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[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[Graphic Omitted]
SEMIANNUAL REPORT
MARCH 31, 1998
O MFS(R) INTERNATIONAL OPPORTUNITIES FUND
O MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
O MFS(R) INTERNATIONAL VALUE FUND
O MFS(R) ASIA PACIFIC FUND
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IN MEMORIAM
A. KEITH BRODKIN
1935 - 1998
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT(SM)
[Photo of A. Keith Brodkin]
On February 2, 1998, Keith Brodkin, a friend and leader to everyone at MFS, died
unexpectedly at age 62. His thoughtful letters to shareholders on the markets
and economy have been an integral part of MFS shareholder reports like this one
for many years.
Keith joined MFS in 1970 as the firm's first fixed- income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and four
years later became Chairman and Chief Executive Officer. During his stewardship,
MFS has achieved significant growth in total assets under management, rising
from some $25 billion in 1991 to the over $80 billion today entrusted to us by
three million individual and institutional investors worldwide. Under Keith's
leadership, MFS has carefully but steadily built its domestic and international
investment capabilities through the introduction of a range of new products and
a still- growing staff that now numbers over 100 equity and fixed-income
professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
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MFS(R) INTERNATIONAL OPPORTUNITIES FUND MFS(R) INTERNATIONAL VALUE FUND
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND MFS(R) ASIA PACIFIC FUND
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TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive Officer, State Street Bank and Trust Company
Eastern Enterprises
INVESTOR INFORMATION
Lawrence T. Perera - Partner, Hemenway & Barnes For MFS stock and bond market outlooks, call toll free:
1-800-637-4458 anytime from a touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard University
Graduate School of Business Administration For information on MFS mutual funds, call your financial
adviser or, for an information kit, call toll free:
Charles W. Schmidt - Private Investor 1-800-637-2929 any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Arnold D. Scott* - Senior Executive Vice President,
Director, and Secretary, MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman, Chief Executive Officer, P.O. Box 2281
and Director, MFS Investment Management Boston, MA 02107-9906
Elaine R. Smith - Independent Consultant For general information, call toll free: 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman, North American Management
Corp. (investment advisers) For service to speech- or hearing-impaired, call toll free:
1-800-637-6576 any business day from 9 a.m. to 5 p.m.
INVESTMENT ADVISER Eastern time. (To use this service, your phone must be
Massachusetts Financial Services Company equipped with a Telecommunications Device for the Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, and exchanges, call
toll free: 1-800-MFS-TALK (1-800-637-8255) anytime from
DISTRIBUTOR a touch-tone telephone.
MFS Fund Distributors, Inc.
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
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*
*Affiliated with the Investment Adviser
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LETTER FROM THE CHAIRMAN
Dear Shareholders:
As investment managers we take a long-term view of the world's economies, as
well as of the stock and bond markets, and try to avoid getting caught up in
short-term fluctuations. However, it is hard to ignore unexpected events such
as the Asian economic turmoil or closely watched companies that miss their
quarterly earnings estimates. Given the potential for these events and their
possible impact on major market indices, we think it's important to offer some
perspective about recent market behavior and to let you know what MFS is doing
in an effort to provide you with favorable long-term investment performance.
The most notable recent event affecting investment markets has been the Asian
turmoil, which began in the summer of 1997 as a result of slowing growth rates
in the region and excess speculation in real estate markets. Since then, most
countries in the region have begun to implement the economic and regulatory
restructuring needed to put themselves on a stronger financial foundation.
While it may be a few years before some of these countries return to solid
economic footing, and while there will probably be a relatively short-term
impact on the U.S. economy, we believe the long-term outlook for the region is
quite positive.
The Asian situation has brought home the lesson that major events can quickly
impact investment markets around the world, including those of the United
States. Although U.S. equities have enjoyed a bull market lasting more than 15
years and have continued to set records in the first few months of 1998, there
have been brief bouts of volatility associated with the Asian turmoil, as well
as with perceived downturns for certain industries such as technology.
While we believe the long-term outlook for the equity markets is favorable, we
also believe we are overdue for a market correction in which prices will
remain flat or decline, possibly for an extended period of time. Since no one
can predict market cycles, that makes it that much more important to find
companies that can keep growing in the face of the occasional downturn and
even gain market share. For us, this means using original, bottom-up research
to examine each company's earnings potential and position as well as the
overall prospects for its industry. To that end, MFS continues to increase the
research support available to portfolio managers of MFS funds.
On the fixed-income side, MFS uses active portfolio management based on
extensive research and credit analysis to reduce the potential for price
declines and enhance the opportunity for price appreciation. For both equity
and fixed-income managers, this means visiting and meeting with thousands of
companies and issuers of credit every year, as well as attending many
presentations and closely following sources of industry research.
We believe this approach, based on thorough research, teamwork, innovative
thinking, and the free exchange of ideas, is the best way to get the most
performance for shareholders in MFS funds -- in any market environment.
We appreciate your support 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
April 14, 1998
Jeffrey L. Shames, a graduate of Wesleyan University and the Massachusetts
Institute of Technology Sloan School of Management, joined MFS in 1983. After
four years as an industry analyst and portfolio manager, he was named Chief
Equity Officer in 1987 and President and a member of the Board of Directors in
1993. Mr. Shames was appointed Chairman and Chief Executive Officer in
February 1998.
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PORTFOLIO MANAGERS' OVERVIEWS
MFS International Opportunities Fund
The Fund commenced operations on October 9, 1997, and from that date through
March 31, 1998, both Class A and Class I shares provided a total return of
11.40%. These returns, which include the reinvestment of distributions but
exclude the effects of any sales charges, compare to a 5.87% return for the
Morgan Stanley Capital International (MSCI) Europe, Australia, Far East (EAFE)
Index, a broad, unmanaged index of non-U.S. equities.
The objective of the Fund is capital appreciation, which it seeks to achieve
through stock selection of companies that we believe have the potential for
above-average earnings growth over a relatively long period. The most
attractive companies have dominant market shares in industries in which there
is growth potential independent of the business cycle. Although the Fund can
invest in companies of all sizes, its concentration is on small-capitalization
companies whose growth rates tend to be higher.
In recent months, the Fund has benefited from the strong performance of the
European markets, particularly in the financial services sector. That sector
has been helped by a positive macroeconomic environment and consolidation,
both of which have caused earnings growth to accelerate. The Fund has also
been helped by the performance of a number of Asian stocks that have
rebounded, most notably Wing Hang Bank in Hong Kong and Tanjong, a Malaysian
gaming company. Japanese holdings include Sony and Canon, both of which have
seen a significant increase in exports driven by the strong U.S. and European
economies and the weak yen.
The investment environment in Europe is positive right now. Inflation is under
control, and interest rates are low and, in some cases, heading lower as
European economies converge in preparation for monetary union. In addition,
companies are continuing their efforts to restructure, selling off noncore
assets and cutting costs. With economic growth accelerating, earnings
estimates are likely to be upgraded as the year progresses.
Although the environment remains difficult in Asia, there have been some
improvements over the past several months. For example, South Korea and
Thailand, two countries with problems last year, have taken some positive
steps, including reforming their financial sectors, managing their respective
debts, and allowing businesses that were not viable to fail. Although
significant risks remain, we believe there are opportunities to invest in good
franchises at attractive prices. The Fund has recently added to positions in
some of the more stable markets such as Hong Kong and Singapore. In our view,
the banking systems there are secure, and these countries appear less likely
to be impacted by the expected slowdown in economic activity in the region.
Going forward, we believe Europe should continue to see strong economic growth
and, as long as interest rates remain low, the high current valuations there
will remain justified. In Asia, we expect continued volatility but see
opportunities for selective investments as economic growth resumes. As it
does, we intend to gradually increase weightings. The Latin American markets
were hit over the past six months as investors worried about a spillover from
the Asian crisis. The economies are in reasonably good shape and valuations
are attractive, particularly given their growth prospects. We are particularly
attracted to the telecommunications and utilities sectors in Latin America,
both of which should benefit from ongoing privatization.
Respectfully,
/s/ David A. Antonelli
David A. Antonelli
Portfolio Manager
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MFS International Strategic Growth Fund
The Fund commenced operations on October 9, 1997, and from that date through
March 31, 1998, both Class A and Class I shares provided a total return of
14.40%. These returns, which include the reinvestment of distributions but
exclude the effects of any sales charges, compare to a 5.87% return for the
MSCI EAFE Index.
The Fund uses a bottom-up, fundamental research strategy to find what we
believe are the best companies with the strongest growth prospects. There is
no focus on broad geographic areas or specific countries. As a result, the
Fund's weightings vary significantly from those of the MSCI EAFE Index. Also,
the Fund takes positions in individual securities that are somewhat more
concentrated than might be found in a larger, more diversified fund.
Although the Fund does not focus on geographic regions, its performance
clearly has been driven by its holdings in Europe, including in such companies
as Benckiser, a Dutch consumer products company, and Akzo Nobel, a Dutch
pharmaceutical and specialty chemical company. While Europe has been a strong
performer in local currency terms, the strength of the dollar has reduced some
of those gains for U.S. investors. Europe's strength derives from a
combination of its economies improving, falling interest rates, the move
toward a single currency, and economic convergence -- all of which have helped
support higher valuations. At the same time, corporate earnings growth has
accelerated throughout Europe as companies continue to restructure, for
example in the chemical and pharmaceutical industries, in both of which
businesses are more focused and are using capital more efficiently.
Europe currently makes up approximately 70% of portfolio assets, with 8% in
the Americas (about evenly split between Canada and Latin America).
Approximately 18% is in the Asia/Pacific region. The Fund's largest sector is
financial services at approximately 25% of assets, with European banks and
insurance companies making up over half that weighting. The next largest
sector is consumer staples, at almost 13% of assets, and includes Benckiser
and the German company Henkel. Holdings in Japan include globally competitive
companies such as Canon and Sony, as well as some domestically oriented
companies such as Kirin Beverage, a soft drink company. Approximately 4% of
the assets are in Malaysia, Hong Kong, and Singapore. While that region has
presented a difficult investment environment, the companies we have invested
in, including Tanjong, a Malaysian gaming company, and Overseas Union Bank in
Singapore, have performed relatively well compared to the overall market.
Overall, returns in most markets in which the Fund invests have been strong.
Even Japan is up 5% in local currency terms in the first quarter of 1998, and
Europe is up over 20%. Although we do not expect the kinds of returns we've
seen in Europe to continue, the investment environment there continues to be
favorable, with an acceleration of inflation unlikely in the medium term.
Although some improvement has been seen in Asia, with several countries taking
positive steps to restructure their economies and reform their financial
systems, Japan has made few structural changes, and we expect growth there to
be flat to negative until it does.
Respectfully,
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
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MFS International Value Fund
The Fund commenced operations on October 9, 1997, and from that date through
March 31, 1998, Class A shares provided a total return of 15.70%, while Class
I shares returned 15.80%. These returns, which include the reinvestment of
distributions but exclude the effects of any sales charges, compare to a 5.87%
return for the MSCI EAFE Index.
The Fund's performance has benefited from two developments. First, in the
weeks after it commenced operations, only about half of assets were invested
in stocks because we could not find enough companies selling at attractive
valuations at that time. Now, however, the Fund is almost fully invested, with
94% of its assets in equities. The second thing that has helped performance
has been our almost completely avoiding Asian equity markets and, instead,
concentrating on Europe at a time when markets there have been rising. The
Fund is currently focused on companies with steady earnings, including
utility, consumer staples, and financial services companies.
Among regions, the Fund was heavily weighted in Europe, particularly in some
of the smaller countries such as the Netherlands and Sweden. These countries
tend to spawn successful international companies, some of which have been very
attractive investments during the past 12 to 24 months. In Sweden, for
example, Astra has been a successful investment, while Volvo, an automaker,
and Scandia, an insurance company, have also done well. In the Netherlands,
IHC Caland, a company that makes dredging and other marine equipment, has
performed well. Another thing that helped performance was the fact that Japan
was underweighted relative to the MSCI EAFE Index.
The portfolio is currently structured so as to continue making headway in the
difficult environment resulting from the impact of turmoil in Southeast Asia
and Japan. The Fund has significant holdings in financial services, utilities,
and communications companies. In many overseas economies, utilities and
communications companies are growing at rates that are much faster than those
of the United States. There are very few U.S. utilities in the Fund. Utilities
usually pay healthy dividends that increase their total returns. Finally, in
many countries, these sorts of stocks are among the largest and most liquid on
their respective exchanges. This is also the case with financial services
stocks.
Since the beginning of the year, we have added some Asian stocks to the
portfolio, including Sony and Canon in Japan, Wing Hang Bank in Hong Kong, and
Hong Leong Finance in Singapore.
We believe value can be found in all market sectors. For example, one of the
Fund's large holdings is Banco Tota in Portugal. Although many people have not
seen Portugal as a favorable place to invest, its economy has shown
accelerating growth in recent years, and its major companies are generally
well run. Another, well-known company we own is Nestle, which has not provided
the sort of profits investors have come to expect. However, Nestle's
management has recognized this and is focusing on
increasing profitability.
Looking ahead, we believe the most important thing investors need to guard
against is speculation based on the favorable results of the past few years.
With the exception of Asia, investment markets around the world have made
impressive strides in the past three years or so, and we do not see this as a
time for investors to become overly aggressive.
Respectfully,
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
<PAGE>
MFS Asia Pacific Fund
The Fund commenced operations on October 9, 1997, and from that date through
March 31, 1998, both Class A and Class I shares provided a total return of
- -12.26%. These returns, which include the reinvestment of distributions but
exclude the effects of any sales charges, compare to a -18.83% return for the
MSCI All Country Asia Pacific Index, a broad, unmanaged index of equities from
the Asia/Pacific region.
The Fund seeks to invest in companies in the Asia/Pacific region that we
believe offer an attractive
combination of growth and value. These companies can be located in South
Korea, Japan, Hong Kong, China, Australia, and New Zealand, as well as in
Southeast Asia and the Indian sub-continent. In addition to growth- and value-
oriented companies, the Fund seeks companies with good managements, proven
track records, favorable earnings histories, and sources of recurring income.
This income can result from having a large market share, a strong franchise,
or products that people need regardless of the state of the local economy.
Most countries in the region are still experiencing at least some degree of
economic turmoil and market weakness, but we have also seen what we regard as
a reasonably good recovery in stock prices in several of these markets since
the beginning of the year. In particular, large exporting companies and
companies whose businesses are not concentrated in this region but are
scattered throughout the world have benefited. The recovery in stock prices
has also stemmed from portfolio managers' returning to markets they had all
but abandoned in the fourth quarter of 1997. However, many underlying problems
remain in these economies, and there is risk that some investors could
overlook these problems and push stock prices beyond reasonable valuations.
Although the Fund invests in companies, not countries, we feel Hong Kong and
Singapore have more than their fair share of well-managed companies. On the
other hand, we have found it hard to find good values in places such as
Thailand and Malaysia.
Our search for companies with strong franchises, repeat business, or
attributes that can help them continue growing and generate business in
difficult times has led us to a core group of good performers. This group
includes Hong Kong Bank, or HSBC, an internationally diversified bank that has
a history of generating relatively high returns and has managed to keep its
level of questionable loans relatively low.
Another large holding is Datacraft Asia, a Singapore company that is
installing a large amount of equipment related to the Internet. More and more
companies are adding Internet systems in order to remain competitive, and to
do so they need a company such as Datacraft, which is the dominant provider of
this sort of equipment in the region. While the Fund owns some of the large,
blue-chip companies such as Sony and Canon, it also holds several of the
smaller, fast-growing companies.
Going forward, we remain positive about the region's longer-term prospects
because of its generally favorable demographics and the strong work ethic of
its population. Although gross domestic product per capita is still below that
of the West, wealth is being created, and a number of companies are showing
signs of growth. While the Asian turmoil has been caused in part by
overcapacity and speculative borrowing, we believe that once these countries
get past these problems they will start to grow again, which will create new
investment opportunities.
Respectfully,
/s/ Christopher J. Burn /s/ Barry P. Dargan
Christopher J. Burn Barry P. Dargan
Portfolio Manager 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.
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PORTFOLIO MANAGERS' PROFILES
Each portfolio manager has acted in that capacity since the commencement of
investment operations of each Fund.
MFS INTERNATIONAL OPPORTUNITIES FUND
David A. Antonelli joined MFS in 1991 as an industry specialist following
foreign stocks and was named Assistant Vice President -- Investments in 1994
and Vice President -- Investments in 1995. He is the Assistant Director of
Research and a graduate of Pennsylvania State University and the University of
Pennsylvania Wharton School of Finance and Commerce.
MFS INTERNATIONAL STRATEGIC GROWTH FUND
David R. Mannheim joined MFS in 1988 as a research specialist and was named
Investment Officer in 1990, Assistant Vice President -- Investments in 1991,
Vice President -- Investments in 1992, and Senior Vice President in 1997. He
is a graduate of Amherst College and the Massachusettts Institute of
Technology Sloan School of Management.
MFS INTERNATIONAL VALUE FUND
Frederick J. Simmons joined MFS in 1971 as an Investment Officer in the
Research Department and was named Assistant Vice President -- Investments in
1974, Vice President -- Investments in 1975, and Senior Vice President in
1983. Mr. Simmons graduated with honors from Tufts University and the Amos
Tuck School of Business Administration of Dartmouth College. He is a Chartered
Financial Analyst, a member of the Boston Security Analysts Society, Inc., and
past president of the Electronic Analysts of Boston.
MFS ASIA PACIFIC FUND
Christopher J. Burn joined MFS in 1995 as an Investment Officer following
Asian stocks. He is a graduate of Wesleyan University and the University of
Pennsylvania Wharton School of Finance and Commerce. Prior to joining MFS, he
worked as an analyst at the U.S. State Department and with Peregrine Brokerage
Ltd. in Hong Kong.
Barry P. Dargan joined MFS in 1996 as a Vice President -- Investments,
specializing in Japanese stocks. Prior to joining MFS, he was an executive
director and investment analyst at SBC Warburg in Tokyo, Japan. He is a
graduate of the City University of London and is a Chartered Financial
Analyst.
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FUND FACTS
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.
MFS INTERNATIONAL OPPORTUNITIES FUND
Objective and Investment Focus: Seeks capital appreciation by investing in
equity securities of foreign companies of any size, including smaller
companies in the developing stages of their life cycle.
Commencement of investment operations: October 9, 1997
Class inception: Class A October 9, 1997
Class I October 9, 1997
Size: $1.3 million net assets as of March 31, 1998
MFS INTERNATIONAL STRATEGIC GROWTH FUND
Objective and Investment Focus: Seeks capital appreciation by investing in
equity securities of foreign companies of any size, but generally invests in
established foreign companies.
Commencement of investment operations: October 9, 1997
Class inception: Class A October 9, 1997
Class I October 9, 1997
Size: $1.2 million net assets as of March 31, 1998
MFS INTERNATIONAL VALUE FUND
Objective and Investment Focus: Seeks capital appreciation by investing in
foreign securities that the manager believes are undervalued compared to
industry norms within their countries.
Commencement of investment operations: October 9, 1997
Class inception: Class A October 9, 1997
Class I October 9, 1997
Size: $1.2 million net assets as of March 31, 1998
MFS ASIA PACIFIC FUND
Objective and Investment Focus: Seeks capital appreciation by investing in
equity securities of companies whose principal activities are in Asia or the
Pacific Basin.
Commencement of investment operations: October 9, 1997
Class inception: Class A October 9, 1997
Class I October 9, 1997
Size: $2.2 million net assets as of March 31, 1998
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 (Unaudited) - March 31, 1998
<TABLE>
<CAPTION>
MFS INTERNATIONAL OPPORTUNITIES FUND
Stocks - 98.7%
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ISSUER SHARES VALUE
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Foreign Stocks - 97.5%
Australia - 1.9%
QBE Insurance Group Ltd. (Insurance) 4,133 $ 18,069
Westpac Banking Corp. Ltd. (Banks and Credit Cos.) 1,032 6,918
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$ 24,987
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Brazil - 5.7%
Companhia Electrict est Rio de Janeiro (Utilities -
Electric) 16,300 $ 11,326
Companhia Riogrand Telecomunicacoes (Utilities -
Telephone) 10,000 12,578
Companhia Paranaense de Energy, ADR (Utilities -
Electric) 975 14,199
Telecomunicacoes Brasileiras S.A., ADR
(Telecommunications) 214 27,780
Uniao de Banco Brasiliero S.A. (Banks and Credit Cos.) 200 7,250
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$ 73,133
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Canada - 2.3%
Canadian National Railway Co. (Railroads) 470 $ 30,080
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Chile - 1.0%
Chilectra S.A., ADR (Utilities - Electric) 305 $ 8,235
Santa Isabel S.A., ADR (Stores)## 228 4,147
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$ 12,382
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Egypt - 0.7%
Commercial International Bank, GDR (Banks and Credit
Cos.)## 250 $ 4,600
Suez Cement Co., GDR (Construction) 100 2,135
Suez Cement Co., GDR (Construction)## 100 2,135
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$ 8,870
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Finland - 2.3%
Pohjola Insurance Group (Insurance) 280 $ 12,979
TT Tieto Oy (Computer Software - Systems) 100 16,936
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$ 29,915
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France - 9.0%
Alcatel Alsthom Compagnie (Telecommunications) 120 $ 22,535
Compagnie Generale de Geophysique S.A., ADR (Oil
Services)* 495 12,746
Dassault Systemes S.A., ADR (Computer Software -
Systems) 335 13,233
Renault Regie Nationale (Automobiles) 175 7,799
Sanofi S.A. (Medical and Health Products) 84 9,644
TOTAL S.A., "B" (Oils) 130 15,618
TV Francaise (Broadcasting) 57 7,087
Union des Assurances Federales S.A. (Insurance) 160 26,301
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$ 114,963
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Germany - 4.6%
Adidas-Salomon AG (Apparel and Textiles) 53 $ 9,404
Henkel KGaA (Chemicals) 440 31,995
Wella AG (Cosmetics) 20 17,205
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$ 58,604
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Greece - 1.9%
Athens Medic Center, GDR (Medical and Health
Technology and Services) 710 $ 11,727
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 490 12,275
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$ 24,002
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Hong Kong - 5.1%
Cheung Kong Holdings Ltd. (Real Estate) 1,000 $ 7,098
Hutchison Whampoa Ltd. (Conglomerate) 2,000 14,068
Li & Fung Ltd. (Wholesale) 4,000 6,350
Liu Chong Hing Bank (Banks and Credit Cos.) 4,000 6,453
Wing Hang Bank Ltd. (Banks and Credit Cos.) 10,500 31,169
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$ 65,138
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Hungary - 0.8%
Gedeon Richter Ltd. (Pharmaceuticals)## 40 $ 4,140
Magyar Tavkozlesi Rt. (Telecommunications)* 200 6,225
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$ 10,365
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Ireland - 3.6%
Allied Irish Banks PLC (Banks and Credit Cos.)* 1,438 $ 17,758
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.)* 12,084 28,145
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$ 45,903
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Italy - 4.4%
Banca Carige S.p.A. (Banks and Credit Cos.) 1,200 $ 13,435
Banca Nazionale del Lavoro (Banks and Credit Cos.) 450 12,164
Industrie Natuzzi S.p.A., ADR (Consumer Goods and
Services) 612 16,906
Telecom Italia S.p.A. (Telecommunications)* 1,700 13,403
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$ 55,908
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Japan - 5.3%
Aeon Credit Service Co. Ltd. (Financial Services) 200 $ 9,280
Aiful Corp. (Financial Services) 100 6,297
Canon, Inc., ADR (Special Products and Services) 500 11,406
Fujimi, Inc. (Electronics) 110 4,354
Osaka Sanso Kogyo Ltd. (Chemicals) 5,000 8,621
Sony Corp., ADR (Electronics) 243 20,670
Ushio, Inc. (Electronics) 1,000 7,721
----------
$ 68,349
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Malaysia - 2.9%
New Straits Times Press Berhad (Printing and
Publishing) 10,000 $ 15,659
Tanjong PLC (Entertainment) 9,000 22,006
----------
$ 37,665
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Netherlands - 13.0%
Akzo Nobel N.V. (Chemicals) 134 $ 27,235
Benckiser N.V. (Consumer Goods and Services)* 490 27,067
Brunel International N.V. (Human Resources)* 940 27,969
Fugro N.V. (Engineering)* 575 22,628
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 140 6,383
IHC Caland N.V. (Transportation)* 168 9,280
ING Groep N.V. (Financial Services)* 300 17,032
Koninklijke Arend Groep N.V. (Consumer Goods and
Services) 478 16,929
Royal Dutch Petroleum Co. (Oils) 217 12,289
----------
$ 166,812
- ----------------------------------------------------------------------------------------------
Norway - 0.8%
Christiania Bank and Trust (Banks and Credit Cos.) 2,500 $ 10,622
- ----------------------------------------------------------------------------------------------
Peru - 1.0%
Luz del Sur S.A. (Utilities - Electric) 2,932 $ 3,194
Telefonica del Peru S.A., ADR (Telecommunications) 443 9,552
----------
$ 12,746
- ----------------------------------------------------------------------------------------------
Portugal - 2.4%
Banco Espirito Santo e Comercial de Lisboa S.A. (Banks
and Credit Cos.) 403 $ 18,628
Portugal Telecom S.A. (Utilities - Telephone) 233 12,218
----------
$ 30,846
- ----------------------------------------------------------------------------------------------
Singapore - 2.9%
Hong Leong Finance Ltd. (Finance)+ 5,000 $ 8,517
Mandarin Oriental International Ltd. (Restaurants and
Lodgings)* 17,000 13,600
Overseas Union Bank (Finance) 4,000 15,608
----------
$ 37,725
- ----------------------------------------------------------------------------------------------
South Africa - 0.3%
South African Breweries, ADR (Food and Beverage
Products) 150 $ 4,397
- ----------------------------------------------------------------------------------------------
South Korea - 0.4%
Pohang Iron & Steel Co. Ltd., ADR (Steel) 265 $ 5,134
- ----------------------------------------------------------------------------------------------
Spain - 3.5%
Abengoa S.A. (Construction) 239 $ 21,328
Acerinox S.A. (Iron and Steel) 85 13,979
Repsol S.A., ADR (Oil Services) 199 10,124
----------
$ 45,431
- ----------------------------------------------------------------------------------------------
Sweden - 5.2%
Ericsson LM, "B" (Telecommunications) 220 $ 10,437
Securitas AB, "B" (Commercial Services) 375 12,734
Skandia Forsakrings AB (Insurance) 292 18,993
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 356 11,711
Volvo AB, "B" (Automobiles) 400 12,709
----------
$ 66,584
- ----------------------------------------------------------------------------------------------
Switzerland - 2.6%
Ciba Specialty AG (Chemicals)* 100 $ 12,795
Kuoni Reisen Holdings AG (Transportation) 2 10,040
Novartis AG (Pharmaceuticals) 6 10,622
----------
$ 33,457
- ----------------------------------------------------------------------------------------------
United Kingdom - 12.9%
ASDA Group PLC (Supermarkets) 4,147 $ 13,915
British Aerospace PLC (Aerospace and Defense)* 853 28,114
British Petroleum PLC (Oils)* 907 13,062
HSBC Holdings PLC (Financial Services)* 200 6,505
Kwik-Fit Holdings PLC (Automotive Repair Centers) 1,404 10,963
Lloyds TSB Group PLC (Banks and Credit Cos.)* 813 12,669
LucasVarity PLC (Automotive) 6,050 24,431
PowerGen PLC (Utilities - Electric)* 611 8,543
Sema Group PLC (Computer Software - Systems) 240 9,483
Standard Chartered PLC (Banks and Credit Cos.) 800 11,609
Taylor Nelson AGB (Advertising) 3,600 6,545
Williams PLC (Diversified Manufacturing) 2,530 20,221
----------
$ 166,060
- ----------------------------------------------------------------------------------------------
Venezuela - 1.0%
Compania Anonima Nacional Telefonos de Venezuela, ADR
(Telecommunications) 300 $ 12,544
- ----------------------------------------------------------------------------------------------
Total Foreign Stocks $1,252,622
- ----------------------------------------------------------------------------------------------
U.S. Stocks - 1.2%
Medical and Health Products - 0.9%
American Home Products Corp. 120 $ 11,445
- ----------------------------------------------------------------------------------------------
Telecommunications - 0.3%
Global TeleSystems Group, Inc.* 100 $ 4,675
- ----------------------------------------------------------------------------------------------
Total U.S. Stocks $ 16,120
- ----------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,098,047) $1,268,742
- ----------------------------------------------------------------------------------------------
Short-Term Obligation - 2.7%
- ----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ----------------------------------------------------------------------------------------------
General Electric Co., due 4/01/98, at Amortized Cost $ 35 $ 35,000
- ----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,133,047) $1,303,742
Other Assets, Less Liabilities - (1.4)% (18,607)
- ----------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,285,135
- ----------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
See notes to financial statements
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - March 31, 1998
<TABLE>
<CAPTION>
MFS INTERNATIONAL STRATEGIC GROWTH FUND
Stocks - 95.1%
- ----------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Australia - 3.2%
QBE Insurance Group Ltd. (Insurance) 5,700 $ 24,919
Seven Network Ltd. (Entertainment) 3,900 14,338
----------
$ 39,257
- ----------------------------------------------------------------------------------------------
Canada - 4.5%
Canadian National Railway Co. (Railroads) 780 $ 49,920
Legacy Hotel Real Estate Investment Trust (Real Estate)## 800 5,240
----------
$ 55,160
- ----------------------------------------------------------------------------------------------
Chile - 1.6%
Chilectra S.A., ADR (Utilities - Electric) 750 $ 20,250
- ----------------------------------------------------------------------------------------------
Finland - 3.5%
Huhtamaki Oy Group (Conglomerate) 185 $ 10,060
Pohjola Insurance Group, "A" (Insurance) 330 15,296
TT Tieto Oy (Computer Software - Systems) 105 17,783
----------
$ 43,139
- ----------------------------------------------------------------------------------------------
France - 6.4%
Renault S.A. (Automobiles) 200 $ 8,914
TOTAL S.A., "B" (Oils) 170 20,423
TV Francaise (Broadcasting) 150 18,650
Union des Assurances Federales S.A. (Insurance) 185 30,411
----------
$ 78,398
- ----------------------------------------------------------------------------------------------
Germany - 6.7%
Adidas-Salomon AG (Apparel and Textiles) 90 $ 15,969
Henkel KGaA (Chemicals) 630 45,811
Wella AG (Cosmetics) 25 21,506
----------
$ 83,286
- ----------------------------------------------------------------------------------------------
Greece - 0.4%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 200 $ 5,010
- ----------------------------------------------------------------------------------------------
Hong Kong - 1.3%
Wing Hang Bank Ltd. (Banks and Credit Cos.) 5,500 $ 16,326
- ----------------------------------------------------------------------------------------------
Ireland - 3.4%
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.)* 17,891 $ 41,670
- ----------------------------------------------------------------------------------------------
Italy - 1.8%
Banca Carige S.p.A. (Banks and Credit Cos.) 1,200 $ 13,435
ERG S.p.A. (Oils)* 2,000 9,336
----------
$ 22,771
- ----------------------------------------------------------------------------------------------
Japan - 10.5%
Canon, Inc., ADR (Special Products and Services) 700 $ 15,969
Eisai Co. Ltd. (Pharmaceuticals) 1,000 13,718
Kinki Coca-Cola Bottling Co. (Beverages) 1,000 11,319
Kirin Beverage Corp. (Beverages) 1,000 19,116
Nitto Denko Corp. (Industrial Goods and Services) 1,000 14,543
Sony Corp. (Electronics) 100 8,471
Sony Corp., ADR (Electronics) 230 19,564
Tokyo Broadcasting System, Inc. (Broadcasting) 1,000 11,469
Ushio, Inc. (Electronics) 2,000 15,442
----------
$ 129,611
- ----------------------------------------------------------------------------------------------
Malaysia - 2.8%
New Straits Times Press Berhad (Printing and Publishing) 6,000 $ 9,396
Tanjong PLC (Entertainment) 10,000 24,451
----------
$ 33,847
- ----------------------------------------------------------------------------------------------
Mexico - 0.3%
TV Azteca, S.A. de C.V., ADR (Broadcasting)* 200 $ 3,925
- ----------------------------------------------------------------------------------------------
Netherlands - 11.2%
Akzo Nobel N.V. (Chemicals) 200 $ 40,649
Benckiser N.V. (Consumer Goods and Services)* 560 30,933
Brunel International N.V. (Human Resources) 620 18,448
IHC Caland N.V. (Transportation) 170 9,391
Ing Groep N.V. (Financial Services) 420 23,845
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services) 430 15,230
----------
$ 138,496
- ----------------------------------------------------------------------------------------------
Peru - 1.0%
Luz del Sur S.A. (Utilities - Electric) 1,790 $ 1,950
Telefonica del Peru S.A., ADR (Telecommunications) 500 10,781
----------
$ 12,731
- ----------------------------------------------------------------------------------------------
Portugal - 4.8%
Banco Espirito Santo e Comercial de Lisboa S.A. (Banks
and Credit Cos.) 330 $ 15,253
Banco Totta & Acores S.A. (Banks and Credit Cos.) 700 25,959
Portugal Telecom S.A. (Utilities - Telephone) 350 18,214
----------
$ 59,426
- ----------------------------------------------------------------------------------------------
Singapore - 2.2%
Hong Leong Finance Ltd. (Finance)+ 7,000 $ 11,923
Overseas Union Bank (Finance) 4,000 15,609
----------
$ 27,532
- ----------------------------------------------------------------------------------------------
Spain - 2.7%
Acerinox S.A. (Iron and Steel) 100 $ 16,446
Repsol S.A. (Oils) 320 16,338
----------
$ 32,784
- ----------------------------------------------------------------------------------------------
Sweden - 6.9%
Astra AB (Pharmaceuticals) 1,100 $ 21,835
Skandia Forsakrings AB (Insurance) 330 21,464
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 770 25,330
Volvo AB, "B" (Automobiles) 530 16,840
----------
$ 85,469
- ----------------------------------------------------------------------------------------------
Switzerland - 2.9%
Ciba Specialty AG (Chemicals)* 170 $ 21,752
Novartis AG (Pharmaceuticals) 8 14,163
----------
$ 35,915
- ----------------------------------------------------------------------------------------------
United Kingdom - 16.1%
ASDA Group PLC (Supermarkets) 6,200 $ 20,803
Avis Europe PLC (Auto Rental)## 3,500 14,222
British Aerospace PLC (Aerospace and Defense)* 1,300 42,847
British Petroleum PLC (Oils) 1,714 24,685
Carlton Communicatons PLC (Broadcasting) 1,100 8,773
Diageo PLC (Food and Beverages) 909 10,723
Lloyds TSB Group PLC (Banks and Credit Cos.) 1,090 16,986
LucasVarity PLC (Automotive) 5,800 23,421
PowerGen PLC (Utilities - Electric) 1,000 13,983
Tomkins PLC (Conglomerate) 3,600 22,032
----------
$ 198,475
- ----------------------------------------------------------------------------------------------
Venezuela - 0.9%
Compania Anonima Nacional Telefonos de Venezuela, ADR
(Telecommunications) 270 $ 11,289
- ----------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,032,071) $1,174,767
- ----------------------------------------------------------------------------------------------
Short-Term Obligation - 5.7%
- ----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ----------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 4/01/98, at Amortized Cost $ 70 $ 70,000
- ----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,102,071) $1,244,767
Other Assets, Less Liabilities - (0.8)% (10,174)
- ----------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,234,593
- ----------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - March 31, 1998
<TABLE>
<CAPTION>
MFS INTERNATIONAL VALUE FUND
Stocks - 93.9%
- ----------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 86.8%
Australia - 2.5%
QBE Insurance Group Ltd. (Insurance) 3,250 $ 14,208
Seven Network Ltd. (Entertainment) 4,400 16,176
----------
$ 30,384
- ----------------------------------------------------------------------------------------------
Austria - 0.4%
Austria Tabak AG (Tobacco)* 100 $ 5,314
- ----------------------------------------------------------------------------------------------
Brazil - 1.7%
Companhia Cervejaria Brahma, ADR (Beverages) 1,300 $ 20,150
- ----------------------------------------------------------------------------------------------
Canada - 1.6%
Canadian National Railway Co. (Railroads) 300 $ 19,200
- ----------------------------------------------------------------------------------------------
Chile - 1.6%
Enersis S.A., ADR (Utilities - Electric) 600 $ 18,938
- ----------------------------------------------------------------------------------------------
France - 13.2%
Alcatel Alsthom Compagnie (Telecommunications) 150 $ 28,169
Pin Printemps Redo (Real Estate Investment Trust) 26 20,110
Renault Regie Nationale (Automobiles) 225 10,028
Sanofi S.A. (Medical and Health Products) 120 13,777
SEITA (Tobacco) 625 24,524
Total SA, ADR (Oils) 370 22,223
TV Francaise (Broadcasting) 100 12,434
Union des Assurances Federales S.A. (Insurance) 175 28,767
----------
$ 160,032
- ----------------------------------------------------------------------------------------------
Germany - 8.4%
Adidas-Salomon AG (Apparel and Textiles) 100 $ 17,743
Henkel KGaA (Chemicals) 300 21,815
Mannesmann AG (Diversified Machinery) 35 25,640
Prosieben Media AG (Entertainment)* 300 15,663
Wella AG (Cosmetics) 25 21,506
----------
$ 102,367
- ----------------------------------------------------------------------------------------------
Hong Kong - 1.1%
Wing Hang Bank Ltd. (Banks and Credit Cos.) 4,500 $ 13,358
- ----------------------------------------------------------------------------------------------
Italy - 3.6%
Instituto Nazionale delle Assicurazioni (Insurance) 6,000 $ 19,462
Telecom Italia S.p.A. (Telecommunications)* 4,000 24,522
----------
$ 43,984
- ----------------------------------------------------------------------------------------------
Japan - 6.5%
Aiful Corp. (Financial Services) 100 $ 6,297
Canon, Inc. (Office Equipment) 1,000 22,564
Sony Corp., ADR (Electronics) 200 17,013
Terumo Corp. (Pharmaceuticals) 1,000 14,018
Tokyo Broadcasting System, Inc. (Broadcasting) 1,000 11,469
Ushio, Inc. (Electronics) 1,000 7,721
----------
$ 79,082
- ----------------------------------------------------------------------------------------------
Malaysia - 1.4%
Tanjong PLC (Entertainment) 7,000 $ 17,115
- ----------------------------------------------------------------------------------------------
Netherlands - 9.0%
Akzo Nobel N.V. (Chemicals) 120 $ 24,389
Benckiser N.V. (Consumer Goods and Services)* 200 11,048
Hunter Douglas N.V., ADR (Consumer Goods and Services)* 465 21,200
IHC Caland N.V. (Transportation)* 350 19,333
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services) 320 11,334
Royal Dutch Petroleum Co., ADR (Oils) 400 22,725
----------
$ 110,029
- ----------------------------------------------------------------------------------------------
Norway - 1.8%
Christiania Bank and Trust (Banks and Credit Cos.) 5,000 $ 21,243
- ----------------------------------------------------------------------------------------------
Peru - 1.0%
Telefonica del Peru S.A., ADR (Telecommunications) 550 $ 11,859
- ----------------------------------------------------------------------------------------------
Portugal - 2.4%
Banco Totta E Acores (Banks and Credit Cos.) 800 $ 29,667
- ----------------------------------------------------------------------------------------------
Singapore - 0.8%
Hong Leong Finance Ltd. (Finance)+ 6,000 $ 10,220
- ----------------------------------------------------------------------------------------------
Spain - 1.4%
Acerinox S.A. (Iron and Steel) 100 $ 16,446
- ----------------------------------------------------------------------------------------------
Sweden - 6.7%
Astra AB (Pharmaceuticals) 1,200 $ 23,820
Securitas AB, "B" (Commercial Services) 190 6,452
Skandia Forsakrings AB (Insurance) 200 13,009
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 750 24,672
Volvo AB, "B" (Automobiles) 400 12,709
----------
$ 80,662
- ----------------------------------------------------------------------------------------------
Switzerland - 2.2%
Nestle AG, Registered Shares (Food and Beverage
Products) 14 $ 26,760
- ----------------------------------------------------------------------------------------------
United Kingdom - 19.5%
ASDA Group PLC (Supermarkets) 5,100 $ 17,112
Avis Europe PLC (Auto Rental)## 8,000 32,507
Bank of Scotland (Banks and Credit Cos.)* 1,500 17,795
Booker PLC (Food - Wholesale)* 3,600 15,684
British Aerospace PLC (Aerospace and Defense)* 500 16,480
Compass Group PLC (Food - Catering)## 1,500 25,561
Gallaher Group PLC (Tobacco) 4,000 22,017
LucasVarity PLC (Automotive) 6,000 24,229
PowerGen PLC (Utilities - Electric)* 1,600 22,373
Tomkins PLC (Conglomerate) 2,650 16,218
Williams PLC (Diversified Manufacturing) 3,300 26,376
----------
$ 236,352
- ----------------------------------------------------------------------------------------------
Total Foreign Stocks $1,053,162
- ----------------------------------------------------------------------------------------------
U.S. Stocks - 7.1%
Construction Services - 1.9%
Martin Marietta Materials, Inc. 550 $ 23,753
- ----------------------------------------------------------------------------------------------
Insurance - 1.9%
Transamerica Corp. 200 $ 23,300
- ----------------------------------------------------------------------------------------------
Medical and Health Products - 1.6%
American Home Products Corp. 200 $ 19,075
- ----------------------------------------------------------------------------------------------
Telecommunications - 1.7%
Sprint Corp. 300 $ 20,306
- ----------------------------------------------------------------------------------------------
Total U.S. Stocks $ 86,434
- ----------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $992,754) $1,139,596
- ----------------------------------------------------------------------------------------------
Short-Term Obligation - 6.2%
- ----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ----------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 4/01/98, at Amortized Cost $ 75 $ 75,000
- ----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,067,754) $1,214,596
Other Assets, Less Liabilities - (0.1)% (807)
- ----------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,213,789
- ----------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
</TABLE>
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - March 31, 1998
<TABLE>
<CAPTION>
MFS ASIA PACIFIC FUND
Stocks - 94.2%
- ----------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Australia - 8.0%
Australia & New Zealand Banking Group Ltd. (Banks and
Credit Cos.)* 4,826 $ 32,287
Broken Hill Proprietary Co. Ltd. (Mining)* 4,034 41,258
Fletcher Challenge Paper, ADR (Paper Products) 1,400 19,688
Mayne Nickless Ltd. (Business Services) 2,000 10,333
QBE Insurance Group Ltd. (Insurance) 8,225 35,958
Westpac Banking Corp. Ltd., ADR (Banks and Credit Cos.) 1,000 33,875
----------
$ 173,399
- ----------------------------------------------------------------------------------------------
Canada - 1.1%
Bell Canada International, Inc. (Telecommunications)* 1,100 $ 24,612
- ----------------------------------------------------------------------------------------------
China - 1.0%
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 900 $ 21,150
- ----------------------------------------------------------------------------------------------
Hong Kong - 19.5%
Asia Electronics Holding Co. (Electronics)* 1,500 $ 13,031
Cheung Kong Holdings Ltd. (Real Estate) 13,000 92,280
Citic Pacific Ltd. (Conglomerate) 4,000 14,145
Hong Kong & China Gas Ltd. (Oil and Gas) 10,000 16,778
Hong Kong Electric Holdings Ltd. (Utilities - Electric) 5,000 17,165
Hutchison Whampoa Ltd. (Conglomerate) 14,000 98,475
Li & Fung Ltd. (Wholesale) 34,000 53,974
Liu Chong Hing Bank (Banks and Credit Cos.) 19,000 30,652
National Mutual Asia Ltd. (Insurance) 24,000 19,824
Sun Hung Kai Properties Ltd. (Real Estate) 4,000 27,232
Wing Hang Bank Ltd. (Banks and Credit Cos.) 14,000 41,558
----------
$ 425,114
- ----------------------------------------------------------------------------------------------
India - 0.3%
Mahanagar Telephone Nigam Ltd., GDR (Utilities -
Telephone)* 400 $ 6,870
- ----------------------------------------------------------------------------------------------
Indonesia - 1.0%
PT Indah Kiat Pulp & Paper Corp. (Paper Products) 90,000 $ 22,500
- ----------------------------------------------------------------------------------------------
Japan - 33.0%
Aeon Credit Service Co. Ltd. (Financial Services) 480 $ 22,273
AFLAC, Inc. (Insurance) 700 44,275
Bank of Tokyo Ltd. (Banks and Credit Cos.) 2,000 24,288
Bridgestone Corp. (Tire and Rubber) 2,000 45,277
Canon, Inc. (Office Equipment) 2,000 45,128
Fujimi, Inc. (Electronics) 550 21,769
Keyence Corp. (Electronics) 300 41,379
Kinki Coca-Cola Bottling Co. (Beverages) 3,000 33,958
Kirin Beverage Corp. (Beverages) 1,000 19,116
Meitec Corp. (Computer Software - Systems) 1,000 31,259
Nippon Broadcasting System (Broadcasting) 1,000 40,180
Nippon Telephone & Telegraph Co. (Utilities - Telephone) 4 33,283
NTT Data Corp. (Telecommunications) 1 44,453
Secom Co. (Consumer Goods and Services) 1,000 61,095
Shohkoh Fund & Co. Ltd. (Financial Services) 100 33,358
Sony Corp. (Electronics) 700 59,295
Takeda Chemical Industries (Pharmaceuticals) 1,000 25,412
TDK Corp., ADR (Electronics) 520 39,910
Terumo Corp. (Pharmaceuticals) 2,000 28,036
Ushio, Inc. (Electronics) 3,000 23,164
----------
$ 716,908
- ----------------------------------------------------------------------------------------------
Malaysia - 3.9%
New Straits Times Press Berhad (Printing and Publishing) 23,000 $ 36,016
Tanjong PLC (Entertainment) 20,000 48,901
----------
$ 84,917
- ----------------------------------------------------------------------------------------------
New Zealand - 0.5%
Telecom Corp. of New Zealand Ltd. (Utilities - Telephone) 300 $ 11,531
- ----------------------------------------------------------------------------------------------
Philippines - 3.8%
San Miguel Corp., "B" (Brewery) 15,000 $ 26,211
SM Prime Holding, Inc. (Real Estate) 281,000 55,055
----------
$ 81,266
- ----------------------------------------------------------------------------------------------
Singapore - 14.5%
Datacraft Asia Ltd. (Telecommunications) 25,000 $ 81,000
Development Bank of Singapore Ltd. (Banks and Credit
Cos.)* 6,600 48,238
Hong Leong Finance Ltd. (Finance)+ 27,000 45,990
Mandarin Oriental International Ltd. (Restaurants and
Lodgings)* 21,000 16,800
Overseas Union Bank (Finance) 10,000 39,021
Overseas-Chinese Banking Corp. Ltd. (Finance) 1,000 5,636
Singapore Land Ltd. (Conglomerate) 15,000 48,312
Singapore Press Holdings Ltd. (Printing & Publishing) 2,552 29,243
----------
$ 314,240
- ----------------------------------------------------------------------------------------------
South Korea - 1.4%
Pohang Iron & Steel Co. Ltd., ADR (Steel) 1,550 $ 30,031
- ----------------------------------------------------------------------------------------------
Taiwan - 1.1%
Acer, Inc., GDR (Computer Hardware)* 2,400 $ 24,480
- ----------------------------------------------------------------------------------------------
United Kingdom - 5.1%
HSBC Holdings PLC (Financial Services)* 3,600 $ 110,116
- ----------------------------------------------------------------------------------------------
Total Stocks (Identified Cost $2,198,950) $2,047,134
- ----------------------------------------------------------------------------------------------
Rights
- ----------------------------------------------------------------------------------------------
Development Bank of Singapore (Banks and Credit Cos.)*
(Identified Cost, $0) 1,200 $ 0
- ----------------------------------------------------------------------------------------------
Short-Term Obligation - 6.9%
- ----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ----------------------------------------------------------------------------------------------
Federal National Mortgage Assn., due 4/01/98, at
Amortized Cost $ 150 $ 150,000
- ----------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,348,950) $2,197,134
- ----------------------------------------------------------------------------------------------
Securities Sold Short - (1.1)%
- ----------------------------------------------------------------------------------------------
SHARES
- ----------------------------------------------------------------------------------------------
Malayan Banking Berhad (Banks and Credit Cos.) (Proceeds
Received, $23,099) (6,000) $ (23,077)
- ----------------------------------------------------------------------------------------------
Other Assets, Less Liabilities 249
- ----------------------------------------------------------------------------------------------
Net Assets - 100.0% $2,174,306
- ----------------------------------------------------------------------------------------------
* Non-income producing security.
+ Restricted security.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------------------------
INTERNATIONAL
INTERNATIONAL STRATEGIC
OPPORTUNITIES GROWTH
MARCH 31, 1998 FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $1,133,047 and
$1,102,071, respectively) $1,303,742 $1,244,767
Cash 1,099 1,780
Foreign currency, at value (identified cost, $249 and $840,
respectively) 251 829
Receivable for investments sold 4,269 3,687
Dividends and interest receivable 2,283 1,830
---------- ----------
Total assets $1,311,644 $1,252,893
---------- ----------
Liabilities:
Payable for investments purchased $ 17,174 $ 10,714
Net payable for closed forward foreign currency exchange
contracts 5,384 4,146
Accrued expenses and other liabilities 3,951 3,440
---------- ----------
Total liabilities $ 26,509 $ 18,300
---------- ----------
Net assets $1,285,135 $1,234,593
========== ==========
Net assets consist of:
Paid-in capital $1,152,493 $1,078,112
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 165,293 138,545
Accumulated undistributed net realized gain (loss) on
investments and foreign currency transactions (31,053) 19,206
Accumulated net investment loss (1,598) (1,270)
---------- ----------
Total $1,285,135 $1,234,593
========== ==========
Shares of beneficial interest outstanding:
Class A 64,107 38,081
Class I 51,267 69,866
---------- ----------
Total shares of beneficial interest outstanding 115,374 107,947
========== ==========
Net assets:
Class A $ 714,084 $ 435,494
Class I 571,051 799,099
---------- ----------
Total net assets $1,285,135 $1,234,593
========== ==========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $11.14 $11.44
====== ======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $11.14 $11.44
====== ======
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Statements of Assets and Liabilities (Unaudited) - continued
- ---------------------------------------------------------------------------------------------------------
INTERNATIONAL ASIA
VALUE PACIFIC
MARCH 31, 1998 FUND FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $1,067,754 and
$2,348,950, respectively) $1,214,596 $2,197,134
Cash 291 4,585
Foreign currency, at value (identified cost, $232 and $1,733,
respectively) 232 1,755
Receivable for investments sold 6,852 23,099
Dividends and interest receivable 1,444 3,857
---------- ----------
Total assets $1,223,415 $2,230,430
---------- ----------
Liabilities:
Securities sold short, at value (proceeds received, $23,099) $ -- $ 23,077
Payable for investments purchased 6,361 21,645
Payable to investment adviser 3,265 --
Net payable for forward foreign currency exchange contracts
to sell -- 6,442
Payable to affiliates -
Shareholder servicing agent fee -- 7
Administrative fee -- 3
Accrued expenses and other liabilities -- 4,950
---------- ----------
Total liabilities $ 9,626 $ 56,124
---------- ----------
Net assets $1,213,789 $2,174,306
========== ==========
Net assets consist of:
Paid-in capital $1,049,733 $2,414,600
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies 146,822 (158,218)
Accumulated undistributed net realized gain (loss) on
investments and foreign currency transactions 14,528 (82,884)
Accumulated undistributed net investment income 2,706 808
---------- ----------
Total $1,213,789 $2,174,306
========== ==========
Shares of beneficial interest outstanding:
Class A 96,005 206,053
Class I 8,911 42,381
---------- ----------
Total shares of beneficial interest outstanding 104,916 248,434
========== ==========
Net assets:
Class A $1,110,641 $1,803,281
Class I 103,148 371,025
---------- ----------
Total net assets $1,213,789 $2,174,306
========== ==========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $11.57 $ 8.75
====== ======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $11.58 $ 8.75
====== ======
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Statements of Operations (Unaudited)
- ------------------------------------------------------------------------------------------------
INTERNATIONAL
INTERNATIONAL STRATEGIC
OPPORTUNITIES GROWTH
PERIOD ENDED MARCH 31, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income:
Income -
Dividends $ 4,983 $ 5,433
Interest 3,093 2,965
Foreign taxes withheld (587) (678)
-------- --------
Total investment income $ 7,489 $ 7,720
-------- --------
Expenses -
Management fees $ 5,021 $ 5,009
Shareholder servicing agent fees 614 578
Distribution and service fees - (Class A) 1,446 878
Administrative fees 62 62
Registration fees 5,875 5,875
Custodian fees 2,696 1,484
Printing 2,300 2,300
Postage 21 251
Auditing fees 2,750 2,749
Legal fees 713 525
Miscellaneous -- 805
-------- --------
Total expenses $ 21,498 $ 20,516
Fees paid indirectly (62) (153)
Preliminary reduction of expenses by investment adviser
and distributor (12,349) (11,373)
-------- --------
Net expenses $ 9,087 $ 8,990
-------- --------
Net investment loss $ (1,598) $ (1,270)
-------- --------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $(30,753) $ 19,328
Foreign currency transactions (300) (122)
-------- --------
Net realized gain (loss) on investments and
foreign currency transactions $(31,053) $ 19,206
-------- --------
Change in unrealized appreciation (depreciation) -
Investments $170,695 $142,685
Translation of assets and liabilities in foreign currencies (5,402) (4,140)
-------- --------
Net unrealized gain on investments and foreign currency
translation $165,293 $138,545
-------- --------
Net realized and unrealized gain on investments and
foreign currency $134,240 $157,751
-------- --------
Increase in net assets from operations $132,642 $156,481
======== ========
* For the period from the commencement of the Fund's investment operations, October 9, 1997,
through March 31, 1998.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Statements of Operations (Unaudited) - continued
- ------------------------------------------------------------------------------------------------
INTERNATIONAL ASIA
VALUE PACIFIC
PERIOD ENDED MARCH 31, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income:
Income -
Interest $ 7,993 $ 10,347
Dividends 3,700 8,864
Foreign taxes withheld (387) (1,109)
-------- ---------
Total investment income $ 11,306 $ 18,102
-------- ---------
Expenses -
Management fees $ 4,751 $ 9,029
Shareholder servicing agent fees 553 378
Distribution and service fees - (Class A) 2,250 3,850
Administrative fees 59 50
Registration fees 5,875 4,885
Custodian fees 1,427 2,535
Printing 2,300 500
Postage 250 41
Auditing fees 3,250 2,900
Legal fees 613 908
Miscellaneous 476 188
-------- ---------
Total expenses $ 21,804 $ 25,264
Fees paid indirectly (122) (37)
Preliminary reduction of expenses by investment adviser
and distributor (13,082) (12,879)
-------- ---------
Net expenses $ 8,600 $ 12,348
-------- ---------
Net investment income $ 2,706 $ 5,754
-------- ---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 14,404 $ (84,115)
Foreign currency transactions 124 1,231
-------- ---------
Net realized gain (loss) on investments and
foreign currency transactions $ 14,528 $ (82,884)
-------- ---------
Change in unrealized appreciation (depreciation) -
Investments $146,841 $(151,816)
Securities sold short -- 22
Translation of assets and liabilities in foreign currencies (19) (6,424)
-------- ---------
Net unrealized gain (loss) on investments and foreign
currency translation $146,822 $(158,218)
-------- ---------
Net realized and unrealized gain (loss) on investments
and
foreign currency $161,350 $(241,102)
-------- ---------
Increase (decrease) in net assets from operations $164,056 $(235,348)
======== =========
* For the period from the commencement of the Fund's investment operations, October 9, 1997,
through March 31, 1998.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Statements of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------------------------------------------
INTERNATIONAL
INTERNATIONAL STRATEGIC
OPPORTUNITIES GROWTH
PERIOD ENDED MARCH 31, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment loss $ (1,598) $ (1,270)
Net realized gain (loss) on investments and foreign currency
transactions (31,053) 19,206
Net unrealized gain on investments and foreign currency
translation 165,293 138,545
---------- ----------
Increase in net assets from operations $ 132,642 $ 156,481
---------- ----------
Net increase in net assets from Fund share transactions $1,152,493 $1,078,112
---------- ----------
Total increase in net assets $1,285,135 $1,234,593
Net assets:
At beginning of period -- --
--------- ---------
At end of period (including accumulated net investment loss
of $1,598 and $1,270, respectively) $1,285,135 $1,234,593
========== ==========
* For the period from the commencement of the Fund's investment operations, October 9, 1997,
through March 31, 1998.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Statements of Changes in Net Assets (Unaudited) - continued
- ------------------------------------------------------------------------------------------------
INTERNATIONAL ASIA
VALUE PACIFIC
PERIOD ENDED MARCH 31, 1998* FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,706 $ 5,754
Net realized gain (loss) on investments and foreign currency
transactions 14,528 (82,884)
Net unrealized gain (loss) on investments and foreign
currency translation 146,822 (158,218)
---------- ----------
Increase (decrease) in net assets from operations $ 164,056 $ (235,348)
---------- ----------
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 $1,049,733 $2,414,600
---------- ----------
Total increase in net assets $1,213,789 $2,174,306
Net assets:
At beginning of period -- --
---------- ----------
At end of period (including accumulated undistributed net
investment income of $2,706, and $808, respectively) $1,213,789 $2,174,306
========== ==========
* For the period from the commencement of the Fund's investment operations, October 9, 1997,
through March 31, 1998.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Financial Highlights (Unaudited)
- ----------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 1998* INTERNATIONAL OPPORTUNITIES FUND
- ----------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
<S> <C> <C>
Net asset value - beginning of period $ 10.00 $ 10.00
------- -------
Income from investment operations# -
Net investment loss(S) $ (0.01) $ (0.01)
Net realized and unrealized gain on investments
and foreign currency transactions 1.15 1.15
------- -------
Total from investment operations $ 1.14 $ 1.14
------- -------
Net asset value - end of period $ 11.14 $ 11.14
======= =======
Total return 11.40%++ 11.40%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.75%+ 1.75%+
Net investment loss (0.24)%+ (0.24)%+
Portfolio turnover 74% 74%
Average commission rate $0.0127 $0.0127
Net assets at end of period (000 omitted) $ 714 $ 571
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
March 31, 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) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the
Fund at not more than 1.75% of the Fund's average daily net assets. The investment adviser and
distributor did not impose any of their fees for the period indicated. If the fees had been incurred
by the Fund and/or if actual expenses had been over/under this limitation, the net investment loss
per share and the ratios would have been:
Net investment loss $ (0.15) $ (0.12)
Ratios (to average net assets):
Expenses## 4.36%+ 3.86%+
Net investment loss (2.85)%+ (2.35)%+
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Financial Highlights (Unaudited) - continued
- -----------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 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 loss(S) $ (0.01) $ (0.01)
Net realized and unrealized gain on investments
and foreign currency transactions 1.45 1.45
------- -------
Total from investment operations $ 1.44 $ 1.44
------- -------
Net asset value - end of period $ 11.44 $ 11.44
======= =======
Total return 14.40%++ 14.40%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.75%+ 1.75%+
Net investment loss (0.24)%+ (0.25)%+
Portfolio turnover 33% 33%
Average commission rate $0.0256 $0.0256
Net assets at end of period (000 omitted) $ 435 $ 799
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
March 31, 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) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the
Fund at not more than 1.75% of the Fund's average daily net assets. The investment adviser and
distributor did not impose any of their fees for the period indicated. If the fees had been incurred
by the Fund and/or if actual expenses had been over/under this limitation, the net investment loss
per share and the ratios would have been:
Net investment loss $ (0.13) $ (0.11)
Ratios (to average net assets):
Expenses## 4.32%+ 3.82%+
Net investment loss (2.81)%+ (2.32)%+
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Financial Highlights (Unaudited) - continued
- ------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 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) $ 0.03 $ 0.03
Net realized and unrealized gain on investments
and foreign currency transactions 1.54 1.55
------- -------
Total from investment operations $ 1.57 $ 1.58
------- -------
Net asset value - end of period $ 11.57 $ 11.58
======= =======
Total return 15.70%++ 15.80%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.75%+ 1.75%+
Net investment income 0.55%+ 0.56%+
Portfolio turnover 25% 25%
Average commission rate $0.0286 $0.0286
Net assets at end of period (000 omitted) $ 1,111 $ 103
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
March 31, 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) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the
Fund at not more than 1.75% of the Fund's average daily net assets. The investment adviser and
distributor did not impose any of their fees for the period indicated. If the fees had been incurred
by the Fund and/or if actual expenses had been over/under this limitation, the net investment loss
per share and the ratios would have been:
Net investment loss $ (0.10) $ (0.08)
Ratios (to average net assets):
Expenses## 4.48%+ 3.98%+
Net investment loss (2.18)%+ (1.67)%+
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - continued
Financial Highlights (Unaudited) - continued
- --------------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 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) $ 0.03 $ 0.02
Net realized and unrealized loss on investments
and foreign currency transactions (1.26) (1.25)
------- -------
Total from investment operations $ (1.23) $ (1.23)
------- -------
Less distributions declared to shareholders from
net investment income $ (0.02) $ (0.02)
------- -------
Net asset value - end of period $ 8.75 $ 8.75
======= =======
Total return (12.26)%++ (12.26)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.34%+ 1.34%+
Net investment income 0.63%+ 0.55%+
Portfolio turnover 21% 21%
Average commission rate $0.0157 $0.0157
Net assets at end of period (000 omitted) $ 1,803 $ 371
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through
March 31, 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) The investment adviser and distributor voluntarily waived their fees for the period indicated. If the
fees had been incurred by the Fund, the net investment loss per share and the ratios would have been:
Net investment loss $ (0.03) $ (0.02)
Ratios (to average net assets):
Expenses## 2.84%+ 2.34%+
Net investment loss (0.87)%+ (0.45)%+
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS International Opportunities Fund, MFS International Strategic Growth Fund,
MFS International Value Fund, and MFS Asia Pacific 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.
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. 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. Securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains
and losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Forward Foreign Currency Exchange Contracts - The Funds may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Funds will enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, the Funds may enter into contracts to deliver
or receive foreign currency it will receive from or require for its normal
investment activities. The Funds may also use contracts in a manner intended
to protect foreign-currency-denominated securities from declines in value due
to unfavorable exchange rate movements. For non-hedging purposes, the Funds
may enter into contracts with the intent of changing the relative exposure of
the Funds' 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 Funds do not own with the intent of
purchasing it later at a lower price. The 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 the 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 the 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 deposited with the broker in connection
with the short sale, 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 and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on
such date.
Fees Paid Indirectly - The Funds' custody fee is calculated as a percentage of
the Funds' average daily net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
Funds. This amount is shown as a reduction of expenses on the Statement 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.
Multiple Classes of Shares of Beneficial Interest - The Funds offer multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Funds 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 preliminary reduction of expenses in the Statement of
Operations.
The MFS International Opportunities Fund, MFS International Strategic Growth
Fund, and MFS International Value Fund have a temporary expense reimbursement
agreement whereby MFS has voluntarily agreed to pay all of the Fund's
operating expenses, exclusive of management, distribution, and service fees.
Each Fund 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 March 31, 1998, the
aggregate unreimbursed expenses owed to MFS by the Funds amounted to:
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
-----------------------------------------------------------------------
$5,882 $5,486 $6,164
Administrator - Each Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, each Fund pays MFS an administrative fee
at the following annual percentages of the Funds' 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%
Each Fund pays no compensation directly to its Trustees who are officers of
the investment adviser, or to officers of each Fund, all of whom receive
remuneration for their services to each Fund from MFS. Certain officers and
Trustees of the Funds 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.
Distributor - 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 each 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, commissions to dealers and payments
to MFD wholesalers for sales at or above a certain dollar level, and other
such distribution-related expenses that are approved by the Trustees.
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. MFD
receives all contingent deferred sales charges. There were no contingent
deferred sales charges imposed during the period ended March 31, 1998.
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 each Fund's 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>
INTERNATIONAL INTERNATIONAL INTERNATIONAL ASIA
OPPORTUNITIES STRATEGIC GROWTH VALUE PACIFIC
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $1,793,311 $1,349,430 $1,151,878 $2,615,041
========== ========== ========== ==========
Sales $ 664,512 $ 336,640 $ 173,527 $ 355,076
========== ========== ========== ==========
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Funds, as computed on a federal income tax basis, are
as follows:
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL ASIA
OPPORTUNITIES STRATEGIC GROWTH VALUE PACIFIC
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate cost $1,133,047 $1,102,071 $1,067,754 $2,348,950
---------- ---------- ---------- ----------
Gross unrealized appreciation $ 191,511 $ 178,563 $ 172,015 $ 70,269
Gross unrealized depreciation (20,816) (35,867) (25,173) (222,085)
---------- ---------- ---------- ----------
Net unrealized appreciation (depreciation) $ 170,695 $ 142,696 $ 146,842 $ (151,816)
========== ========== ========== ==========
</TABLE>
(5) Shares of Beneficial Interest
The 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:
Class A Shares
PERIOD ENDED MARCH 31, 1998*
----------------------------------------
INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC
FUND GROWTH FUND
----------------- --------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 64,108 $640,938 38,181 $ 382,553
Shares reacquired (1) (5) (100) (1,064)
------ -------- ------- ----------
Net increase 64,107 $640,933 38,081 $ 381,489
====== ======== ======= ==========
Class A Shares
PERIOD ENDED MARCH 31, 1998*
----------------------------------------
INTERNATIONAL ASIA PACIFIC
VALUE FUND FUND
----------------- --------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 96,025 $960,810 206,374 $2,023,811
Shares issued to shareholders in
reinvestment of distributions -- -- 498 4,074
Shares reacquired (20) (201) (819) (5,680)
------ -------- ------- ----------
Net increase 96,005 $960,609 206,053 $2,022,205
====== ======== ======= ==========
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through March 31, 1998.
Class I Shares
PERIOD ENDED MARCH 31, 1998*
----------------------------------------
INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC
FUND GROWTH FUND
----------------- --------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 51,267 $511,560 72,391 $ 723,594
Shares reacquired -- -- (2,525) (26,971)
------ -------- ------- ----------
Net increase 51,267 $511,560 69,866 $ 696,623
====== ======== ======= ==========
Class I Shares
PERIOD ENDED MARCH 31, 1998*
----------------------------------------
INTERNATIONAL ASIA
VALUE FUND PACIFIC FUND
----------------- --------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 8,911 $ 89,124 47,761 $ 437,074
Shares issued to shareholders in
reinvestment of distributions -- -- 107 871
Shares reacquired -- -- (5,487) (45,550)
------ -------- ------- ----------
Net increase 8,911 $ 89,124 42,381 $ 392,395
====== ======== ======= ==========
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through March 31, 1998.
(6) Line of Credit
Each Fund and other affiliated funds participate in a $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
each Fund's shares. Interest is charged to each fund, based on its borrowings,
at a rate equal to the bank's base rate. In addition, a commitment fee, based
on the average daily unused portion of the line of credit, is allocated among
the participating funds at the end of each quarter. The commitment fee
allocated to the Funds for the period ended March 31, 1998, were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL ASIA
OPPORTUNITIES STRATEGIC GROWTH VALUE PACIFIC
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$2 $2 $4 $5
</TABLE>
(7) Financial Instruments
The Funds trade 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 short sales and forward foreign currency
exchange contracts. The notional or contractual amounts of these instruments
represent the investment the Funds have 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
ASIA PACIFIC FUND:
<TABLE>
<CAPTION>
CONTRACTS TO CONTRACTS NET UNREALIZED
SETTLEMENT DATE DELIVER IN EXCHANGE FOR AT VALUE DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 5/15/98 MYR 335,713 $ 88,160 $ 91,595 $(3,435)
5/15/98 SGD 185,898 112,000 115,007 (3,007)
-------
$(6,442)
=======
</TABLE>
INTERNATIONAL OPPORTUNITIES FUND:
Forward foreign currency purchases and sales under master netting agreements
amounted to a net payable of $3,966 with Deutsche Bank and $1,418 with Merrill
Lynch at March 31, 1998.
At March 31, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
INTERNATIONAL STRATEGIC GROWTH FUND:
Forward foreign currency purchases and sales under master netting agreements
amounted to a net payable of $3,437 with Deutsche Bank and $709 with Merrill
Lynch at March 31, 1998.
At March 31, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) Restricted Securities
The Funds may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At March 31, 1998,
the Funds owned the following restricted securities which may not be publicly
sold without registration under the Securities Act of 1933. The Funds does 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 PERCENTAGE OF
FUND DESCRIPTION ACQUISITION SHARES COST VALUE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International
Opportunities Hong Leong Finance Ltd. 10/13/97 5,000 $ 7,997 $ 8,517 0.66%
International Strategic
Growth Hong Leong Finance Ltd. 10/10/97 7,000 12,942 11,923 0.97%
International Value Hong Leong Finance Ltd. 10/21/97 6,000 9,702 10,220 0.84%
Asia Pacific Hong Leong Finance Ltd. 10/13/97 27,000 48,518 45,990 2.12%
</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) International Opportunities Fund
MFS(R) International Strategic Growth Fund
MFS(R) International Value Fund
MFS(R) Asia Pacific Fund
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INVESTMENT MANAGEMENT
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