<PAGE>
[LOGO] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
ANNUAL REPORT
SEPTEMBER 30, 1998
o MFS(R) ASIA PACIFIC FUND
o MFS(R) INTERNATIONAL OPPORTUNITIES FUND
o MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
o MFS(R) INTERNATIONAL VALUE FUND
<PAGE>
MFS(R) ASIA PACIFIC FUND
MFS(R) INTERNATIONAL OPPORTUNITIES FUND
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
MFS(R) INTERNATIONAL VALUE FUND
<TABLE>
<S> <C>
TRUSTEES CUSTODIAN
Richard B. Bailey* - Private Investor; State Street Bank and Trust Company
Former Chairman and Director (until 1991),
MFS(R) Investment Management AUDITORS
Ernst & Young LLP
Peter G. Harwood - Private Investor
INVESTOR INFORMATION
J. Atwood Ives - Chairman and Chief Executive For MFS stock and bond market outlooks, call toll
Officer, Eastern Enterprises (diversified services free: 1-800-637-4458 anytime from a touch-tone
company) telephone.
Lawrence T. Perera - Partner, Hemenway & Barnes For information on MFS mutual funds, call your
(attorneys) financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
William J. Poorvu - Adjunct Professor, Harvard a.m. to 5 p.m. Eastern time (or leave a message
University Graduate School of Business anytime).
Administration
INVESTOR SERVICE
Charles W.Schmidt - PrivateInvestor MFS Service Center, Inc.
P.O. Box 2281
Arnold D. Scott* - Senior Executive Vice Boston, MA 02107-9906
President, Director, and Secretary, MFS Investment
Management For general information, call toll free:
1-800-225-2606 any business day from 8 a.m. to
Jeffrey L. Shames* - Chairman, Chief Executive 8 p.m. Eastern time.
Officer, and Director, MFS Investment Management
For service to speech- or hearing-impaired, call
Elaine R. Smith - Independent Consultant toll free: 1-800-637-6576 any business day from
9 a.m. to 5 p.m. Eastern time. (To use this service,
David B. Stone - Chairman and Director, North your phone must be equipped with a
American Management Corp. (investment advisers) Telecommunications Device for the Deaf.)
INVESTMENT ADVISER For share prices, account balances, and exchanges,
Massachusetts Financial Services Company call toll free: 1-800-MFS-TALK (1-800-637-8255)
500 Boylston Street anytime from a touch-tone telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
DISTRIBUTOR www.mfs.com
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGERS
David A. Antonelli*
Christopher J. Burn*
Barry P. Dargan*
David R. Mannheim*
Frederick J. Simmons*
Treasurer
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
</TABLE>
*Affiliated with the Investment Adviser
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders,
In the coming year, MFS will celebrate its 75\t/\h/ anniversary. In 1924, our
Massachusetts Investors Trust, the nation's first mutual fund, opened to the
public and helped launch a revolution in investing that continues today. In
the 75 years since, MFS has grown with its investors not only through bear
markets, economic and political turmoil, wars, and oil shortages, but also
through long periods of growth and prosperity. We are very proud of our record
of investment management and service to shareholders throughout our history.
One of the best ways for us to serve our shareholders is to help them
understand some of the reasons behind developments in the investment markets
and, when necessary, to take a more cautious outlook. This is particularly
important during periods of market volatility such as we are experiencing this
year, when equity prices do not follow a straight course. In light of this
volatility, it is clear that equity valuations have risen to a point at which
stock prices have become vulnerable to changes in the investment environment
such as a slowing economy, earnings disappointments, and global economic and
political turmoil. While we continue to hold a favorable long-term outlook for
the equity markets, we also believe that the recent market correction was
overdue but was also a healthy near-term event that should rid the financial
system of excesses that have developed.
Currently, equity investors seem to be focused on the slowdown in corporate
earnings and, more recently, on the continuing uncertainty overseas,
particularly in Russia and some of the emerging markets. In the second
quarter, for example, average earnings growth for companies in the Standard &
Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index of common
stock total return performance, was about 3%, well below what people were
expecting a year ago. As a result of this and continuing concerns about Asia
and emerging markets, the stock markets pulled back from the record-high
levels set in mid-July. Although the U.S. stock market has responded
positively to reductions in interest rates by the Federal Reserve Board, the
market's retreat helped correct some -- but not all -- of the overvaluations
that had been building for some time. Prior to July, equity prices had been
rising without a corresponding increase in corporate earnings. As a result,
price-to-earnings (P/E) ratios, or the amount investors paid for stocks in
relation to companies' earnings per share, also went up. If this year's
downturn helps create more reasonable valuations, we believe it could provide
a sounder long-term foundation for the equity markets. On another positive
note, interest rates have begun to decline 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.
Internationally, the economic turmoil in Asia continues to be a concern to us,
while Russia is facing political and economic uncertainty and Latin American
economies are feeling substantial pressure. We believe the United States has
yet to see the full impact of this crisis. There have been brief periods of
improvement in a few countries and countries such as Japan and Brazil have
taken positive steps toward economic reform but, for the most part, most of
these economies are still very weak. At the same time, the Asian turmoil has
had the beneficial effect of moderating U.S. growth and keeping inflation in
check, which has helped establish a favorable interest-rate environment.
Countering the situation in Asia has been the growing strength of European
economies, although European equity markets have also seen some volatility
this year. But as these countries move toward economic union, they are
benefiting from a convergence of interest rates to lower levels, a rapid
expansion of manufacturing and service businesses, and an increasingly strong
consumer sector. This has helped American exporters offset some of their Asian
losses while providing investment opportunities in developed and emerging
European markets.
Given the uncertainty arising from these conflicting developments, we believe
that 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. This
includes portfolios that focus on bond and international investments as well
as on the U.S. stock market. At MFS, we also believe our decades-long
commitment to original, company-by-company research gives us an advantage by
helping us find companies that we think can keep growing or gain market share
during periods of turmoil. To help fulfill this commitment and to provide the
broadest possible coverage of industry sectors and individual companies, MFS
continues to increase its number of full-time research analysts, who
thoroughly investigate each company's earnings potential and position in its
industry as well as the overall prospects for that industry.
We also use active portfolio management on the fixed-income side, using 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.
As we have for 75 years, we will continue to apply this discipline of thorough,
bottom-up research to both the equity and fixed-income markets because we
believe it offers the best potential for providing favorable long-term
performance for our shareholders -- regardless of changes in the overall market
environment.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
October 14, 1998
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
MFS Asia Pacific Fund
Dear Shareholders,
The Fund commenced operations on October 9, 1997, and from that date through
September 30, 1998, Class A shares provided a total return of -34.82%, while
Class I shares returned -34.72%. These returns, which include the reinvestment
of any distributions but exclude the effects of any sales charges, compare to
a -36.68% return for the Morgan Stanley Capital International (MSCI) All
Country Asia Pacific Index, a broad, unmanaged index of equities from the
Asia/Pacific region.
The past several months have seen continued turbulence in Asian stock markets
as the economic effects of last year's collapses have washed through the
region. At the center of Asia's problems is the weakness of the Japanese
banking system, which has led to a severe credit crunch in Asia's largest
economy.
The world eagerly awaits the effect of the Japanese government's
recapitalization of its banks. This has been much talked about but, to date,
there has been virtual political paralysis. Until this situation is resolved,
credit contraction in Japan will continue, fueling the recession and further
pressuring Japan's Asian trading partners.
In light of the difficult conditions in Asia, the Fund has moved even further
into strong, defensive companies with net cash on their balance sheets
(shielding them from credit problems) and into businesses that we believe are
best resisting recession. Specifically, we have increased the Fund's weighting
in Japan, reduced weightings in Singapore and Hong Kong, and eliminated all
investments in Malaysia. While the Asian crisis has endured longer than most
observers had anticipated, we believe there are still high-quality companies
there that continue to create shareholder value.
The Fund's largest holding is Secom, a Japanese security company that has
shown steady growth despite economic difficulty in that country. Also in
Japan, Sony remains a globally strong company and is a core holding of the
Fund. In Hong Kong, Li & Fung, an export company, has weathered the economic
storm extremely well and is the Fund's top Hong Kong holding.
Respectfully,
/s/ Christopher J. Burn /s/ Barry P. Dargan
Christopher J. Burn Barry P. Dargan
Portfolio Manager Portfolio Manager
<PAGE>
MFS International Opportunities Fund
Dear Shareholders,
The Fund commenced operations on October 9, 1997, and from that date through
September 30, 1998, both Class A and Class I shares provided a total return of
- -5.80%. These returns, which include the reinvestment of any distributions but
exclude the effects of any sales charges, compare to a -0.45% return for the
MSCI Europe, Australia, Far East (EAFE) Index, a broad, unmanaged index of
non-U.S. equities.
The Fund seeks capital appreciation by investing in smaller-capitalization
companies that we believe can offer predictable growth. The Fund can invest up
to 35% of its assets in emerging market stocks, although our current weighting
there is lower.
Currently, the Fund is most heavily invested in European stocks, with
relatively light weightings in Asia and Latin America. Latin America exposure
is predominantly weighted towards telecommunications stocks such as Telebras.
In Asia, we are looking for investment opportunities in good companies in
countries whose economies we feel may have bottomed out after the economic
turmoil in the region.
In Europe, we have invested in service companies, such as SEMA, a provider of
information technology services. The company has solid earnings growth
prospects, despite recent weakness in its share price which we feel has made
the stock a good value.
IHC Caland is another interesting story, with strong management that has
delivered consistent earnings growth. The company is involved in offshore oil
equipment and manufactures dredging equipment. Its shares have been hurt by
weakness in oil services sector, but the company offers good long-term growth
prospects and is attractive now. Brunnel, a Dutch staffing company is another
active stock that has excellent future growth prospects.
Though the banking sector as a whole has been weak, the Fund has gotten good
performance from Allied Irish Bank, which has benefited from a strong retail
franchise in a booming Irish economy and from a reduction in interest rates
spurred by European monetary union.
Respectfully,
/s/ David A. Antonelli
David A. Antonelli
Portfolio Manager
MFS International Strategic Growth Fund
Dear Shareholders,
The Fund commenced operations on October 9, 1997, and from that date through
September 30, 1998, Class A shares provided a total return of -3.20% while
Class I shares returned -3.00%. These returns, which include the reinvestment
of any distributions but exclude the effects of any sales charges, compare to
a -0.45% return for the MSCI EAFE Index.
The Fund seeks capital appreciation by investing predominantly in non-U.S.
companies. Though we do have the ability to invest in U.S. companies, we'll
only do so if a company conducts the majority of its business outside the
United States. We look for global firms that we feel can sustain above-average
growth and that are also trading at attractive valuations. We employ a strict
bottom-up fundamental analysis of companies rather than top-down regional
allocations.
We have reduced the Fund's exposure in Latin America and, since the beginning
of the year, to some of its Asian holdings due to weakness in those areas.
Stocks that have held up well in the current volatility include Benckiser, a
Dutch consumer staples company, and Next, a British retailer we purchased on
what we perceived to be a depressed valuation in spite of good growth
prospects. The Fund is underweighted in bank stocks, though we have seen good
performance in retail banks, as opposed to the big-name global investment
banks. We also have found attractive stocks in the European defense industry,
such as British Aerospace, Thomson CSF, and Saab Aerospace.
One of the Fund's more interesting top holdings is Olympus Optical, a Japanese
company that is the global leader in providing endoscopes to the medical
market, with about a 70% market share.
Respectfully,
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
MFS International Value Fund
Dear Shareholders,
The Fund commenced operations on October 9, 1997, and from that date through
September 30, 1998, both Class A and Class I shares provided a total return of
4.70%. These returns, which include the reinvestment of any distributions but
exclude the effects of any sales charges, compare to a -0.45% return for the
MSCI EAFE Index.
The Fund continues to favor European equities because we believe they offer
good growth prospects at reasonable valuations. We are continuing to monitor
the situation in Southeast Asia, hoping that the current turmoil will present
buying opportunities. However, we believe it is still somewhat premature to
make new investments there.
In our view, the long-term global environment for equities, underpinned by
prospects for low inflation and low interest rates, remains favorable.
Earnings continue to grow and, while they have slowed in the United States,
they are still high by historic standards and are accelerating in a number of
European markets. In Japan, until there is evidence of the government's
altering its fiscal and monetary policies to stimulate the domestic economy,
most of the opportunities will remain in the strongest, most globally
competitive multinationals.
The Fund has significant holdings in consumer staples, financial services, and
utilities and communications companies. Concern about the effects of Southeast
Asian problems spreading to the rest of the world governs our choice of
industries, and we view these sectors as fertile ground for steadily earning
companies selling at reasonable valuations.
Respectfully,
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are only through the end of the period of the report as stated on the cover.
The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
PERFORMANCE SUMMARY
Currently, each Fund offers only Class A and Class I shares, which are
available for purchase at net asset value only by certain retirement plans
established for the benefit of employees of MFS and its affiliates and certain
of their family members who are also residents of the Commonwealth of
Massachusetts.
The following information illustrates the historical performance of each
Fund's Class A shares in comparison to various market indicators. Performance
results reflect the percentage change in net asset value, including
reinvestment of dividends. Benchmark comparisons are unmanaged and do not
reflect any fees or expenses. The performance of other share classes will be
greater than or less than the line shown. (See Notes to Performance Summary
for more information.) It is not possible to invest directly in an index.
MFS ASIA PACIFIC FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from November 1, 1997, through September 30, 1998)
MFS MSCI Consumer
Asia Pacific All Country Price Index
Fund - Class A Asia Pacific Index - U.S.
-----------------------------------------------------------
11/97 $10,000 $10,000 $10,000
9/98 6,518 7,228 10,124
TOTAL RETURNS THROUGH SEPTEMBER 30, 1998
CLASS A
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return -34.82%
- -------------------------------------------------------------------------------
SEC Results -37.92%
- -------------------------------------------------------------------------------
CLASS I
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return -34.72%
- -------------------------------------------------------------------------------
COMPARATIVE INDICES
10 Years/Life
- -------------------------------------------------------------------------------
MSCI All Country Asia Pacific Index** -36.68%
- -------------------------------------------------------------------------------
Consumer Price Index+# + 1.24%
- -------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1998.
** Source: Lipper Analytical Services, Inc. "Life" refers to the period from
November 1, 1997, through September 30, 1998.
+ Source: CDA/Wiesenberger. "Life" refers to the period from November 1, 1997,
through September 30, 1998.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
MFS INTERNATIONAL OPPORTUNITIES FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from November 1, 1997, through September 30, 1998)
MFS Consumer
International MSCI Price
Opportunities EAFE Index
Fund - Class A Index - U.S.
-----------------------------------------------------
11/97 $10.000 $10,000 $10,000
9/98 9,420 9,955 10,124
TOTAL RETURNS THROUGH SEPTEMBER 30, 1998
CLASS A
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return - 5.80%
- -------------------------------------------------------------------------------
SEC Results -10.27%
- -------------------------------------------------------------------------------
CLASS I
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return - 5.80%
- -------------------------------------------------------------------------------
COMPARATIVE INDICES
10 Years/Life
- -------------------------------------------------------------------------------
MSCI EAFE Index+ - 0.45%
- -------------------------------------------------------------------------------
Consumer Price Index+# + 1.24%
- -------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1998.
+ Source: CDA/Wiesenberger. "Life" refers to the period from November 1, 1997,
through September 30, 1998.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
MFS INTERNATIONAL STRATEGIC GROWTH FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from November 1, 1997, through September 30, 1998)
MFS Consumer
International MSCI Price
Strategic Growth EAFE Index
Fund - Class A Index - U.S.
-----------------------------------------------------
11/97 $10,000 $10,000 $10,000
9/98 9,680 9,955 10,124
TOTAL RETURNS THROUGH SEPTEMBER 30, 1998
CLASS A
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return - 3.20%
- -------------------------------------------------------------------------------
SEC Results - 7.80%
- -------------------------------------------------------------------------------
CLASS I
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return - 3.00%
- -------------------------------------------------------------------------------
COMPARATIVE INDICES
10 Years/Life
- -------------------------------------------------------------------------------
MSCI EAFE Index+ - 0.45%
- -------------------------------------------------------------------------------
Consumer Price Index+# + 1.24%
- -------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1998.
+ Source: CDA/Wiesenberger. "Life" refers to the period from November 1, 1997,
through September 30, 1998.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
MFS INTERNATIONAL VALUE FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from November 1, 1997, through September 30, 1998)
MFS Consumer
International MSCI Price
Value EAFE Index
Fund - Class A Index - U.S.
-----------------------------------------------------
11/97 $10,000 $10,000 $10,000
9/98 10,470 9,955 10,124
TOTAL RETURNS THROUGH SEPTEMBER 30, 1998
CLASS A
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return + 4.70%
- -------------------------------------------------------------------------------
SEC Results - 0.27%
- -------------------------------------------------------------------------------
CLASS I
10 Years/Life*
- -------------------------------------------------------------------------------
Total Return + 4.70%
- -------------------------------------------------------------------------------
COMPARATIVE INDICES
10 Years/Life
- -------------------------------------------------------------------------------
MSCI EAFE Index+ - 0.45%
- -------------------------------------------------------------------------------
Consumer Price Index+# + 1.24%
- -------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1998.
+ Source: CDA/Wiesenberger. "Life" refers to the period from November 1, 1997,
through September 30, 1998.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable 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 include the reinvestment of dividends and capital gains.
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.
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.
<PAGE>
PORTFOLIO OF INVESTMENTS - September 30, 1998
<TABLE>
MFS ASIA PACIFIC FUND
Stocks - 89.5%
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 86.5%
Australia - 6.2%
Australia & New Zealand Banking Group Ltd. (Banks and
Credit Cos.)* 2,470 $ 13,219
Fletcher Challenge Paper Co., ADR (Paper Products) 2,400 11,700
Mayne Nickless Ltd. (Business Services)* 2,038 10,886
QBE Insurance Group Ltd. (Insurance) 15,200 55,480
Seven Network Ltd. (Entertainment) 5,000 14,244
-----------
$ 105,529
- --------------------------------------------------------------------------------------------------------
Canada - 0.6%
Bell Canada International, Inc. (Telecommunications)* 1,100 $ 10,278
- --------------------------------------------------------------------------------------------------------
China - 1.3%
Guangshen Railway Ltd. (Railroads) 1,000 $ 6,688
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 1,500 15,375
-----------
$ 22,063
- --------------------------------------------------------------------------------------------------------
Hong Kong - 5.5%
Hong Kong Electric Holdings Ltd. (Utilities -
Electric) 5,000 $ 17,197
Hutchison Whampoa Ltd. (Conglomerate) 4,000 21,062
Li & Fung Ltd. (Wholesale) 34,000 54,849
-----------
$ 93,108
- --------------------------------------------------------------------------------------------------------
India - 1.4%
Mahanagar Telephone Nigam Ltd., GDR
(Telecommunications)## 2,000 $ 23,750
- --------------------------------------------------------------------------------------------------------
Japan - 60.6%
Aeon Credit Service Co. Ltd. (Financial Services) 480 $ 21,796
AFLAC, Inc. (Insurance) 2,500 71,406
Bridgestone Corp. (Tire and Rubber) 2,000 40,346
Canon, Inc. (Special Products and Services) 2,000 40,640
Fujimi, Inc. (Electronics) 500 14,121
Futaba Corp. (Electronics) 1,000 35,945
Keyence Corp. (Electronics) 300 28,763
Kinki Coca-Cola Bottling Co. (Beverages) 3,000 32,350
Kirin Beverage Corp. (Beverages) 2,000 31,617
Megachips Corp. (Electronics)* 1,000 26,042
Meitec Corp. (Computer Software - Systems) 1,000 21,640
Nippon Broadcasting System Co. (Broadcasting) 1,000 34,771
Nippon Telephone & Telegraph Co. (Utilities -
Telephone) 8 58,392
NTT Data Corp. (Telecommunications) 10 36,532
Olympus Optical Co. (Conglomerate) 6,000 65,977
Rohm Co. (Electronics) 1,000 95,364
Secom Co. (Consumer Goods and Services) 2,000 124,707
Shohkoh Fund & Co. Ltd. (Financial Services) 100 25,638
Sony Corp. (Electronics) 700 48,731
Sony Corp., ADR (Electronics) 400 27,500
Takeda Chemical Industries Co. (Medical and Health
Products) 1,000 26,775
TDK Corp., ADR (Electronics) 720 47,880
Terumo Corp. (Pharmaceuticals) 2,000 41,153
Ushio, Inc. (Electronics) 3,000 26,167
-----------
$ 1,024,253
- --------------------------------------------------------------------------------------------------------
Malaysia - 0.7%
Tanjong PLC (Entertainment)+ 15,000 $ 11,160
- --------------------------------------------------------------------------------------------------------
New Zealand - 1.4%
Telecom Corp. of New Zealand Ltd. (Utilities -
Telephone) 800 $ 24,100
- --------------------------------------------------------------------------------------------------------
Philippines - 1.0%
SM Prime Holding, Inc. (Real Estate) 139,000 $ 17,255
- --------------------------------------------------------------------------------------------------------
Singapore - 5.2%
Hong Leong Finance Ltd. (Finance)+ 37,000 $ 22,358
Natsteel Electronics Ltd. (Electronics) 20,000 43,839
Singapore Press Holdings Ltd. (Printing & Publishing) 2,552 21,166
-----------
$ 87,363
- --------------------------------------------------------------------------------------------------------
South Korea - 1.3%
Pohang Iron & Steel Co. Ltd., ADR (Steel) 1,550 $ 21,409
- --------------------------------------------------------------------------------------------------------
United Kingdom - 1.3%
HSBC Holdings PLC (Financial Services)* 1,200 $ 21,991
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 1,462,259
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 3.0%
Electronics - 0.8%
Amkor Technology, Inc.* 2,900 $ 14,137
- --------------------------------------------------------------------------------------------------------
Financial Institutions - 0.8%
Associates First Capital Corp., "A" 200 $ 13,050
- --------------------------------------------------------------------------------------------------------
Insurance - 1.0%
American International Group, Inc. 225 $ 17,325
- --------------------------------------------------------------------------------------------------------
Telecommunications - 0.4%
Global TeleSystems Group, Inc.* 200 $ 6,750
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 51,262
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,850,141) $ 1,513,521
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 6.2%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 10/01/98, at Amortized
Cost $ 105 $ 105,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,955,141) $ 1,618,521
- --------------------------------------------------------------------------------------------------------
Securities Sold Short - (13.2)%
- --------------------------------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------------------------------
Hong Kong - (8.4)%
Bank of East Asia (Banks and Credit Cos.) (56,170) $ (79,378)
Heng Seng Bank (Banks and Credit Cos.) (10,000) (63,238)
--------- -----------
(66,170) $ (142,616)
- --------------------------------------------------------------------------------------------------------
Japan - (3.3)%
All Nippon Airways (Airlines) (3,000) $ (9,683)
Bank of Tokyo Mitsubishi Ltd., ADR (Banks and Credit
Cos.) (2,200) (14,438)
Dai-Ichi Kangyo Bank Ltd. (Banks and Credit Cos.) (2,000) (8,377)
Fuji Bank (Banks and Credit Cos.) (4,000) (8,069)
Industrial Bank of Japan (Banks and Credit Cos.) (2,000) (7,336)
Sakura Bank Ltd. (Banks and Credit Cos.) (5,000) (7,336)
--------- -----------
(18,200) $ (55,239)
- --------------------------------------------------------------------------------------------------------
Malaysia - (0.4)%
Malayan Banking Berhad (Banks and Credit Cos.) (9,400) $ (7,407)
- --------------------------------------------------------------------------------------------------------
Singapore - (1.1)%
Wing Tai Holdings (Holding Company) (50,000) $ (18,513)
- --------------------------------------------------------------------------------------------------------
Total Securities Sold Short (Proceeds Received, $210,222) $ (223,775)
- --------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 17.5% 295,503
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 1,690,249
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF Investments - September 30, 1998
<TABLE>
MFS INTERNATIONAL OPPORTUNITIES FUND
Stocks - 87.1%
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 84.6%
Australia - 1.5%
QBE Insurance Group Ltd. (Insurance) 5,133 $ 18,736
- --------------------------------------------------------------------------------------------------------
Brazil - 0.8%
Telecomunicacoes Brasileiras S.A., ADR
(Telecommunications) 145 $ 10,005
- --------------------------------------------------------------------------------------------------------
Canada - 2.5%
Canadian National Railway Co. (Railroads) 695 $ 31,014
- --------------------------------------------------------------------------------------------------------
Finland - 8.1%
Helsingin Puhelin Oy (Telecommunications) 600 $ 26,942
Konecranes Interna (Electronics) 300 11,823
Nokia AB Oy (Telecommunications) 150 11,935
Pohjola Insurance Group (Insurance) 560 22,168
Sampo (Electronics) 430 12,288
Tieto Corp. (Computer Software - Systems) 540 17,442
-----------
$ 102,598
- --------------------------------------------------------------------------------------------------------
France - 8.5%
Alcatel Alsthom Compagnie (Telecommunications) 95 $ 8,458
Sanofi S.A. (Medical and Health Products) 125 18,415
Sita Soc Industries (Hazardous Waste) 40 8,804
Television Francaise (Entertainment) 65 11,156
Thomson CSF (Aerospace and Defense) 550 16,815
Total S.A., "B" (Oils) 190 23,982
Union des Assurances Federales S.A. (Insurance) 170 19,756
-----------
$ 107,386
- --------------------------------------------------------------------------------------------------------
Germany - 5.5%
Bayer Hypo Vereins (Banks and Credit Cos.) 200 $ 14,749
Henkel KGaA (Chemicals) 190 14,416
Hoechst AG (Chemicals) 345 13,476
Mannesmann AG (Conglomerate) 285 26,144
Wella AG (Consumer Goods and Services) 2 1,415
-----------
$ 70,200
- --------------------------------------------------------------------------------------------------------
Greece - 0.6%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 294 $ 7,060
- --------------------------------------------------------------------------------------------------------
Ireland - 5.3%
Allied Irish Banks PLC (Banks and Credit Cos.) 3,006 $ 44,606
Anglo Irish Bank PLC (Banks and Credit Cos.)* 9,284 22,076
-----------
$ 66,682
- --------------------------------------------------------------------------------------------------------
Italy - 6.1%
Banca Carige S.p.A. (Banks and Credit Cos.) 1,420 $ 12,488
Industrie Natuzzi S.p.A., ADR (Consumer Goods and
Services) 252 4,977
Istituto Mobiliare Italiano S.p.A. (Banks and Credit
Cos.) 1,600 21,155
Mediaset S.p.A. (Entertainment) 4,050 27,205
Telecom Italia Mobile Di Risp S.p.A
(Telecommunications)* 1,700 11,729
-----------
$ 77,554
- --------------------------------------------------------------------------------------------------------
Japan - 5.8%
Canon, Inc., ADR (Special Products and Services) 400 $ 7,850
Fujimi, Inc. (Electronics) 400 11,297
Kinki Coca-Cola Bottling Co. (Beverages) 1,000 10,784
Olympus Optical Co. (Conglomerate) 2,000 21,992
Sony Corp., ADR (Electronics) 193 13,269
Ushio, Inc. (Electronics) 1,000 8,722
-----------
$ 73,914
- --------------------------------------------------------------------------------------------------------
Netherlands - 14.0%
Akzo Nobel N.V. (Chemicals) 626 $ 22,294
Benckiser N.V., "B" (Consumer Goods and Services) 390 19,486
Brunel International N.V. (Human Resources)* 870 27,238
Fugro N.V. (Engineering)* 812 25,595
Hunter Douglas N.V., ADR (Consumer Goods and Services)* 415 14,096
IHC Caland N.V. (Marine Equipment) 446 20,862
ING Groep N.V. (Financial Services) 269 12,140
Koninklijke Ahold N.V. (Supermarkets) 300 8,978
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services) 1,423 26,474
-----------
$ 177,163
- --------------------------------------------------------------------------------------------------------
Portugal - 0.7%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 537 $ 8,735
- --------------------------------------------------------------------------------------------------------
Spain - 0.2%
Telefonica de Espana S.A., ADR (Telecommunications) 25 $ 2,699
- --------------------------------------------------------------------------------------------------------
Sweden - 3.1%
Astra AB (Pharmaceuticals) 400 $ 6,591
Ericsson LM, "B" (Telecommunications) 340 6,428
Securitas AB (Security Services) 275 14,121
Skandia Forsakrings AB (Insurance) 75 977
Volvo AB (Automotive) 450 11,037
-----------
$ 39,154
- --------------------------------------------------------------------------------------------------------
Switzerland - 2.5%
Barry Callebaut AG (Food and Beverage Products)* 45 $ 10,286
Novartis AG (Medical and Health Products) 8 12,881
UBS AG (Banks and Credit Cos.) 43 8,425
-----------
$ 31,592
- --------------------------------------------------------------------------------------------------------
United Kingdom - 19.4%
ASDA Group PLC (Supermarkets) 4,147 $ 12,098
British Aerospace PLC (Aerospace and Defense)* 4,962 30,088
British Petroleum PLC (Oils)* 1,244 19,016
Glaxo Wellcome PLC, ADR (Medical and Health Products) 330 18,851
Kwik-Fit Holdings PLC (Automotive Repair Centers) 1,804 12,502
Lloyds TSB Group PLC (Banks and Credit Cos.) 550 6,156
LucasVarity PLC (Automotive) 8,404 25,836
Next PLC (Stores) 3,500 24,968
SEMA Group PLC (Computer Software - Systems) 2,850 28,221
Taylor Nelson Sofres PLC (Market Research) 15,700 21,200
Tomkins PLC (Conglomerate) 4,100 19,220
Williams PLC (Conglomerate) 2,635 15,418
Williams PLC, "B" (Conglomerate)* 2,530 1,418
Zeneca Group PLC (Medical and Health Products) 300 10,599
-----------
$ 245,591
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 1,070,083
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 2.5%
Electronics - 1.3%
AMP, Inc. 475 $ 16,981
- --------------------------------------------------------------------------------------------------------
Oils - 1.2%
Amoco Corp. 275 $ 14,816
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 31,797
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,213,459) $ 1,101,880
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 9.1%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn., due 10/01/98, at
Amortized Cost $ 115 $ 115,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,328,459) $ 1,216,880
Other Assets, Less Liabilities - 3.8% 48,394
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 1,265,274
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS - September 30, 1998
<TABLE>
MFS INTERNATIONAL STRATEGIC GROWTH FUND
Stocks - 89.2%
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 86.8%
Australia - 3.5%
QBE Insurance Group Ltd. (Insurance) 6,386 $ 23,309
Seven Network Ltd. (Entertainment) 3,700 10,541
-----------
$ 33,850
- --------------------------------------------------------------------------------------------------------
Brazil - 0.5%
Companhia Electricas est Rio de Janeiro (Utilities -
Electric)* 14,500 $ 5,138
- --------------------------------------------------------------------------------------------------------
Canada - 3.6%
Canadian National Railway Co. (Railroads) 650 $ 29,006
Legacy Hotel Real Estate Investment Trust (Real Estate
Investment Trust)*## 400 1,495
T. Eaton Co. Ltd. (Stores)* 900 4,130
-----------
$ 34,631
- --------------------------------------------------------------------------------------------------------
Chile - 0.8%
Chilectra S.A., ADR (Utilities - Electric) 475 $ 7,776
- --------------------------------------------------------------------------------------------------------
Finland - 4.9%
Helsingin Puhelin Oyj (Telecommunications) 315 $ 14,145
Huhtamaki Oy Group (Conglomerate) 150 4,638
Pohjola Insurance Group (Insurance) 400 15,835
Tieto Corp. (Computer Software - Systems) 395 12,758
-----------
$ 47,376
- --------------------------------------------------------------------------------------------------------
France - 7.6%
Television Francaise (Entertainment) 85 $ 14,589
Thomson CSF (Aerospace and Defense) 600 18,343
Total S.A., "B" (Oils) 170 21,458
Union des Assurances Federales S.A. (Insurance) 165 19,175
-----------
$ 73,565
- --------------------------------------------------------------------------------------------------------
Germany - 2.7%
Henkel KGaA (Chemicals) 260 $ 19,727
Wella AG (Consumer Goods and Services) 9 6,367
-----------
$ 26,094
- --------------------------------------------------------------------------------------------------------
Greece - 1.0%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 399 $ 9,581
- --------------------------------------------------------------------------------------------------------
Ireland - 3.7%
Allied Irish Banks PLC (Banks and Credit Cos.) 750 $ 11,129
Anglo Irish Bank PLC (Banks and Credit Cos.)* 10,400 24,730
-----------
$ 35,859
- --------------------------------------------------------------------------------------------------------
Italy - 5.1%
Banca Carige S.p.A. (Banks and Credit Cos.) 1,400 $ 12,312
ERG S.p.A. (Oils) 2,600 9,462
Mediaset S.p.A. (Entertainment) 2,640 17,733
Telecom Italia S.p.A., Saving Shares (Telecommunications) 3,000 9,662
-----------
$ 49,169
- --------------------------------------------------------------------------------------------------------
Japan - 11.2%
Canon, Inc., ADR (Special Products and Services) 900 $ 17,663
Kinki Coca-Cola Bottling Co. (Beverages) 1,000 10,783
Kirin Beverage Corp. (Beverages) 1,000 15,808
NTT Data Corp. (Telecommunications) 3 10,960
Olympus Optical Co. (Conglomerate) 2,000 21,992
Sony Corp. (Electronics) 100 $ 6,962
Sony Corp., ADR (Electronics) 215 14,781
Tokyo Broadcasting System, Inc. (Entertainment) 1,000 9,038
-----------
$ 107,987
- --------------------------------------------------------------------------------------------------------
Malaysia - 0.2%
Tanjong PLC (Entertainment)+ 3,000 $ 2,232
- --------------------------------------------------------------------------------------------------------
Netherlands - 12.2%
Akzo Nobel N.V. (Chemicals) 840 $ 29,915
Benckiser N.V., "B" (Consumer Goods and Services) 650 32,478
Brunel International N.V. (Human Resources)* 200 6,262
Fugro N.V. (Engineering)* 231 7,281
IHC Caland N.V. (Marine Equipment) 158 7,391
ING Groep N.V. (Financial Services) 400 18,051
Koninklijke Ahold N.V. (Supermarkets) 400 11,970
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services) 230 4,279
-----------
$ 117,627
- --------------------------------------------------------------------------------------------------------
Norway - 0.8%
Storebrand Asa (Insurance) 1,100 $ 7,598
- --------------------------------------------------------------------------------------------------------
Portugal - 2.3%
Banco Espirito Santo e Comercial de Lisboa S.A. (Banks
and Credit Cos.) 68 $ 1,867
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 1,232 20,040
-----------
$ 21,907
- --------------------------------------------------------------------------------------------------------
Sweden - 5.4%
Astra AB (Pharmaceuticals) 1,050 $ 17,302
Saab AB, "B" (Aerospace)* 2,525 21,772
Skandia Forsakrings AB (Insurance) 100 1,303
Volvo AB (Automotive) 480 11,772
-----------
$ 52,149
- --------------------------------------------------------------------------------------------------------
Switzerland - 2.2%
Barry Callebaut AG (Food and Beverage Products)* 42 $ 9,600
Novartis AG (Medical and Health Products) 7 11,271
-----------
$ 20,871
- --------------------------------------------------------------------------------------------------------
United Kingdom - 19.1%
ASDA Group PLC (Supermarkets) 6,000 $ 17,503
Avis Europe PLC (Auto Rental)## 3,000 12,586
British Aerospace PLC (Aerospace and Defense)* 6,268 38,007
British Petroleum PLC (Oils)* 1,617 24,718
Diageo PLC (Food and Beverage Products) 729 6,934
ICON PLC, ADR (Biotechnology)* 115 3,752
Lloyds TSB Group PLC (Banks and Credit Cos.) 859 9,615
LucasVarity PLC (Automotive) 7,700 23,672
Next PLC (Stores) 3,850 27,465
Taylor Nelson Sofres PLC (Market Research) 1,600 2,160
Tomkins PLC (Conglomerate) 3,950 18,517
-----------
$ 184,929
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 838,339
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 2.4%
Business Services - 1.6%
Galileo International, Inc. 400 $ 15,100
- --------------------------------------------------------------------------------------------------------
Oils - 0.8%
Amoco Corp. 150 $ 8,081
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 23,181
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $913,345) $ 861,520
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 9.8%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 10/01/98, at Amortized Cost $ 95 $ 95,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,008,345) $ 956,520
Other Assets, Less Liabilities - 1.0% 9,200
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 965,720
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS - September 30, 1998
<TABLE>
MFS INTERNATIONAL VALUE FUND
Stocks - 89.5%
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 75.7%
Australia - 2.4%
QBE Insurance Group Ltd. (Insurance) 3,542 $ 12,928
Seven Network Ltd. (Entertainment) 4,736 13,492
-----------
$ 26,420
- --------------------------------------------------------------------------------------------------------
Austria - 0.6%
Austria Tabak AG (Tobacco) 108 $ 6,389
- --------------------------------------------------------------------------------------------------------
Canada - 1.3%
Canadian National Railway Co. (Railroads) 323 $ 14,414
- --------------------------------------------------------------------------------------------------------
Chile - 0.2%
Enersis S.A., ADR (Utilities - Electric) 100 $ 2,038
- --------------------------------------------------------------------------------------------------------
Finland - 0.9%
Helsingin Puhelin Oyj (Telecommunications) 215 $ 9,655
- --------------------------------------------------------------------------------------------------------
France - 14.8%
Alcatel Alsthom Compagnie (Telecommunications) 161 $ 14,335
Pin Printemps Redo (Real Estate Investment Trust) 140 20,274
Sanofi S.A. (Medical and Health Products) 129 19,004
SEITA (Tobacco) 672 38,927
Television Francaise (Entertainment) 108 18,536
Thomson CSF (Aerospace and Defense) 215 6,573
Total S.A., ADR (Oils) 398 24,999
Union des Assurances Federales S.A. (Insurance) 188 21,848
-----------
$ 164,496
- --------------------------------------------------------------------------------------------------------
Germany - 4.3%
Henkel KGaA (Chemicals) 323 $ 24,507
Mannesmann AG (Conglomerate) 161 14,769
Wella AG (Consumer Goods and Services)* 13 9,197
-----------
$ 48,473
- --------------------------------------------------------------------------------------------------------
Greece - 1.0%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 474 $ 11,382
- --------------------------------------------------------------------------------------------------------
Ireland - 0.5%
Allied Irish Banks PLC (Banks and Credit Cos.) 400 $ 5,936
- --------------------------------------------------------------------------------------------------------
Italy - 3.8%
Instituto Nazionale delle Assicurazioni (Insurance) 6,452 $ 16,436
Istituto Mobiliare Italiano S.p.A. (Banks and Credit
Cos.) 430 5,685
Telecom Italia S.p.A. (Telecommunications)* 4,302 20,600
-----------
$ 42,721
- --------------------------------------------------------------------------------------------------------
Japan - 7.5%
Canon, Inc. (Special Products and Services) 1,000 $ 20,320
Olympus Optical Co. (Conglomerate) 1,000 10,996
Sony Corp., ADR (Electronics) 200 13,750
Terumo Corp. (Pharmaceuticals) 1,000 20,577
Tokyo Broadcasting System, Inc. (Entertainment) 1,000 9,037
Ushio, Inc. (Electronics) 1,000 8,722
-----------
$ 83,402
- --------------------------------------------------------------------------------------------------------
Malaysia - 0.1%
Tanjong PLC (Entertainment)+ 1,000 $ 744
- --------------------------------------------------------------------------------------------------------
Netherlands - 10.3%
Akzo Nobel N.V. (Chemicals) 516 $ 18,377
Benckiser N.V. "B" (Consumer Goods and Services) 215 10,743
Equant N.V. (Telecommunications)* 100 4,600
Hunter Douglas N.V., ADR (Consumer Goods and Services)* 500 16,983
IHC Caland N.V. (Marine Equipment)* 275 12,863
ING Groep N.V. (Financial Services)* 216 9,748
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services)* 24 446
Royal Dutch Petroleum Co., ADR (Oils) 430 20,479
Wolters Kluwer N.V. (Publishing)* 108 20,764
-----------
$ 115,003
- --------------------------------------------------------------------------------------------------------
Portugal - 2.9%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 1,505 $ 24,481
Elec de Portugal (Utilities - Electric) 323 7,441
-----------
$ 31,922
- --------------------------------------------------------------------------------------------------------
Spain - 1.4%
Telefonica de Espana (Utilities - Telephone) 430 $ 15,717
- --------------------------------------------------------------------------------------------------------
Sweden - 4.5%
Astra AB (Pharmaceuticals) 1,291 $ 21,273
Saab AB, "B" (Aerospace and Defense)* 1,372 11,830
Skandia Forsakrings AB (Insurance) 500 6,515
Volvo AB (Automotive) 430 10,546
-----------
$ 50,164
- --------------------------------------------------------------------------------------------------------
Switzerland - 3.0%
Nestle S.A. (Food and Beverage Products) 15 $ 29,976
UBS AG (Banks and Credit Cos.)* 18 3,527
-----------
$ 33,503
- --------------------------------------------------------------------------------------------------------
United Kingdom - 16.2%
Allied Zurich (Insurance)* 350 $ 3,579
ASDA Group PLC (Supermarkets) 3,978 11,604
Avis Europe PLC (Auto Rental)## 5,808 24,366
British Aerospace PLC (Aerospace and Defense)* 3,013 18,270
British America Tobacco (Tobacco)* 375 2,791
Compass Group (Consumer Goods & Services) 3,227 30,310
Gallaher Group PLC (Tobacco) 4,302 31,310
LucasVarity PLC (Automotive) 6,000 18,446
Next PLC (Stores) 800 5,707
Tomkins PLC (Conglomerate)* 2,849 13,356
Williams PLC (Conglomerate) 3,275 19,163
Williams PLC "B" (Conglomerate) 3,300 1,850
-----------
$ 180,752
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 843,131
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 13.8%
Construction Services - 2.3%
Martin Marietta Materials, Inc. 592 $ 25,567
- --------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 2.7%
Philip Morris Cos., Inc. 646 $ 29,756
- --------------------------------------------------------------------------------------------------------
Electronics - 1.0%
AMP, Inc. 323 $ 11,547
- --------------------------------------------------------------------------------------------------------
Insurance - 3.2%
ReliaStar Financial Corp. 323 $ 12,597
Transamerica Corp. 215 22,790
-----------
$ 35,387
- --------------------------------------------------------------------------------------------------------
Special Products and Services - 2.8%
McDonalds Corp. 215 $ 12,833
Xerox Corp. 215 18,221
-----------
$ 31,054
- --------------------------------------------------------------------------------------------------------
Stores - 0.7%
Rite Aid Corp. 215 $ 7,633
- --------------------------------------------------------------------------------------------------------
Supermarkets - 0.5%
Albertsons, Inc. 107 $ 5,791
- --------------------------------------------------------------------------------------------------------
Telecommunications - 0.6%
Sprint Corp. 100 $ 7,200
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 153,935
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $971,358) $ 997,066
- --------------------------------------------------------------------------------------------------------
Preferred Stock - 1.6%
- --------------------------------------------------------------------------------------------------------
Germany - 1.6%
Prosieben Media AG (Entertainment) (Identified Cost, $17,037) 323 $ 17,778
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 6.7%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 10/01/98, at Amortized Cost $ 75 $ 75,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,063,395) $ 1,089,844
Other Assets, Less Liabilities - 2.2% 24,499
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 1,114,343
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
Statements of Assets and Liabilities
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ASIA INTERNATIONAL
PACIFIC OPPORTUNITIES
SEPTEMBER 30, 1998 FUND FUND
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $1,955,141 and
$1,328,459, respectively) $1,618,521 $1,216,880
Cash 19,539 7,422
Foreign currency, at value (identified cost, $14,610 and
$3,835, respectively) 12,499 3,902
Receivable for Fund shares sold 50 --
Deposits with brokers for securities sold short 298,010 --
Receivable for investments sold 1,700 51,636
Net receivable for forward foreign currency exchange
contracts to sell 4,045 --
Interest and dividends receivable 3,123 3,577
Other assets 12 1,906
---------- ----------
Total assets $1,957,499 $1,285,323
---------- ----------
Liabilities:
Securities sold short, at value (proceeds received, $210,222
and $0, respectively)
$ 223,775 $ --
Payable for investments purchased 38,030 18,882
Net payable for forward foreign currency exchange contracts
to sell -- 997
Dividends payable on securities sold short 3,562 --
Payable to affiliates -
Shareholder servicing agent fee 5 --
Administrative fee 23 --
Accrued expenses and other liabilities 1,855 170
---------- ----------
Total liabilities $ 267,250 $ 20,049
---------- ----------
Net assets $1,690,249 $1,265,274
========== ==========
Net assets consist of:
Paid-in-capital $2,508,020 $1,390,147
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (352,965) (112,438)
Accumulated net realized loss on investments and foreign
currency transactions (481,741) (16,602)
Accumulated undistributed net investment income 16,935 4,167
---------- ----------
Total $1,690,249 $1,265,274
========== ==========
Shares of beneficial interest outstanding:
Class A 206,690 60,806
Class I 52,399 73,457
---------- ----------
Total shares of beneficial interest outstanding 259,089 134,263
========== ==========
Net assets:
Class A $1,348,208 $ 573,052
Class I 342,041 692,222
---------- ----------
Total net assets $1,690,249 $1,265,274
========== ==========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $6.52 $9.42
===== =====
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $6.53 $9.42
===== =====
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Assets and Liabilities - continued
<CAPTION>
- --------------------------------------------------------------------------------------------------------
INTERNATIONAL
STRATEGIC INTERNATIONAL
GROWTH VALUE
SEPTEMBER 30, 1998 FUND FUND
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $1,008,345 and
$1,063,395, respectively) $956,520 $1,089,844
Cash 1,986 3,395
Foreign currency, at value (identified cost, $3,547 and $2,108,
respectively) 3,480 1,984
Receivable for investments sold 5,667 15,305
Interest and dividends receivable 3,372 3,862
Other assets 3,012 --
-------- ----------
Total assets $974,037 $1,114,390
-------- ----------
Liabilities:
Payable for investments purchased $ 7,657 $ --
Net payable for forward foreign currency exchange contracts
subject to master netting agreements 499 --
Accrued expenses and other liabilities 161 47
-------- ----------
Total liabilities $ 8,317 $ 47
-------- ----------
Net assets $965,720 $1,114,343
======== ==========
Net assets consist of:
Paid-in-capital $984,942 $1,068,446
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies (52,257) 26,439
Accumulated undistributed net realized gain on investments and
foreign currency transactions 31,247 8,745
Accumulated undistributed net investment income 1,788 10,713
-------- ----------
Total $965,720 $1,114,343
======== ==========
Shares of beneficial interest outstanding:
Class A 9,282 95,755
Class I 90,307 10,745
-------- ----------
Total shares of beneficial interest outstanding 99,589 106,500
======== ==========
Net assets:
Class A $ 89,829 $1,001,855
Class I 875,891 112,488
-------- ----------
Total net assets $965,720 $1,114,343
======== ==========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $9.68 $10.46
===== ======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $9.70 $10.47
===== ======
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Operations
<CAPTION>
- ------------------------------------------------------------------------------------------------
ASIA INTERNATIONAL
PACIFIC OPPORTUNITIES
PERIOD ENDED SEPTEMBER 30, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income:
Income -
Dividends $ 31,838 $ 25,775
Interest 12,991 6,515
Foreign taxes withheld (3,051) (2,782)
--------- ---------
Total investment income $ 41,778 $ 29,508
--------- ---------
Expenses -
Management fee $ 18,922 $ 12,280
Shareholder servicing agent fee 2,286 1,320
Distribution and service fees (Class A) 7,802 3,300
Administrative fee 220 154
Custodian fee 4,950 7,404
Interest expense 1,015 --
Printing 827 3,628
Postage 184 153
Auditing fees 6,505 6,305
Legal fees 1,884 2,524
Registration fees 4,875 4,875
Dividend expense on securities sold short 3,562 --
Miscellaneous 255 484
--------- ---------
Total expenses $ 53,287 $ 42,427
Fees paid indirectly (283) (476)
Reduction of expenses by investment adviser and distributor (27,527) (19,926)
--------- ---------
Net expenses $ 25,477 $ 22,025
--------- ---------
Net investment income $ 16,301 $ 7,483
--------- ---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $(517,934) $ (16,602)
Securities sold short 36,193 --
Foreign currency transactions 5,580 (3,316)
--------- ---------
Net realized loss on investments and foreign currency
transactions $(476,161) $ (19,918)
--------- ---------
Change in unrealized depreciation -
Investments $(336,620) $(111,579)
Securities sold short (13,553) --
Translation of assets and liabilities in foreign currencies (2,792) (859)
--------- ---------
Net unrealized loss on investments and foreign currency
translation $(352,965) $(112,438)
--------- ---------
Net realized and unrealized loss on investments and
foreign currency $(829,126) $(132,356)
--------- ---------
Decrease in net assets from operations $(812,825) $(124,873)
========= =========
* For the period from the commencement of each Fund's investment operations, October 9, 1997,
through September 30, 1998.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Operations - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------
INTERNATIONAL
STRATEGIC INTERNATIONAL
GROWTH VALUE
PERIOD ENDED SEPTEMBER 30, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income:
Income -
Dividends $ 22,285 $ 9,739
Interest 4,758 23,215
Foreign taxes withheld (2,698) (2,748)
--------- ---------
Total investment income $ 24,345 $30,206
--------- ---------
Expenses -
Management fee $ 10,774 $ 10,778
Shareholder servicing agent fee 1,147 1,267
Distribution and service fees (Class A) 1,412 5,022
Administrative fee 132 133
Custodian fee 5,954 4,510
Printing 4,773 4,947
Postage 183 595
Auditing fees 6,305 6,305
Legal fees 2,133 2,694
Registration fees 5,481 5,688
Miscellaneous 680 964
--------- ---------
Total expenses $ 38,974 $ 42,903
Fees paid indirectly (199) (252)
Reduction of expenses by investment adviser and distributor (19,323) (23,338)
--------- ---------
Net expenses $ 19,452 $ 19,313
--------- ---------
Net investment income $ 4,893 $ 10,893
--------- ---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 31,247 $ 8,745
Foreign currency transactions (3,105) (228)
--------- ---------
Net realized gain on investments and foreign
currency transactions $ 28,142 $ 8,517
--------- ---------
Change in unrealized appreciation (depreciation) -
Investments $ (51,825) $ 26,449
Translation of assets and liabilities in foreign currencies (432) (10)
--------- ---------
Net unrealized gain (loss) on investments and foreign
currency translation $ (52,257) $ 26,439
--------- ---------
Net realized and unrealized gain (loss) on investments
and foreign currency $ (24,115) $ 34,956
--------- ---------
Increase (decrease) in net assets from operations $ (19,222) $ 45,849
========= =========
* For the period from the commencement of each Fund's investment operations, October 9, 1997,
through September 30, 1998.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
- ------------------------------------------------------------------------------------------------
ASIA INTERNATIONAL
PACIFIC OPPORTUNITIES
PERIOD ENDED SEPTEMBER 30, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 16,301 $ 7,483
Net realized loss on investments and foreign currency
transactions (476,161) (19,918)
Net unrealized loss on investments and foreign currency
translation (352,965) (112,438)
---------- ----------
Decrease in net assets from operations $ (812,825) $ (124,873)
---------- ----------
Distributions declared to shareholders -
From net investment income (Class A) $ (4,075) $ --
From net investment income (Class I) (871) --
---------- ----------
Total distributions declared to shareholders $ (4,946) $ --
---------- ----------
Net increase in net assets from Fund share transactions $2,508,020 $1,390,147
---------- ----------
Total increase in net assets $1,690,249 $1,265,274
Net assets:
At beginning of period -- --
---------- ----------
At end of period (including accumulated undistributed net
investment income of $16,935 and $4,167, respectively) $1,690,249 $1,265,274
========== ==========
* For the period from the commencement of each Fund's investment operations, October 9, 1997,
through September 30, 1998.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------
INTERNATIONAL
STRATEGIC INTERNATIONAL
GROWTH VALUE
PERIOD ENDED SEPTEMBER 30, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,893 $ 10,893
Net realized gain on investments and foreign currency
transactions 28,142 8,517
Net unrealized gain (loss) on investments and foreign
currency translation (52,257) 26,439
---------- ----------
Increase (decrease) in net assets from operations $ (19,222) $ 45,849
---------- ----------
Net increase in net assets from Fund share transactions $ 984,942 $1,068,494
---------- ----------
Total increase in net assets $ 965,720 $1,114,343
Net assets:
At beginning of period -- --
---------- ----------
At end of period (including accumulated undistributed net
investment income of $1,788 and $10,713, respectively) $ 965,720 $1,114,343
========== ==========
* For the period from the commencement of each Fund's investment operations, October 9, 1997,
through September 30, 1998.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PERIOD ENDED SEPTEMBER 30, 1998* ASIA PACIFIC FUND
- --------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.07 $ 0.08
Net realized and unrealized loss on investments
and foreign currency (3.53) (3.53)
------ ------
Total from investment operations $(3.46) $(3.45)
----- -----
Less distributions declared to shareholders from
net investment income $(0.02) $(0.02)
------ ------
Net asset value - end of period $ 6.52 $ 6.53
====== ======
Total return (34.82)%++ (34.72)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses##(S)(S) 1.36%+ 1.33%+
Net investment income 0.86%+ 0.83%+
Portfolio turnover 84% 84%
Net assets at end of period (000 omitted) $1,348 $342
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
September 30, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
(S)(S) Excluding dividend expense on securities sold short, the ratio of expenses to average net assets
is 1.17% and 1.14% for Class A and I, respectively.
(S) The investment adviser and the distributor voluntarily waived their fees for the period indicated.
If these fees had been incurred by the Fund, the net investment loss per share and the ratios
would have been:
Net investment loss $(0.06) $(0.02)
Ratios (to average net assets):
Expenses## 2.90%+ 2.37%+
Net investment loss (0.69)%+ (0.22)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PERIOD ENDED SEPTEMBER 30, 1998* INTERNATIONAL OPPORTUNITIES FUND
- -----------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.06 $ 0.07
Net realized and unrealized loss on investments
and foreign currency (0.64) (0.65)
------ ------
Total from investment operations $(0.58) $(0.58)
------ ------
Net asset value - end of period $ 9.42 $ 9.42
====== ======
Total return (5.80)%++ (5.80)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses### 1.75%+ 1.75%+
Net investment income 0.54%+ 0.65%+
Portfolio turnover 165% 165%
Net assets at end of period (000 omitted) $573 $692
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
September 30, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
### The Fund's expenses without reduction for fees paid indirectly for both Class A and Class I for
the period ended September 30, 1998 would have been 1.79%.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of
the Fund, exclusive of management and distribution and service fees at not more than 1.75% of the
Fund's average daily net assets. The investment adviser and the distributor voluntarily waived
their fees for the period indicated. If these fees had been incurred by the Fund and other
expenses had not been limited, the net investment loss per share and the ratios would have been:
Net investment loss $(0.13) $(0.07)
Ratios (to average net assets):
Expenses## 3.57%+ 3.07%+
Net investment loss (1.32)%+ (0.71)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PERIOD ENDED SEPTEMBER 30, 1998* INTERNATIONAL STRATEGIC GROWTH FUND
- --------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.04 $ 0.05
Net realized and unrealized loss on investments
and foreign currency (0.36) (0.35)
------ ------
Total from investment operations $(0.32) $(0.30)
------ ------
Net asset value - end of period $ 9.68 $ 9.70
====== ======
Total return (3.20)%++ (3.00)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses### 1.75%+ 1.75%+
Net investment income 0.34%+ 0.48%+
Portfolio turnover 103% 103%
Net assets at end of period (000 omitted) $90 $876
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
September 30, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
### The Fund's expenses without reduction for fees paid indirectly for both Class A and Class I for
the period ended September 30, 1998, would have been 1.77%.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of
the Fund, exclusive of management and distribution and service fees, at not more than 1.75% of the
Fund's average daily net assets. The investment adviser and the distributor voluntarily waived
their fees for the period indicated. If these fees had been incurred by the Fund and other
expenses had not been limited the net investment loss per share and the ratios would have been:
Net investment loss $(0.20) $(0.13)
Ratios (to average net assets):
Expenses## 3.88%+ 3.38%+
Net investment loss (1.79)%+ (1.15)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PERIOD ENDED SEPTEMBER 30, 1998* INTERNATIONAL VALUE FUND
- -----------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.10 $ 0.11
Net realized and unrealized gain on investments
and foreign currency 0.36 0.36
------ ------
Total from investment operations $ 0.46 $ 0.47
------ ------
Net asset value - end of period $10.46 $10.47
====== ======
Total return 4.70%++ 4.70%++
Ratios (to average net assets)/Supplemental data(S):
Expenses### 1.75%+ 1.75%+
Net investment income 0.98%+ 1.00%+
Portfolio turnover 71% 71%
Net assets at end of period (000 omitted) $1,002 $112
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
September 30, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
### The Fund's expenses without reduction for fees paid indirectly for both Class A and Class I for
the period ended September 30, 1998, would have been 1.77%.
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of
the Fund, exclusive of management and distribution and service fees, at not more than 1.75% of the
Fund's average daily net assets. The investment adviser and the distributor voluntarily waived
their fees for the period indicated. If these fees had been incurred by the Fund and other
expenses had not been limited, the net investment loss per share and the ratios would have been:
Net investment loss $(0.13) $(0.07)
Ratios (to average net assets):
Expenses## 3.92%+ 3.42%+
Net investment loss (1.19)%+ (0.67)%+
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Asia Pacific Fund, MFS International Opportunities Fund, MFS International
Strategic Growth Fund and MFS International Value Fund (the Funds) are
diversified series of MFS Series Trust V (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. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued at fair value as determined in good
faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Forward Foreign Currency Exchange Contracts - Each 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. Each Fund may enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, each Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. They 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, each Fund may enter into
contracts with the intent of changing the relative exposure of each 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.
Short Sales - Each Fund may enter into short sales. A short sale transaction
involves selling a security which the Fund does not own with the intent of
purchasing it later at a lower price. A Fund will realize a gain if the security
price decreases and a loss if the security price increases between the date of
the short sale and the date on which a Fund must replace the borrowed security.
Losses can exceed the proceeds from short sales and can be greater than losses
from the actual purchase of a security. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, or interest a Fund may be required to pay in connection with a short
sale. Whenever a Fund engages in short sales, its custodian segregates cash or
marketable securities in an amount that, when combined with the amount of
proceeds from the short sale deposited with the broker, at least equals the
current market value of the security sold short.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
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 payments received in additional securities are
recorded on the ex-dividend date in an amount equal to the value of the security
on such date.
Fees Paid Indirectly - Each 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 Statements of Operations.
Tax Matters and Distributions - Each 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. Each 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. Each 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 net realized gains. During
the period ended September 30, 1998, the following amounts were reclassified
among accumulated undistributed net investment income, accumulated net realized
gain on investments and paid-in-capital due to differences between book and tax
accounting for currency transactions. These changes had no effect on the net
assets or net asset values per share.
ASIA PACIFIC INTERNATIONAL
INCREASE (DECREASE) FUND OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
Accumulated net realized loss on
investments and foreign currency
transactions $(5,580) $ 3,316
Accumulated undistributed net
investment income $ 5,580 $(3,316)
INTERNATIONAL
STRATEGIC INTERNATIONAL
INCREASE (DECREASE) GROWTH FUND VALUE FUND
- --------------------------------------------------------------------------------
Paid-in-capital $ -- $ (48)
Accumulated undistributed net realized
gain on investments and foreign
currency transactions $ 3,105 $ 228
Accumulated undistributed net investment
income $(3,105) $ (180)
At September 30, 1998, MFS Asia Pacific Fund and MFS International
Opportunities Fund, for federal income tax purposes, each had a capital loss
carryforward. The amounts of $452,755 and $14,414, respectively may be applied
against any net taxable realized gains of each succeeding year until the
earlier of their utilization or expiration on September 30, 2006.
Multiple Classes of Shares of Beneficial Interest - The Funds 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.
(3) Transactions with Affiliates
Investment Adviser - Each Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. For the
MFS Asia Pacific Fund, the management fee is computed daily and paid monthly
at an annual rate of 1.00% of average daily net assets. The management fee for
MFS International Opportunities Fund, MFS International Strategic Growth Fund,
and MFS International Value Fund is computed daily and paid monthly at the
following annual rates:
First $500 million of average net assets 0.975%
Average net assets in excess of $500 million 0.925%
The investment adviser has voluntarily agreed to waive its fee, which is
reflected as a reduction of expenses in the Statements of Operations.
MFS International Opportunities Fund, MFS International Strategic Growth Fund,
and MFS International Value Fund each have a temporary expense reimbursement
agreement whereby MFS has voluntarily agreed to pay all of these Funds'
operating expenses, exclusive of management, and distribution and service
fees. Each of these Funds in turn will pay MFS an expense reimbursement fee
not greater than 1.75% of average daily net assets. To the extent that the
expense reimbursement fee exceeds each Fund's actual expenses, the excess will
be applied to amounts paid by MFS in prior years. At September 30, 1998, the
aggregate unreimbursed expenses owed to MFS by the Funds amounted to:
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
-----------------------------------------------------------------------
$4,380 $7,137 $7,538
Each 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 officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Trustees are currently
not receiving any payments for their services to each Fund.
Administrator - Each Fund has an administrative services agreement with MFS to
provide each Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, each 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%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, did not
receive any sales charges on sales on Class A shares of each Fund for the
period ended September 30, 1998.
The Trustees have adopted a distribution plan for Class A shares pursuant to
Rule 12b-1 of the Investment Company Act of 1940 as follows:
Each Fund's distribution plan provides that each Fund will pay MFD up to 0.50%
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 each 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 0.25% per annum of each Fund's average daily
net assets attributable to Class A shares. Distribution and service fees under
the Class A distribution plan are currently being waived.
Certain Class A shares are subject to a contingent deferred sales charge in
the event of a shareholder redemption within 12 months following purchase.
There were no contingent deferred sales charges imposed during the period
ended September 30, 1998 on Class A shares of each Fund.
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 each 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:
<TABLE>
<CAPTION>
ASIA INTERNATIONAL INTERNATIONAL INTERNATIONAL
PACIFIC OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases
Investments (non-U.S. government securities) $4,035,738 $3,186,357 $1,972,871 $1,679,146
---------- ---------- ---------- ----------
Sales
Investments (non-U.S. government securities) $1,914,065 $1,956,322 $1,090,784 $ 699,497
---------- ---------- ---------- ----------
The cost and unrealized appreciation or depreciation in value of the investments owned by each Fund, as computed on a federal
income tax basis, are as follows:
<CAPTION>
ASIA INTERNATIONAL INTERNATIONAL INTERNATIONAL
PACIFIC OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate cost $1,984,127 $1,329,924 $1,010,434 $1,063,725
---------- ---------- ---------- ----------
Gross unrealized appreciation $ 40,848 $ 50,100 $ 55,164 $ 119,343
Gross unrealized depreciation (406,454) (163,144) (109,078) (93,224)
---------- ---------- ---------- ----------
Net unrealized appreciation (depreciation) $(365,606) $(113,044) $ (53,914) $ 26,119
========= ========= ========== ==========
</TABLE>
(5) Shares of Beneficial Interest
Each Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
PERIOD ENDED SEPTEMBER 30, 1998*
----------------------------------------------------------------------
INTERNATIONAL
ASIA PACIFIC OPPORTUNITIES
FUND FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 213,642 $2,084,461 75,967 $ 780,005
Shares issued to shareholders in
reinvestment of distributions 498 4,074 -- --
Shares reacquired (7,450) (53,156) (15,161) (153,975)
------- ---------- ------ ----------
Net increase 206,690 $2,035,379 60,806 $ 626,030
======= ========== ====== ==========
* For the period from the commencement of each Fund's investment operations, October 9, 1997, through September 30, 1998.
<CAPTION>
Class A Shares
PERIOD ENDED SEPTEMBER 30, 1998*
----------------------------------------------------------------------
INTERNATIONAL
STRATEGIC INTERNATIONAL
GROWTH FUND VALUE FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 38,708 $ 388,757 96,025 $ 960,810
Shares reacquired (29,426) (342,377) (270) (3,059)
------- ---------- ------ ----------
Net increase 9,282 $ 46,380 95,755 $ 957,751
======= ========== ====== ==========
<CAPTION>
Class I Shares
PERIOD ENDED SEPTEMBER 30, 1998*
----------------------------------------------------------------------
INTERNATIONAL
ASIA PACIFIC OPPORTUNITIES
FUND FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 59,916 $ 532,264 73,457 $ 764,117
Shares issued to shareholders in
reinvestment of distributions 106 871 -- --
Shares reacquired (7,623) (60,494) -- --
------- ---------- ------ ----------
Net increase 52,399 $ 472,641 73,457 $ 764,117
======= ========== ====== ==========
<CAPTION>
Class I Shares
PERIOD ENDED SEPTEMBER 30, 1998*
----------------------------------------------------------------------
INTERNATIONAL
STRATEGIC INTERNATIONAL
GROWTH FUND VALUE FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 92,832 $ 965,533 10,745 $ 110,743
Shares reacquired (2,525) (26,971) -- --
------- ---------- ------ ----------
Net increase 90,307 $ 938,562 10,745 $ 110,743
======= ========== ====== ==========
* For the period from the commencement of each Fund's investment operations, October 9, 1997, through September 30, 1998.
</TABLE>
(6) Line of Credit
Each Fund and other affiliated funds participate in an $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 each Fund for the period ended September 30, 1998, were as follows:
ASIA INTERNATIONAL INTERNATIONAL INTERNATIONAL
PACIFIC OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND FUND
-------------------------------------------------------------------------------
$14 $9 $8 $3
(7) Financial Instruments
Each 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 forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
each 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.
Forward Foreign Currency Exchange Contracts
<TABLE>
ASIA PACIFIC FUND:
<CAPTION>
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER IN EXCHANGE FOR AT VALUE (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 12/15/98 AUD 164,069 $ 97,588 $ 97,452 $ 136
12/15/98 JPY 30,000,000 229,183 222,401 6,782
12/15/98 SGD 185,898 107,536 110,409 (2,873)
-------- -------
$430,262 $ 4,045
======== =======
INTERNATIONAL OPPORTUNITIES FUND:
- -----------------------------------------------------------------------------------------------------------------------------------
Sales 01/11/99 SGD 18,500 $ 10,997 $ 10,000 $ (997)
Currency abbreviations are defined as follows:
AUD = Australian Dollars
JPY = Japanese Yen
SGD = Singapore Dollars
</TABLE>
INTERNATIONAL STRATEGIC GROWTH FUND:
Forward foreign currency sales under master netting agreements amounted to a
net payable of $499 with Merrill Lynch at September 30, 1998.
At September 30, 1998, each Fund had sufficient cash and/or securities to
cover any commitments under these contracts.
(8) Restricted Securities
Each Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At September 30,
1998, the Funds owned the following restricted securities which may not be
publicly sold without registration under the Securities Act of 1933. The Funds
do not have the right to demand that such securities be registered. The value
of these securities is determined by valuations furnished by dealers or by a
pricing service, or if not available, are valued at fair value as determined
in good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
DATE OF SHARE % OF
FUND DESCRIPTION ACQUISITION AMOUNT COST VALUE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asia Pacific Fund Hong Leong Finance Ltd. 10/13/97 37,000 $58,952 $22,358 1.32%
Tanjong PLC 10/13/97 15,000 33,049 11,160 0.66
International Strategic Tanjong PLC 11/28/97, 3,000 4,219 2,232 0.23
Growth Fund 12/03/97,
& 1/15/98
International Value Fund Tanjong PLC 12/03/97 1,000 1,455 744 0.10
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust V and Shareholders of MFS Asia Pacific
Fund, MFS International Opportunities Fund, MFS International Strategic Growth
Fund and MFS International Value Fund:
We have audited the accompanying statements of assets and liabilities of MFS
Asia Pacific Fund, MFS International Opportunities Fund, MFS International
Strategic Growth Fund and MFS International Value Fund (the "Funds"),
including the schedules of portfolio investments, as of September 30, 1998,
and the related statements of operations, the statements of changes in net
assets and financial highlights for the period from October 9, 1997
(commencement of operations) to September 30, 1998. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
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 and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 1998, 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 positions of MFS
Asia Pacific Fund, MFS International Opportunities Fund, MFS International
Strategic Growth Fund and MFS International Value Fund at
September 30, 1998, and the results of their operations, the changes in their
net assets and the financial highlights for the period from October 9, 1997
(commencement of operations) to September 30, 1998, in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
November 6, 1998
<PAGE>
FEDERAL TAX INFORMATION
In January 1999, shareholders will be mailed a Form 1099 reporting the federal
tax status of all distributions paid during the calendar year 1998.
For the year ended September 30, 1998, income from foreign sources and foreign
taxes withheld were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
ASIA PACIFIC OPPORTUNITIES STRATEGIC INTERNATIONAL
FUND FUND GROWTH FUND VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income from foreign sources $23,706 $21,815 $20,227 $19,878
Foreign taxes withheld $ 3,051 $ 2,681 $ 2,355 $ 2,748
</TABLE>
--------------------------------------------
This report is prepared for the general information of
shareholders. It is authorized for distribution to
prospective investors only when preceded or accompanied by a
current prospectus.
<PAGE>
MFS(R) ASIA PACIFIC FUND
MFS(R) INTERNATIONAL OPPORTUNITIES FUND
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
MFS(R) INTERNATIONAL VALUE FUND
[LOGO] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
INC-2 11/98 1.4M
