH APRIL 30, 1998
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +12.20% +23.79% +59.30% +95.26% +167.29%
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Average Annual Total Return -- +23.79% +16.79% +14.32% + 13.70%
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SEC Results -- +17.91% +14.91% +13.22% + 12.98%
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CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +11.83% +23.05% +56.09% +89.27% +159.30%
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Average Annual Total Return -- +23.05% +16.00% +13.61% + 13.25%
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SEC Results -- +19.05% +15.25% +13.35% + 13.25%
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*For the period from the commencement of the Fund's investment operations,
September 4, 1990, through April 30, 1998.
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +11.83% +23.06% +56.25% +90.02% +159.30%
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Average Annual Total Return -- +23.06% +16.04% +13.70% + 13.25%
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SEC Results -- +22.06% +16.04% +13.70% + 13.25%
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CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
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Cumulative Total Return +12.50% +24.30% +60.08% +96.29% +168.38%
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Average Annual Total Return -- +24.30% +16.98% +14.44% + 13.76%
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*For the period from the commencement of the Fund's investment operations,
September 4, 1990, through April 30, 1998.
Class A share ("A") SEC results include the maximum 4.75% sales charge. Class B
share ("B") SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years from 4% to 0%. Class C shares ("C") have
no initial sales charge but, like B, have higher annual fees and expenses than
A. C SEC results reflect the 1% CDSC applicable to shares redeemed within 12
months. Class I shares ("I") have no sales charge or Rule 12b-1 fees and are
only available to certain institutional investors.
B and C results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of B and C. Because
operating expenses of B and C are higher than those of A, B and C performance
generally would have been lower than A performance. The A performance included
in the B and C SEC performance has been adjusted to reflect the CDSC generally
applicable to B and C rather than the initial sales charge generally applicable
to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been higher
than A performance. The A performance included in the I performance has been
adjusted to reflect the fact that I have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of dividends and capital gains.
Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably affected
by changes in interest rates and currency exchange rates, market conditions, and
the economic and political conditions of the countries where investments are
made. These risks may increase share price volatility. Please see a prospectus
for details.
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1998
LARGEST STOCK SECTORS
Other Sectors 19.11%
Financial Services 15.63%
Consumer Staples 13.60%
Energy 10.14%
Utilities & Communications 9.87%
Industrial Goods & Services 9.79%
Health care 8.04%
Technology 7.90%
Retailing 5.92%
For a more complete breakdown, refer to the Portfolio of Investments.
TOP 10 STOCK HOLDINGS
TYCO INTERNATIONAL LTD. 2.2% CANADIAN NATIONAL RAILWAY 1.8%
Fire protection, packaging, and electronic Railway/transportation company
equipment manufacturer
PINAULT-PRINTEMPS-REDOUTE SA 1.7%
GENERAL ELECTRIC CO. 2.0% French department store chain
Diversified manufacturing and financial
services conglomerate IHC CALAND NV 1.7%
Dutch marine services company
SONY CORP. 1.9%
Japanese electronics and entertainment ASDA GROUP 1.7%
company British food retailer
BRITISH PETROLEUM PLC 1.9% COMPASS GROUP PLC 1.6%
Oil exploration and production company British commercial food catering
company
AMERICAN EXPRESS CO. 1.9%
Financial services company
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- April 30, 1998
<TABLE>
<CAPTION>
Stocks - 59.7%
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ISSUER SHARES VALUE
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<S> <C> <C>
Foreign Stocks - 41.4%
Australia - 1.8%
Fosters Brewing Group (Beverages) 877,700 $ 1,908,419
QBE Insurance Group Ltd. (Insurance) 565,991 2,593,960
Seven Network Ltd. (Entertainment) 277,800 996,471
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$ 5,498,850
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Austria - 0.3%
Austria Tabak AG (Tobacco)* 16,200 $ 1,014,263
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Brazil - 0.8%
Companhia Cervejaria Brahma, ADR (Beverages) 32,200 $ 424,637
Companhia Paranaense de Energia, ADR
(Utilities - Electric) 68,100 970,425
Uniao de Banco Brasiliero S.A. (Banks and
Credit Cos.) 26,900 1,069,275
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$ 2,464,337
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Canada - 1.1%
Canadian National Railway Co. (Railroads) 52,800 $ 3,435,300
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Chile - 0.4%
Enersis S.A., ADR (Utilities - Electric) 41,600 $ 1,224,600
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Finland - 0.4%
Huhtamaki Oy Group (Conglomerate) 21,100 $ 1,220,392
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France - 4.2%
Elf Aquitaine S.A. (Oils) 11,100 $ 1,455,647
Pin Printemps Redo (Retail) 4,300 3,200,432
Sanofi S.A. (Medical and Health Products) 17,600 2,132,536
Total S.A., ADR (Oils) 34,700 2,038,625
TV Francaise (Broadcasting) 16,100 2,261,198
Union des Assurances Federales S.A. (Insurance) 11,500 1,798,637
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$ 12,887,075
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Germany - 2.2%
Adidas-Salomon AG (Apparel and Footwear) 13,300 $ 2,204,932
Mannesmann AG (Machinery and Telecommunications
Equipment) 3,300 2,618,668
Volkswagen AG (Automotive) 2,400 1,911,173
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$ 6,734,773
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Greece - 0.4%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 39,496 $ 1,131,907
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Hong Kong - 0.5%
Hong Kong Electric Holdings Ltd. (Utilities -
Electric) 223,000 $ 685,046
Wharf Holdings Ltd. (Real Estate) 300,000 480,155
Wing Hang Bank Ltd. (Banks and Credit Cos.) 160,800 452,461
------------
$ 1,617,662
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Italy - 2.0%
Eni S.P.A, ADR (Oils) 15,200 $ 1,005,100
Instituto Nazionale delle Assicurazioni
(Insurance) 575,400 1,719,624
Telecom Italia S.P.A. (Telecommunications)* 301,950 1,591,767
Telecom Italia S.P.A., Saving Shares
(Telecommunications) 525,400 1,906,771
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$ 6,223,262
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Japan - 4.8%
Canon, Inc. (Office Equipment) 95,000 $ 2,242,120
Eisai Co. Ltd. (Pharmaceuticals) 33,000 472,779
Kirin Beverage Corp. (Beverages) 115,000 2,245,890
Osaka Sanso Kogyo Ltd. (Chemicals) 146,000 302,745
Rohm Co. (Electronics) 14,000 1,577,138
Sony Corp. (Electronics) 44,000 3,652,843
Takeda Chemical Industries (Pharmaceuticals) 75,000 2,137,687
Terumo Corp. (Pharmaceuticals) 45,000 657,593
Tokyo Broadcasting System, Inc. (Broadcasting) 40,000 506,711
Ushio, Inc. (Electronics) 109,000 993,674
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$ 14,789,180
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Netherlands - 5.1%
Akzo Nobel N.V. (Chemicals) 13,200 $ 2,684,679
Benckiser N.V. (Consumer Goods and Services)* 35,900 2,094,522
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 43,600 2,125,198
IHC Caland N.V. (Marine Equipment)* 53,596 3,119,007
Koninklijke Ahold N.V., ADR (Food/Retail) 46,783 1,470,741
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services)* 30,800 1,066,904
Royal Dutch Petroleum Co., ADR (Oils) 39,400 2,228,563
Wolters Kluwer N.V. (Publishing)* 6,359 831,063
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$ 15,620,677
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New Zealand - 0.1%
Telecom Corp. of New Zealand
(Telecommunications)* 78,400 $ 209,744
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Peru - 0.3%
Telefonica del Peru S.A., ADR
(Telecommunications) 41,400 $ 915,975
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Portugal - 0.6%
Banco Totta E Acores (Banks and Credit Cos.) 48,500 $ 1,845,648
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Singapore - 0.2%
Singapore Press Holdings Ltd. (Printing &
Publishing) 63,972 $ 707,208
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South Korea - 0.1%
Korea Electric Power Corp. (Utilities - Electric) 17,000 $ 231,760
- ---------------------------------------------------------------------------------------------------
Spain - 2.1%
Iberdrola S.A. (Utilities - Electric) 179,000 $ 2,877,814
Acerinox S.A. (Iron and Steel) 6,300 1,021,130
Telefonica de Espana (Utilities - Telephone) 56,200 2,361,001
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$ 6,259,945
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Sweden - 2.8%
Astra AB (Pharmaceuticals) 98,100 $ 1,951,860
Securitas AB (Security Services)* 31,300 1,152,519
Skandia Forsakrings AB (Insurance) 36,700 2,555,724
Telefonaktiebolaget LM Ericsson, ADR
(Telecommunications Equipment) 32,800 1,687,150
Volvo AB (Automobiles) 36,300 1,059,923
------------
$ 8,407,176
- ---------------------------------------------------------------------------------------------------
Switzerland - 0.5%
Ciba Specialty AG (Chemicals) 13,200 $ 1,597,200
- ---------------------------------------------------------------------------------------------------
United Kingdom - 10.7%
Aegis Group PLC (Advertising) 36,400 $ 55,972
ASDA Group PLC (Supermarkets) 928,600 3,108,003
Avis Europe PLC (Auto Rental)## 682,700 2,635,859
Bank of Scotland (Banks and Credit Cos.)* 121,500 1,492,602
BAT Industries PLC (Tobacco) 105,100 990,745
Booker PLC (Food - Wholesale) 187,000 822,011
British Aerospace PLC (Aerospace and Defense)* 77,700 2,594,758
British Petroleum PLC, ADR (Oils) 37,807 3,572,762
Compass Group PLC (Food - Catering)## 176,400 3,051,541
Diageo PLC (Food & Beverage Products) 144,748 1,722,554
Lloyds TSB Group PLC (Banks and Credit Cos.)* 154,965 2,319,420
LucasVarity PLC (Automotive) 595,400 2,659,542
PowerGen PLC (Utilities - Electric)* 191,000 2,579,437
Tomkins PLC (Conglomerates) 453,933 2,670,636
Williams PLC (Conglomerates) 339,000 2,600,714
------------
$ 32,876,556
- ---------------------------------------------------------------------------------------------------
Total Foreign Stocks $126,913,490
- ---------------------------------------------------------------------------------------------------
U.S. Stocks - 18.3%
Aerospace - 0.4%
Lockheed - Martin Corp. 11,008 $ 1,226,016
- ---------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.8%
Norwest Corp. 58,900 $ 2,337,594
- ---------------------------------------------------------------------------------------------------
Business Machines - 0.7%
International Business Machines Corp. 19,400 $ 2,247,975
- ---------------------------------------------------------------------------------------------------
Construction Services - 0.4%
Martin Marietta Materials, Inc. 22,546 $ 1,058,253
- ---------------------------------------------------------------------------------------------------
Consumer Goods and Services - 2.2%
Philip Morris Cos., Inc. 74,000 $ 2,761,125
Tyco International Ltd. 74,700 4,071,150
------------
$ 6,832,275
- ---------------------------------------------------------------------------------------------------
Electrical Equipment - 1.2%
General Electric Co. 43,800 $ 3,728,475
- ---------------------------------------------------------------------------------------------------
Financial Institutions - 1.8%
American Express Co. 34,300 $ 3,498,600
Federal Home Loan Mortgage Corp. 40,600 1,880,287
------------
$ 5,378,887
- ---------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.4%
McCormick & Co., Inc. 35,200 $ 1,205,600
- ---------------------------------------------------------------------------------------------------
Insurance - 1.9%
Allstate Corp. 29,000 $ 2,791,250
Reliastar Financial Corp. 25,400 1,158,875
Transamerica Corp. 16,500 1,905,750
------------
$ 5,855,875
- ---------------------------------------------------------------------------------------------------
Machinery - 0.5%
Deere & Co., Inc. 25,400 $ 1,484,313
- ---------------------------------------------------------------------------------------------------
Medical and Health Products - 1.7%
American Home Products Corp. 15,000 $ 1,396,875
Bristol-Myers Squibb Co. 28,200 2,985,675
Warner-Lambert Co. 4,500 851,344
------------
$ 5,233,894
- ---------------------------------------------------------------------------------------------------
Oils - 1.5%
Exxon Corp. 27,900 $ 2,034,956
USX-Marathon Group 72,500 2,596,406
------------
$ 4,631,362
- ---------------------------------------------------------------------------------------------------
Pharmaceuticals - 0.8%
Schering Plough Corp. 31,700 $ 2,539,962
- ---------------------------------------------------------------------------------------------------
Printing and Publishing - 0.5%
Gannett Co., Inc. 23,800 $ 1,616,913
- ---------------------------------------------------------------------------------------------------
Special Products and Services - 0.7%
McDonalds Corp. 32,300 $ 1,998,563
- ---------------------------------------------------------------------------------------------------
Utilities - Electric - 0.6%
Sierra Pacific Resources 53,800 $ 1,883,000
- ---------------------------------------------------------------------------------------------------
Utilities - Gas - 1.3%
Coastal Corp. 41,000 $ 2,928,937
KN Energy, Inc. 15,200 892,050
------------
$ 3,820,987
- ---------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.9%
Sprint Corp. 41,300 $ 2,821,306
- ---------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 55,901,250
- ---------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $119,821,981) $182,814,740
- ---------------------------------------------------------------------------------------------------
Bonds - 35.3%
- ---------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ---------------------------------------------------------------------------------------------------
U.S. Bonds - 21.1%
Government National Mortgage Association - 3.6%
GNMA, 6.5s, 2028 $ 11,162 $ 11,060,626
------------
$ 11,060,626
- ---------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 17.5%
U.S. Treasury Notes, 5.5s, 2003 $ 5,700 $ 5,659,929
U.S. Treasury Notes, 6.5s, 2005 29,000 30,273,390
U.S. Treasury Notes, 6.625s, 2002 17,150 17,723,496
------------
$ 53,656,815
- ---------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 64,717,441
- ---------------------------------------------------------------------------------------------------
Foreign Bonds - 14.2%
Germany - 6.2%
Germany Federal Republic, 6.25s, 2006 DEM 13,878 $ 8,398,722
Germany Federal Republic, 6s, 2007 17,689 10,547,356
------------
$ 18,946,078
- ---------------------------------------------------------------------------------------------------
Italy - 2.2%
Republic of Italy, 5.75s, 2002 ITL 5,710,000 $ 3,338,179
Republic of Italy, 7.75s, 2006 4,900,000 3,257,355
------------
$ 6,595,534
- ---------------------------------------------------------------------------------------------------
Japan - 0.2%
FNMA, 2.125s, 2007 JPY 90,000 $ 700,415
- ---------------------------------------------------------------------------------------------------
Sweden - 0.7%
Kingdom of Sweden, 6s, 2005 SEK 8,100 $ 1,092,140
Kingdom of Sweden, 13s, 2001 6,600 1,044,829
------------
$ 2,136,969
- ---------------------------------------------------------------------------------------------------
United Kingdom - 4.9%
United Kingdom Treasury, 8s, 2003 GBP 2,240 $ 4,067,786
United Kingdom Treasury, 8.5s, 2005 5,670 10,955,221
------------
$ 15,023,007
- ---------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 43,402,003
- ---------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $107,604,067) $108,119,444
- ---------------------------------------------------------------------------------------------------
Preferred Stocks - 1.8%
- ---------------------------------------------------------------------------------------------------
SHARES
- ---------------------------------------------------------------------------------------------------
Henkel KGAA (Chemicals)* 33,000 $ 2,574,533
Prosieben Media AG (Entertainment)* 14,800 762,887
Wella AG, Preferred (Cosmetics) 2,300 2,095,570
- ---------------------------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $4,167,319) $ 5,432,990
- ---------------------------------------------------------------------------------------------------
Short-Term Obligations - 2.9%
- ---------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ---------------------------------------------------------------------------------------------------
Federal Home Loan Bank Consolidated Discount
Note, due 5/15/98 $ 2,400 $ 2,394,988
Associates Corp. of North America, due 5/01/98 6,400 6,400,000
- ---------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 8,794,988
- ---------------------------------------------------------------------------------------------------
Call Options Purchased
- ---------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
- ---------------------------------------------------------------------------------------------------
Japanese Government Bond/June/102.121
(Premiums Paid, $108,341) JPY 1,567,000 $ 82,710
- ---------------------------------------------------------------------------------------------------
Put Options Purchased - 0.3%
- ---------------------------------------------------------------------------------------------------
Japanese Yen/Deutsche Marks/August/68.4 (Premiums
Paid, $319,639) JPY 1,413,308 $ 808,412
- ---------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $240,816,335) $306,053,284
Call Options Written
- ---------------------------------------------------------------------------------------------------
Japanese Yen/U.S. Dollars/May/119.000 JPY 1,298,743 $ --
Japanese Government Bond/June/104.247 JPY 1,567,000 (20,371)
Japanese Yen/Deutsche Marks/August/66.520 JPY 1,374,463 (23,366)
- ---------------------------------------------------------------------------------------------------
Total Call Options Written (Premiums Received, $548,676) $ (43,737)
- ---------------------------------------------------------------------------------------------------
Put Options Written
- ---------------------------------------------------------------------------------------------------
Canadian Dollars/U.S. Dollars/July/1.430 CAD 8,750 $ (44,439)
Japanese Government Bond/June/100.000 JPY 1,567,000 (21,938)
- ---------------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $85,701) $ (66,377)
- ---------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities 175,414
- ---------------------------------------------------------------------------------------------------
Net Assets - 100.0% $306,118,584
- ---------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
</TABLE>
Abbreviations have been used throughout this report to indicate amounts shown in
currencies other than the U.S. dollar. A list of abbreviations is shown below.
AUD = Australian Dollars GBP = British Pounds
CAD = Canadian Dollars ITL = Italian Lira
CHF = Swiss Francs JPY = Japanese Yen
DEM = German Marks NLG = Netherland Guilder
ESP = Spanish Pesetas SEK = Swedish Krona
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
APRIL 30, 1998
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $240,816,335) $ 306,053,284
Cash 532,183
Net receivable for forward foreign currency exchange
contracts sold 198,322
Receivable for Fund shares sold 1,005,408
Receivable for investments sold 2,948,904
Interest and dividends receivable 2,355,392
Other assets 2,000
--------------
Total assets $ 313,095,493
--------------
Liabilities:
Payable for Fund shares reacquired $ 564,616
Payable for investments purchased 4,333,053
Net payable for forward foreign currency exchange
contracts purchased 426,413
Net payable for foreign currency exchange contracts
closed or subject to master netting agreements 1,262,862
Written options outstanding, at value (premiums
received, $634,377) 110,114
Payable to affiliates -
Management fee 7,738
Shareholder servicing agent fee 934
Distribution and service fee 89,475
Administrative fee 125
Accrued expenses and other liabilities 181,579
--------------
Total liabilities $ 6,976,909
--------------
Net assets $ 306,118,584
==============
Net assets consist of:
Paid-in capital $ 229,393,975
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 64,280,282
Accumulated undistributed net realized gain on
investments and foreign currency transactions 12,036,282
Accumulated undistributed net investment income 408,045
--------------
Total $ 306,118,584
==============
Shares of beneficial interest outstanding 21,132,751
==========
Class A shares:
Net asset value per share
(net assets of $169,456,064 / 11,690,311 shares of
beneficial interest outstanding) $14.50
======
Offering price per share (100 / 95.25 of net asset
value per share) $15.22
======
Class B shares:
Net asset value and offering price per share
(net assets of $108,156,382 / 7,473,153 shares of
beneficial interest outstanding) $14.47
======
Class C shares:
Net asset value and offering price per share
(net assets of $26,638,878 / 1,840,575 shares of
beneficial interest outstanding) $14.47
======
Class I shares:
Net asset value per share
(net assets of $1,867,260 / 128,712 shares of
beneficial interest outstanding) $14.51
======
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 (Unaudited)
- ------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1998
- ------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 3,607,206
Dividends 1,252,423
Foreign taxes withheld (90,193)
-------------
Total investment income $ 4,769,436
-------------
Expenses -
Management fee $ 1,163,344
Trustees' compensation 20,407
Shareholder servicing agent fee 168,162
Distribution and service fee (Class A) 277,460
Distribution and service fee (Class B) 502,094
Distribution and service fee (Class C) 120,437
Administrative fee 18,910
Custodian fee 111,230
Postage 31,134
Printing 21,309
Auditing fees 20,315
Legal fees 798
Miscellaneous 101,634
-------------
Total expenses $ 2,557,234
Fees paid indirectly (36,184)
-------------
Net expenses $ 2,521,050
-------------
Net investment income $ 2,248,387
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 11,422,435
Written option transactions 225,841
Foreign currency transactions 410,593
Interest rate swap agreements 95,191
-------------
Net realized gain on investments and foreign
currency transactions $ 12,154,060
-------------
Change in unrealized appreciation -
Investments $ 19,917,023
Written options 386,759
Translation of assets and liabilities in foreign
currencies (1,850,999)
Interest rate swap agreements (79,135)
-------------
Net unrealized gain on investments and foreign
currency translation $ 18,373,648
-------------
Net realized and unrealized gain on investments
and foreign currency $ 30,527,708
-------------
Increase in net assets from operations $ 32,776,095
=============
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,248,387 $ 5,160,435
Net realized gain on investments and foreign
currency transactions 12,154,060 13,079,421
Net unrealized gain on investments and foreign
currency translation 18,373,648 16,651,658
-------------- --------------
Increase in net assets from operations $ 32,776,095 $ 34,891,514
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (520,386) $ (2,231,027)
From net investment income (Class B) -- (816,452)
From net investment income (Class C) -- (183,191)
From net investment income (Class I) (9,007) (21,797)
From net realized gain on investments and foreign
currency transactions (Class A) (9,740,373) (6,137,212)
From net realized gain on investments and foreign
currency transactions (Class B) (6,225,063) (3,460,672)
From net realized gain on investments and foreign
currency transactions (Class C) (1,494,162) (701,486)
From net realized gain on investments and foreign
currency transactions (Class I) (108,509) --
-------------- --------------
Total distributions declared to shareholders $ (18,097,500) $ (13,551,837)
-------------- --------------
Net increase in net assets from Fund share
transactions $ 18,017,437 $ 36,203,831
-------------- --------------
Total increase in net assets $ 32,696,032 $ 57,543,508
Net assets:
At beginning of period 273,422,552 215,879,044
-------------- --------------
At end of period (including accumulated undistributed
net investment income (distributions in excess of
net investment income) of $408,045 and ($1,310,949),
respectively) $ 306,118,584 $ 273,422,552
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED -----------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.84 $12.73 $11.57 $10.58 $11.19
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.13 $ 0.31 $ 0.34 $ 0.33 $ 0.30
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 1.47 1.61 1.46 0.79 0.15
------ ------ ------ ------ ------
Total from investment operations $ 1.60 $ 1.92 $ 1.80 $ 1.12 $ 0.45
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.05) $(0.21) $(0.63) $(0.08) $(0.25)
From net realized gain on investments and
foreign currency transactions (0.89) (0.60) (0.01) (0.05) (0.33)
In excess of net realized gain on
investments and foreign currency
transactions -- -- -- -- (0.38)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.94) $(0.81) $(0.64) $(0.13) $(0.96)
------ ------ ------ ------ ------
Net asset value - end of period $14.50 $13.84 $12.73 $11.57 $10.68
====== ====== ====== ====== ======
Total return(+) 12.20%++ 15.71% 16.06% 10.63% 4.10%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.52%+ 1.59% 1.63% 1.77% 1.76%
Net investment income 1.85%+ 2.35% 2.79% 3.06% 2.81%
Portfolio turnover 103% 143% 167% 160% 118%
Net assets at end of period (000 omitted) $169,456 $152,919 $129,843 $110,294 $99,870
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to October 31, 1993, are 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 for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1993 1992 1991 1990*
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.21 $ 9.42 $ 8.55 $ 8.50
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.28 $ 0.36 $ 0.37 $ 0.08
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.42 0.86 0.88 (0.03)
------ ------ ------ ------
Total from investment operations $ 1.70 $ 1.22 $ 1.25 $ 0.05
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.45) $(0.26) $(0.38) --
From net realized gain on investments and foreign
currency transactions (0.27) (0.17) -- --
------ ------ ------ ------
Total distributions declared to shareholders $(0.72) $(0.43) $(0.38) $(0.00)
------ ------ ------ ------
Net asset value - end of period $11.19 $10.21 $ 9.42 $ 8.55
====== ====== ====== ======
Total return(+) 17.78% 13.14% 14.94% 3.76%+
Ratios (to average net assets)/Supplemental data:
Expenses 1.92% 1.84% 2.18% 1.57%+
Net investment income 2.96% 3.65% 4.05% 3.14%+
Portfolio turnover 112% 72% 134% 2%
Net assets at end of period (000 omitted) $ 71,262 $ 44,707 $ 30,847 $ 12,510
* For the period from the commencement of the Fund's investment operations, September 4, 1990, through October 31, 1990.
+ Annualized.
# Per share data for the periods subsequent to October 31, 1993, are based on average shares outstanding.
(+) 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.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994 1993**
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $13.82 $12.71 $11.52 $10.54 $11.19 $10.84
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.08 $ 0.22 $ 0.25 $ 0.25 $ 0.25 $ 0.06
Net realized and unrealized
gain on investments and
foreign currency
transactions 1.46 1.62 1.46 0.77 0.13 0.35
------ ------ ------ ------ ------ ------
Total from investment
operations $ 1.54 $ 1.84 $ 1.71 $ 1.02 $ 0.38 $ 0.41
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income
$ -- $(0.13) $(0.47) $(0.03) $(0.24) $(0.06)
From net realized gain on
investments and foreign
currency transactions (0.89) (0.60) (0.01) (0.01) (0.32) --
In excess of net realized
gain on investments and
foreign currency
transactions -- -- -- -- (0.38) --
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(0.89) $(0.73) $(0.48) $(0.04) $(0.94) $(0.06)
------ ------ ------ ------ ------ ------
Net asset value - end of period $14.47 $13.82 $12.75 $11.52 $10.63 $11.19
====== ====== ====== ====== ====== ======
Total return 11.83%++ 15.00% 15.29% 9.75% 3.38% 3.79%++
Ratios (to average net assets)/
Supplemental data:
Expenses 2.17%+ 2.25% 2.34% 2.49% 2.49% 2.77%+
Net investment income 1.20%+ 1.70% 2.07% 2.34% 2.33% 2.15%+
Portfolio turnover 103% 143% 167% 160% 118% 112%
Net assets at end of period
(000 omitted) $108,156 $96,931 $71,788 $57,214 $47,677 $4,381
** For the period from the inception of Class B, September 7, 1993, through October 31, 1993.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to October 31, 1993, are 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.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED --------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994***
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $13.82 $12.72 $11.52 $10.53 $11.06
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.08 $ 0.23 $ 0.26 $ 0.27 $ 0.27
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 1.46 1.61 1.46 0.76 (0.29)
------ ------ ------ ------ ------
Total from investment operations $ 1.54 $ 1.84 $ 1.72 $ 1.03 $(0.02)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.14) $(0.51) $(0.03) $(0.12)
From net realized gain on investments and
foreign currency transactions (0.89) (0.60) (0.01) (0.01) (0.16)
In excess of net realized gain on investments
and foreign currency transactions -- -- -- -- (0.18)
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.89) $(0.74) $(0.52) $(0.04) $(0.46)
------ ------ ------ ------ ------
Net asset value - end of period $14.47 $13.82 $12.72 $11.52 $10.58
====== ====== ====== ====== ======
Total return 11.83%++ 14.97% 15.41% 9.84% (0.15)%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.17%+ 2.24% 2.27% 2.42% 2.39%+
Net investment income 1.21%+ 1.71% 2.14% 2.41% 2.51%+
Portfolio turnover 103% 143% 167% 160% 118%
Net assets at end of period (000 omitted) $26,639 $21,725 $14,248 $10,894 $10,903
*** For the period from the inception of Class C, January 3, 1994, through October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are 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.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997****
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.86 $12.51
------ ------
Income from investment operations# -
Net investment income $ 0.15 $ 0.30
Net realized and unrealized gain on investments and foreign
currency transactions 1.46 1.21
------ ------
Total from investment operations $ 1.61 $ 1.51
------ ------
Less distributions declared to shareholders -
From net investment income $(0.07) $(0.16)
From net realized gain on investments and foreign currency
transactions (0.89) --
------ ------
Total distributions declared to shareholders $(0.96) $(0.16)
------ ------
Net asset value - end of period $14.51 $13.86
====== ======
Total return 12.50%++ 12.08%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.17%+ 1.24%+
Net investment income 2.20%+ 2.72%+
Portfolio turnover 103% 143%
Net assets at end of period (000 omitted) $1,867 $1,848
**** For the period from the inception of Class I, January 2, 1997, through October 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS World Total Return Fund (the Fund) is a non-diversified series of MFS Series
Trust VI (the Trust). The Trust is organized as a Massachusetts business trust
and 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 reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues, forward contracts, and swaps agreements,
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 foreign currency and translated into U.S.
dollars at the closing daily exchange rate. Options, and options on futures
contracts listed on commodities exchanges are reported at market value using
closing settlement prices. Over-the-counter options on securities are valued by
brokers. Over-the-counter currency options are valued through the use of a
pricing model which takes into account foreign currency exchange spot and
forward rates, 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 result from fluctuations in foreign currency exchange rates is not
separately disclosed.
Written Options - The Fund may also write call or put options in exchange for a
premium. The premium is initially recorded as a liability which is subsequently
adjusted to the current value of the options contract. When a written option
expires, the Fund realizes a gain equal to the amount of the premium received.
When a written call option is exercised or closed, the premium received is
offset against the proceeds to determine the realized gain or loss. When a
written 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
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. The Fund 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 as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
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
discount is amortized or accreted for financial statement and tax reporting
purposes as required by federal income tax regulations. Dividends received in
cash are recorded on the ex-dividend date. 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. Some
securities may be purchased on a "when-issued" or "forward delivery" basis,
which means that the securities will be delivered to the Fund at a future date,
usually beyond customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures 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.
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 multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund 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. Class B shares will convert to class A
shares approximately eight years after purchase.
(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.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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 renumeration
for their services to the Fund from MFS. Certain 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 $4,607 for the period ended
April 30, 1998.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$23,784 for the period ended April 30, 1998, as its portion of the sales charge
on sales of Class A shares of the Fund. The Trustees have adopted a distribution
plan for Class A, Class B, and Class C shares pursuant to Rule 12b-1 of the
Investment Company Act of 1940 as follows:
The Fund's 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 paid 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, and 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. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $26,253 for the period ended April 30,
1998. Fees incurred under the distribution plan during the period ended April
30, 1998, were 0.35% of average daily net assets attributable to Class A shares
on an annualized basis.
The Fund's distribution plan provides 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 $14,156 and $10,195 for Class B and Class C shares,
respectively, for the period ended April 30, 1998. Fees incurred under the
distribution plan during the period ended April 30, 1998, were 1.00% of average
daily net assets attributable to Class B and Class C shares on an annualized
basis, respectively.
Certain Class A shares and Class C shares are subject to a contingent deferred
sales charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the period ended April 30,
1998, were $534, $59,930, and $2,357 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 Fund's average daily net assets at an effective annual rate of
0.1125%. Prior to January 1, 1998, the fee was calculated as a percentage of the
average daily net assets at an effective annual rate of 0.13%.
(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 $137,387,922 $ 90,830,608
------------ ------------
Investments (non-U.S. government securities) $164,661,167 $188,638,123
------------ ------------
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 $240,816,335
------------
Gross unrealized appreciation $ 67,760,773
Gross unrealized depreciation (2,523,824)
------------
Net unrealized appreciation $ 65,236,949
============
(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
<TABLE>
<CAPTION>
PERIOD ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,136,126 $ 15,797,414 2,549,188 $ 33,536,171
Shares issued to shareholders in
reinvestment of distributions 727,633 9,481,174 596,268 7,592,322
Shares reacquired (1,220,102) (16,973,891) (2,296,772) (30,263,298)
--------- ------------- --------- -------------
Net increase 643,657 $ 8,304,697 848,684 $ 10,865,195
========= ============= ========= =============
<CAPTION>
Class B Shares
PERIOD ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 896,762 $ 12,435,575 2,145,163 $ 28,207,084
Shares issued to shareholders in
reinvestment of distributions 417,090 5,438,868 297,676 3,786,788
Shares reacquired (855,477) (11,767,681) (1,074,408) (14,221,906)
--------- ------------- --------- -------------
Net increase 458,375 $ 6,106,762 1,368,431 $ 17,771,966
========= ============= ========= =============
<CAPTION>
Class C Shares
PERIOD ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 328,305 $ 4,583,634 681,359 $ 8,952,016
Shares issued to shareholders in
reinvestment of distributions 93,123 1,214,328 55,143 702,127
Shares reacquired (153,044) (2,118,415) (284,443) (3,746,301)
--------- ------------- --------- -------------
Net increase 268,384 $ 3,679,547 452,059 $ 5,907,842
========= ============= ========= =============
<CAPTION>
Class I Shares
PERIOD ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,054 $ 56,214 155,509 $ 1,954,464
Shares issued to shareholders in
reinvestment of distributions 9,026 117,516 1,606 21,797
Shares reacquired (17,747) (247,299) (23,736) (317,433)
--------- ------------- --------- -------------
Net increase (decrease) (4,667) $ (73,569) 133,379 $ 1,658,828
========= ============= ========= =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $805 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
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, 1998, was $747.
(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, 1998, is as follows:
Written Option Transactions
<TABLE>
<CAPTION>
1998 CALLS 1998 PUTS
------------------------------------- -------------------------------------
PRINCIPAL AMOUNTS PRINCIPAL AMOUNTS
OF CONTRACTS OF CONTRACTS
(000 OMITTED) PREMIUMS (000 OMITTED) PREMIUMS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding, beginning of period -
Deutsche Marks/British Pounds 18,519 $ 92,800 20,423 $ 83,855
Japanese Government Bonds -- -- 218,000 14,221
Japanese Yen 1,244,174 237,921 -- --
Japanese Yen/Deutsche Marks 1,451,560 139,942 822,841 61,801
Options written -
Canadian Dollars -- -- 8,750 32,734
Japanese Government Bonds 1,567,000 24,075 1,567,000 52,967
Japanese Yen 1,298,743 204,961 -- --
Japanese Yen/Deutsche Marks 1,374,463 319,640 -- --
Options terminated in closing
transactions -
Deutsche Marks/British Pounds -- -- (20,423) (83,855)
Japanese Government Bonds -- -- (218,000) (14,221)
Japanese Yen (1,244,174) (237,921) -- --
Japanese Yen/Deutsche Marks -- -- (822,841) (61,801)
Options expired -
Deutsche Marks/British Pounds (18,519) (92,800) -- --
Japanese Yen/Deutsche Marks (1,451,560) (139,942) -- --
---------- ---------- --------- ---------
Outstanding, end of period $ 548,676 $ 85,701
========== =========
Options outstanding at end of period consist of:
Canadian Dollars -- $ -- 8,750 $ 32,734
Japanese Government Bonds 1,567,000 24,076 1,567,000 52,967
Japanese Yen 1,298,743 204,961 -- --
Japanese Yen/Deutsche Marks 1,374,463 319,639 -- --
---------- ---------- --------- ---------
Outstanding, end of period $ 548,676 $ 85,701
========== =========
</TABLE>
At April 30, 1998, the Fund had sufficient cash and/or securities at least equal
to the value of the written options.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 5/15/98 AUD 10,818,565 $ 7,249,953 $ 7,044,095 $ 205,858
5/15/98 CAD 2,064,899 1,438,954 1,444,630 (5,676)
5/15/98 CHF 7,740,223 5,468,306 5,166,722 301,584
5/15/98 DEM 42,987,501 23,666,478 23,969,922 (303,444)
----------- ----------- ---------
$37,823,691 $37,625,369 $ 198,322
=========== =========== =========
Purchases 5/15/98 CAD 26,228,148 $18,406,837 $18,349,552 $(57,285)
5/15/98 CHF 2,904,185 2,036,453 1,938,590 (97,863)
5/15/98 DEM 57,215,882 32,051,598 31,903,693 (147,905)
5/15/98 GBP 1,502,743 2,469,007 2,510,336 41,329
5/15/98 NLG 17,994,159 8,979,121 8,910,113 (69,008)
5/18/98 ESP 984,120,654 6,556,433 6,460,752 (95,681)
----------- ----------- ---------
$70,499,449 $70,073,036 $(426,413)
=========== =========== =========
</TABLE>
Forward foreign currency purchases and sales under master netting agreements
excluded above amounted to a net receivable of $218,571 with Bankers' Trust,
$936,196 with Deutsche Bank, $100,065 with Merrill Lynch, and a net payable of
$491,256 with C.S. First Boston and $2,026,438 with Swiss Bank at April 30,
1998.
At April 30, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
<PAGE>
MFS(R) World Total Return Fund
<TABLE>
<S> <C>
Trustees Secretary
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991), MFS
Investment Management Assistant Secretary
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
Custodian
Lawrence H. Cohn, M.D. - Chief of Cardiac State Street Bank and Trust Company
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School Investor Information
For MFS stock and bond market outlooks,
The Hon. Sir J. David Gibbons, KBE - Chief call toll free: 1-800-637-4458 anytime from
Executive Officer, Edmund Gibbons Ltd. a touch-tone telephone.
Abby M. O'Neill - Private Investor For information on MFS mutual funds, call your
financial adviser or, for an information kit,
Walter E. Robb, III - President and Treasurer, call toll free: 1-800-637-2929 any business
Benchmark Advisors, Inc. (corporate financial day from 9 a.m. to 5 p.m. Eastern time (or
consultants); President, Benchmark Consulting leave a message anytime).
Group, Inc. (office services)
Investor Service
Arnold D. Scott* - Senior Executive MFS Service Center, Inc.
Vice President, Director, and Secretary, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief For general information, call toll free:
Executive Officer, and Director, 1-800-225-2606 any business day from
MFS Investment Management 8 a.m. to 8 p.m. Eastern time.
J. Dale Sherratt - President, Insight For service to speech- or hearing-impaired,
Resources, Inc. (acquisition planning call toll free: 1-800-637-6576 any business
specialists) day from 9 a.m. to 5 p.m. Eastern time. (To
use this service, your phone must be equipped
Ward Smith - Former Chairman (until 1994), with a Telecommunications Device for the
NACCO Industries (holding company) Deaf.) For share prices, account balances, and
exchanges, call toll free: 1-800-MFS-TALK
Investment Adviser (1-800-637-8255) anytime from a touch-tone
Massachusetts Financial Services Company telephone.
500 Boylston Street
Boston, MA 02116-3741 World Wide Web
www.mfs.com
Distributor
MFS Fund Distributors, Inc. For the fourth year in a row,
500 Boylston Street MFS earned a #1 ranking in the
Boston, MA 02116-3741 [Dalbar Logo] DALBAR, Inc. Broker/Dealer
Survey, Main Office Operations
Portfolio Manager Service Quality Category. The
Frederick J. Simmons* firm achieved a 3.42 overall score on a
scale of 1 to 4 in the 1997 survey. A total
Treasurer of 111 firms responded, offering input on
W. Thomas London* the quality of service they received from 29
mutual fund companies nationwide. The survey
Assistant Treasurers contained questions about service quality in
Mark E. Bradley* 11 categories, including "knowledge of
Ellen Moynihan* operations contact," "keeping you informed,"
James O. Yost* and "ease of doing business" with the firm.
</TABLE>
*Affiliated with the Investment Adviser
<PAGE>
-----------------
MFS(R) WORLD TOTAL RETURN FUND Bulk Rate
U.S. Postage
Paid
[Logo] M F S(SM) MFS
INVESTMENT MANAGEMENT -----------------
We invented the mutual fund(SM)
500 Boylston Street
Boston, MA 02116-3741
[DALBAR LOGO]
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MWT-3 6/98 41M 24/224/324/824
