<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT ANNUAL REPORT
75 YEARS SEPTEMBER 30, 1999
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) INTERNATIONAL
OPPORTUNITIES FUND
MFS(R) INTERNATIONAL
STRATEGIC GROWTH FUND
MFS(R) INTERNATIONAL
VALUE FUND
<PAGE>
MFS(R) INTERNATIONAL OPPORTUNITIES FUND
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
MFS(R) INTERNATIONAL VALUE FUND
TRUSTEES SECRETARY
Richard B. Bailey* - Private Stephen E. Cavan*
Investor; Former Chairman and
Director (until 1991), MFS ASSISTANT SECRETARY
Investment Management James R. Bordewick, Jr.*
J. Atwood Ives - Chairman and Chief CUSTODIAN
Executive Officer, Eastern State Street Bank and Trust Company
Enterprises (diversified services
company) AUDITORS
Ernst & Young LLP
Lawrence T. Perera - Partner,
Hemenway & Barnes (attorneys) INVESTOR INFORMATION
For MFS stock and bond market
William J. Poorvu - Adjunct outlooks, call toll free:
Professor, Harvard University 1-800-637-4458 anytime from a
Graduate School of Business touch-tone telephone.
Administration
For information on MFS mutual
Charles W. Schmidt - Private funds, call your financial
Investor consultant or, for an information
kit, call toll free: 1-800-637-2929
Arnold D. Scott* - Senior Executive any business day from 9 a.m. to 5
Vice President, Director, and p.m. Eastern time (or leave a
Secretary, MFS Investment message anytime).
Management
INVESTOR SERVICE
Jeffrey L. Shames* - Chairman, MFS Service Center, Inc.
Chief Executive Officer, and P.O. Box 2281
Director, MFS Investment Management Boston, MA 02107-9906
Elaine R. Smith - Independent For general information, call toll
Consultant free: 1-800-225-2606 any business
day from 8 a.m. to 8 p.m. Eastern
David B. Stone - Chairman and time.
Director, North American Management
Corp. (investment advisers) For service to speech- or
hearing-impaired, call toll free:
INVESTMENT ADVISER 1-800-637-6576 any business day
Massachusetts Financial Services Company from 9 a.m. to 5 p.m. Eastern time.
500 Boylston Street (To use this service, your phone
Boston, MA 02116-3741 must be equipped with a
Telecommunications Device for the
DISTRIBUTOR Deaf.)
MFS Fund Distributors, Inc.
500 Boylston Street For share prices, account balances,
Boston, MA 02116-3741 and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255)
CHAIRMAN AND PRESIDENT anytime from a touch-tone
Jeffrey L. Shames* telephone.
PORTFOLIO MANAGERS WORLD WIDE WEB
David A. Antonelli* www.mfs.com
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
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders, The current investment and economic environment bears little
resemblance to last year's. One year ago, global economies were floundering, and
the crisis in Asia threatened an already weak U.S. economy. Corporate earnings
were flat, and economists used the word "deflation" for the first time in recent
memory. Entering 1999, expectations for corporate earnings growth were lowered
dramatically. In an attempt to foster U.S. growth, the Federal Reserve Board
(the Fed) lowered interest rates.
As a result, this year the U.S. economy is booming and unemployment is low. Many
corporations are focused on improving their profitability, and investors have
been rewarded with positive surprises across a variety of industries. Our
analysts predict that corporate earnings growth for 1999 will average 12% - 15%.
Global economies also are showing signs of strength, and the Asian crisis has
passed. In fact, Japan's economic woes seem to have reached bottom. Although the
process is in its infancy, some Japanese corporations not only are talking about
restructuring and cost cutting, they also are beginning to take action, looking
within to become more competitive and improve returns on equity. While still
lagging the United States, Europe is beginning to restructure and consolidate.
These signs of international growth have contributed to concerns that the U.S.
economy now may be too strong. In June, and again in August, the Fed raised
rates by one-quarter of a percentage point to help ward off the specter of
inflation.
After an unprecedented four years of 20% annual returns in the U.S. equity
market, we fear that many investors have become accustomed to high returns and
have lost sight of the risks they take on to achieve them. In the current market
many investors are taking on additional risk - whether through day trading or
investing in speculative Internet stocks.
Risks are as much a part of the market today as they were one year ago. We
believe the market remains overvalued, with stocks priced 30% above our
analysts' earnings projections. And market narrowness has not abated; the top 25
stocks in the Standard & Poor's 500 Composite Index, a popular, unmanaged index
of common stock total return performance, are still the most overvalued. Such
extreme overvaluation makes the stock market sensitive to interest-rate news and
any negative earnings surprises. The Year 2000 (Y2K) computer problem is another
factor causing investor concern. While we believe corporate America is well
prepared to address any Y2K situations that may arise at year-end, no one can
predict investor behavior. In our opinion, it is investor behavior that has the
greatest potential to create market volatility.
We believe the best way to address Y2K and other market risks is through our
continuing commitment to MFS Original Research(R) and our fundamental investment
tenet of long-term investing. Whether markets are up or down, MFS analysts focus
on analyzing industries and visiting companies to determine the long-term
winners and the prices that will make them attractive opportunities. Because all
companies will not benefit equally from the improving international environment,
bottom-up research remains critical to identifying those that we believe are
successfully restructuring, consolidating, and gaining market share.
Changes in market and economic conditions can't be predicted but should always
be expected. The changes we have seen over the past year only reinforce our
commitment to long-term planning and investing. We believe volatility helps to
create opportunity for long-term investors to buy solid companies at attractive
prices. For this reason, we are continuing to expand our domestic and
international capabilities to ensure that MFS has primary, in-house research on
companies worldwide. We believe that we have built the right investment team,
backed by MFS Original Research, to take advantage of those opportunities for
our shareholders.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
October 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
MFS International Opportunities Fund
Dear Shareholders,
For the 12 months ended September 30, 1999, Class A shares of the Fund provided
a total return of 40.11% and Class I shares 40.22%. These returns, which include
the reinvestment of any distributions but exclude the effects of any sales
charges, compare over the same period to a 31.32% return for the Morgan Stanley
Capital International (MSCI) Europe, Australia, Far East (EAFE) Index, a broad,
unmanaged index of non-U.S. equities and to a 29.80% return for the average
international fund reported by Lipper Analytical Services, Inc., an independent
firm that reports mutual fund performance.
The Fund's investment objective is capital appreciation through investing, under
normal conditions, mostly in stocks of companies whose principal activities are
outside the United States. The Fund invests in companies of any size, including
smaller, lesser-known, foreign emerging-growth companies.
The strong performance of the Fund has been driven largely by two factors.
First, the Fund can invest in small companies, including IPO (initial public
offering) opportunities. During the period, we invested quite profitably in some
of these. A second, equally important, factor has been good stock picking. In
the oil services sector, oil prices have rebounded, and our holdings in the
Netherlands-based company Fugro N.V. have helped performance. The Fund has also
concentrated on companies taking advantage of the surge in cellular
communications, including Mannesmann AG in Germany and Nokia AB in Finland.
Respectfully,
/s/ David A. Antonelli
David A. Antonelli
Portfolio Manager
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK - continued
MFS International Strategic Growth Fund
Dear Shareholders,
For the 12 months ended September 30, 1999, Class A shares of the Fund provided
a total return of 43.79% and Class I shares 43.91%. These returns, which include
the reinvestment of any distributions but exclude the effects of any sales
charges, compare over the same period to a 31.32% return for the MSCI EAFE
Index, and to a 29.80% return for the average international fund tracked by
Lipper.
The Fund's investment objective is capital appreciation through investing mostly
in stocks of companies whose principal activities are outside the United States.
The Fund invests in companies of any size, but generally invests in established
foreign companies that we believe offer prospects for earnings growth. The Fund
may also invest in emerging-market companies.
Because the Fund is managed from the bottom up, we buy stocks regardless of
where a company is located. Therefore, our current large relative weighting of
43.6% in continental Europe versus the index weighting of 39.9% and our
underweighting of 16.3% in Japan versus the index weighting of 27.8% are merely
the byproducts of where MFS Original Research(R) is finding companies offering
above-average growth and trading at attractive valuations. We remain cautious on
emerging markets, in which our holdings are minimal.
The Fund's strong performance is due in part to the overweighting in the
utilities and communication sector. This sector is benefiting from deregulation,
consolidation, and growth fueled by the boom in wireless communications and the
increase in Internet traffic. For example, we hold a position in Mannesmann AG,
a German industrial conglomerate that has refocused its business from
engineering to telecommunications. Currently, it is one of the leading companies
in Europe competing in the fast-growing cellular phone market.
Respectfully,
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK - continued
MFS International Value Fund
Dear Shareholders,
For the 12 months ended September 30, 1999, Class A shares of the Fund provided
a total return of 30.01% and Class I shares 30.11%. These returns, which include
the reinvestment of any distributions but exclude the effects of any sales
charges, compare over the same period to a 31.32% return for the MSCI EAFE Index
and to a 29.80% return for the average international fund tracked by Lipper.
The Fund's investment objective is capital appreciation through investing mostly
in stocks of companies whose principal activities are outside the United States.
Specifically, the Fund focuses on established foreign companies, many of which
pay current dividends and whose stocks we believe are undervalued.
The Fund's management believes it is increasingly difficult to find undervalued
stocks. We manage the Fund using a bottom-up approach, applying our criteria to
individual companies rather than to countries or regions. For example, we bought
SEITA, a French tobacco company owned until recently by the government. We
believe its announcement of a merger with the dominant Spanish cigarette company
is very promising. On the other hand, Newell Rubbermaid, Inc., a U.S. consumer
products company that carries such brand name products as Levolor and Goody, has
not done well. We bought the stock because its valuation did not reflect our
belief that Newell's acquisition of Rubbermaid would result in a stronger, more
customer-oriented company. So far, the results of that acquisition have been
disappointing.
Respectfully,
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are current 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.
The portfolios are actively managed, and current holdings may be different.
<PAGE>
PERFORMANCE SUMMARY
Currently each Fund offers only Class A and Class I shares, which are available
for purchase at net asset value only by residents of the Commonwealth of
Massachusetts who are employees (or certain relatives of employees) of MFS and
its affiliates or members of the governing boards of the various funds sponsored
by MFS.
The following information illustrates the historical performance of each Fund's
Class A shares in comparison to various indicators. Performance results reflect
the percentage change in net asset value, including reinvestment of dividends.
Benchmark comparisons are unmanaged and do not reflect any fees or expenses. The
performance of other share classes will be greater than or less than the line
shown. (See Notes to Performance Summary for more information.) It is not
possible to invest directly in an index.
MFS(R) INTERNATIONAL OPPORTUNITIES FUND(1)(2)
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999. Index information is from
October 1, 1997.)
MFS International MSCI
Opportunities EAFE
Fund - Class A Index+
- --------------------------------------------------------------------------------
10/97 $10,000 $10,000
10/98 9,420 9,192
10/99 13,198 12,070
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH SEPTEMBER 30, 1999
CLASS A
1 Year Life*
- ----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +40.11% +31.98%
- ----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +40.11% +15.08%
- ----------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +33.46% +12.28%
- ----------------------------------------------------------------------------
CLASS I
1 Year Life*
- ----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +40.22% +32.08%
- ----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +40.22% +15.13%
- ----------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- ----------------------------------------------------------------------------
Average international fund** +29.80% + 7.46%
- ----------------------------------------------------------------------------
MSCI EAFE Index+ +31.32% + 9.86%
- ----------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999.
Index information is from October 1, 1997.
** Source: Lipper Analytical Services, Inc.
+ Source: Standard & Poor's Micropal, Inc.
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND(1)
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999. Index information is from
October 1, 1997.)
MFS International MSCI
Strategic Growth EAFE
Fund - Class A Index
- --------------------------------------------------------------------------------
10/97 $10,000 $10,000
9/98 9,680 9,192
9/99 13,919 12,070
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH SEPTEMBER 30, 1999
CLASS A
1 Year Life*
- -----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +43.79% +39.19%
- -----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +43.79% +18.22%
- -----------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +36.96% +15.34%
- -----------------------------------------------------------------------------
CLASS I
1 Year Life*
- -----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +43.91% +39.59%
- -----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +43.91% +18.39%
- -----------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- -----------------------------------------------------------------------------
Average international fund** +29.80% + 7.46%
- -----------------------------------------------------------------------------
MSCI EAFE Index+ +31.32% + 9.86%
- -----------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999.
Index information is from October 1, 1997.
** Source: Lipper Analytical Services, Inc.
+ Source: Standard & Poor's Micropal, Inc.
MFS(R) INTERNATIONAL VALUE FUND(1)
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999. Index information is from
October 1, 1997.)
MFS International MSCI
Value Fund EAFE
- Class A Index
- --------------------------------------------------------------------------------
10/9 $10,000 $10,000
9/98 10,470 9,192
9/99 13,612 12,070
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH SEPTEMBER 30, 1999
CLASS A
1 Year Life*
- ----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +30.01% +36.12%
- ----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +30.01% +16.90%
- ----------------------------------------------------------------------------
Average Annual Total Return Including Sales Charge +23.84% +14.05%
- ----------------------------------------------------------------------------
CLASS I
1 Year Life*
- ----------------------------------------------------------------------------
Cumulative Total Return Excluding Sales Charge +30.11% +36.22%
- ----------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +30.11% +16.94%
- ----------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- ----------------------------------------------------------------------------
Average international fund** +29.80% + 7.46%
- ----------------------------------------------------------------------------
MSCI EAFE Index+ +31.32% + 9.86%
- ----------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations,
October 9, 1997, through September 30, 1999.
Index information is from October 1, 1997.
** Source: Lipper Analytical Services, Inc.
+ Source: Standard & Poor's Micropal, Inc.
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable subsidies and waivers, without
which the results would have been less favorable. Subsidies and waivers may be
rescinded at any time. See the prospectus for details. All results are
historical and include the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
(1) 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. See
the prospectus for details.
(2) Each Fund may invest in small or emerging growth companies. Investing in
small or emerging growth companies involves greater risk than is customarily
associated with more-established companies. These risks may increase share
price volatility. See the prospectus for details.
<PAGE>
PORTFOLIO OF INVESTMENTS -- September 30, 1999
MFS INTERNATIONAL OPPORTUNITIES FUND
Stocks - 97.7%
- ------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------
Foreign Stocks - 91.1%
Australia - 0.5%
Coles Myer, Ltd. (Stores)* 1,000 $ 5,225
- ------------------------------------------------------------------------------
Brazil - 2.6%
Petroleo Brasileiro S.A. (Oils) 850 $ 13,413
Tele Centro Sul Participacoes S.A., ADR
(Telecommunications) 145 8,047
Tele Norte Leste Participacoes S.A., ADR
(Telecommunications) 460 7,130
----------
$ 28,590
- ------------------------------------------------------------------------------
Canada - 3.7%
Alliance Forest Products, Inc. (Forest and Paper
Products) 500 $ 5,685
BCE, Inc. (Telecommunications) 180 8,966
Bell Canada International, Inc. (Telecommunications)* 400 4,100
Canadian National Railway Co. (Railroads) 320 9,700
Clarica Life Insurance Co. (Insurance)* 250 3,762
Manulife Financial Corp. (Insurance)* 400 4,752
Toronto - Dominion Bank (Banks and Credit Cos.) 200 3,900
----------
$ 40,865
- ------------------------------------------------------------------------------
China - 0.3%
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 300 $ 3,731
- ------------------------------------------------------------------------------
Denmark - 0.1%
Lundbeck (H.) A/S (Medical) 25 $ 709
- ------------------------------------------------------------------------------
Estonia - 0.2%
Eesti Telekom (Telecommunications)* 110 $ 1,843
- ------------------------------------------------------------------------------
Finland - 6.4%
Helsingin Puhelin Oyj (Telecommunications) 255 10,796
HPY Holding - HTF Holding Oyj Abp (Telecommunications) 600 11,240
Nokia Oyj (Telecommunications) 110 9,841
Nokia Corp., ADR (Telecommunications) 125 11,227
Perlos Corp. (Electronics)* 600 8,074
Sampo (Electronics) 250 8,298
Tieto Corp. (Computer Software - Systems) 360 11,374
----------
$ 70,850
- ------------------------------------------------------------------------------
France - 8.6%
Bouygues (Construction)* 30 $ 9,504
Castorama Dubois Investisse (Stores) 30 8,432
Compagnie Generale de Geophysique S.A., ADR (Oil
Services)* 1,310 15,638
Rhone-Poulenc S.A. (Pharmaceuticals) 215 11,093
Sanofi - Synthelabo S.A. (Medical and Health
Products)* 140 5,957
SEITA (Tobacco) 165 9,829
Television Francaise (Entertainment) 80 22,357
Total S.A., "B" (Oils) 100 12,553
----------
$ 95,363
- ------------------------------------------------------------------------------
Germany - 6.3%
Fielmann AG, Preferred (Retail) 200 $ 8,085
GfK AG (Business Services)* 50 1,303
Henkel KGaA, Preferred (Chemicals) 90 5,649
Mannesmann AG (Conglomerate) 170 27,127
Marschollek Lautenschlaeger, Preferred (Insurance) 75 12,989
SAP AG, ADR (Computer Software - Systems) 180 6,795
Wella AG, Preferred (Consumer Goods and Services) 260 7,744
----------
$ 69,692
- ------------------------------------------------------------------------------
Greece - 1.7%
Antenna TV S.A., ADR (Broadcasting)* 985 $ 9,111
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 403 9,400
----------
$ 18,511
- ------------------------------------------------------------------------------
Hong Kong - 1.1%
Li & Fung Ltd. (Wholesale) 4,000 $ 12,101
- ------------------------------------------------------------------------------
Hungary - 1.1%
Magyar Tavkozlesi Rt., ADR (Telecommunications)* 210 $ 5,723
OTP Bank (Banks and Credit Cos.) 140 6,160
----------
$ 11,883
- ------------------------------------------------------------------------------
Ireland - 1.9%
Allied Irish Bank PLC (Banks and Credit Cos.) 451 $ 5,436
Anglo Irish Bank PLC (Banks and Credit Cos.) 6,289 15,422
Trintech Group PLC, ADR (Computer Software -
Products)* 50 656
----------
$ 21,514
- ------------------------------------------------------------------------------
Italy - 1.8%
Mediaset S.p.A. (Entertainment) 520 $ 5,305
San Paolo - Imi S.p.A (Banks and Credit Cos.) 286 3,712
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications)* 1,540 5,668
Telecom Italia S.p.A. (Telecommunications) 600 5,208
----------
$ 19,893
- ------------------------------------------------------------------------------
Japan - 16.1%
Canon, Inc., ADR (Special Products and Services) 570 $ 16,886
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 1,000 12,039
Chukyo Coca-Cola Bottling Co. Ltd. (Food and Beverage
Products) 1,000 14,006
Don Quijote Co., Ltd. (Retail) 100 17,903
Hitachi Ltd. (Electronics) 1,000 11,055
Hitachi Ltd., ADR (Electronics) 100 10,913
Mikuni Coca-Cola Bottling Co. Ltd. (Food and Beverage
Products) 1,000 22,250
Mimasu Semiconductor Industry Co. Ltd. (Electronics) 700 14,755
Mitsubishi Motor (Automotive) 1,000 5,415
Nippon Telephone & Telegraph Co. (Utilities -
Telephone) 1 12,273
Orix Corp. (Finance)* 100 12,292
Sanwa Bank, Ltd. (Banks and Credit Cos.) 1,000 13,350
Sumitomo Bank Ltd. (Banks and Credit Cos.) 1,000 14,990
----------
$ 178,127
- ------------------------------------------------------------------------------
Foreign Stocks - continued
Mexico - 2.4%
Cifra S.A. de C.V., ADR (Retail)* 375 $ 5,872
Fomento Economico Mexicano S.A. (Food and Beverage
Products) 60 1,879
Grupo Continential, S.A. (Food and Beverage Products) 1,450 1,754
Pan American Beverage (Food and Beverage Products) 465 7,702
Valeo, ADR (Automotive) 125 9,500
----------
$ 26,707
- ------------------------------------------------------------------------------
Netherlands - 9.1%
Equant N.V. (Computer Software - Services)* 120 $ 9,765
Fugro N.V. (Oil Services) 607 20,147
Hunter Douglas N.V., ADR (Consumer Goods and Services) 180 4,864
ING Groep N.V. (Financial Services) 221 11,990
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services)* 688 9,405
Koninklijke Philips Electronics N.V. (Electronics) 75 7,540
Libertel N.V. (Cellular Telephones)* 300 5,409
STMicroelectronics Co. (Electronics) 200 15,574
Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (Publishing) 150 5,202
Wolters Kluwer N.V. (Publishing)* 320 10,961
----------
$ 100,857
- ------------------------------------------------------------------------------
New Zealand - 1.0%
Warehouse Group (Retail) 3,000 $ 11,165
- ------------------------------------------------------------------------------
Norway - 1.0%
P4 Radio Hele Norge ASA (Broadcasting) 2,400 $ 11,157
- ------------------------------------------------------------------------------
Poland - 0.7%
Agora S.A. (Entertainment)*## 180 $ 1,553
KGHM Polska Miedz S.A. (Metals and Minerals) 500 5,925
----------
$ 7,478
- ------------------------------------------------------------------------------
Portugal - 2.5%
Banco Espirito Santo e Comercial de Lisboa S.A. (Banks
and Credit Cos.) 160 $ 4,012
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 237 4,689
BPI - SGPS, S.A. (Banks and Credit Cos.) 304 6,203
Portugal Telecom S.A., ADR (Utilities - Telephone) 150 6,197
Telecel - Comunicacoes Pessoais S.A.
(Telecommunications) 50 6,163
----------
4 27,264
- ------------------------------------------------------------------------------
Singapore - 1.0%
Hong Leong Finance Ltd. (Finance)+ 7,000 $ 11,739
- ------------------------------------------------------------------------------
South Korea - 0.3%
Pohang Iron & Steel Co. Ltd., ADR (Construction) 100 $ 3,131
- ------------------------------------------------------------------------------
Spain - 3.6%
Banco Popular Espanol S.A. (Banks and Credit Cos.) 110 $ 7,589
Cortefiel S.A. (Retail) 200 5,210
Repsol S.A. (Oils) 300 5,869
Superdiplo S.A. (Supermarkets)* 400 8,200
Telefonica de Espana S.A., ADR (Telecommunications) 229 10,992
Telefonica Publicidad e Informacion S.A. (Utilities -
Telephone) 100 2,314
----------
$ 40,174
- ------------------------------------------------------------------------------
Sweden - 3.4%
Celsius AB (Aerospace) 1,330 $ 20,629
Hennes & Mauritz (Apparel and Textiles) 320 8,071
Saab AB, "B" (Aerospace) 400 3,224
Skandia Forsakrings AB (Insurance) 300 6,265
----------
$ 38,189
- ------------------------------------------------------------------------------
Switzerland - 1.5%
Barry Callebaut AG (Food and Beverage Products) 26 $ 4,198
Fantastic Corp. (Computer Software Systems)* 25 1,383
UBS AG (Banks and Credit Cos.) 40 11,264
----------
$ 16,845
- ------------------------------------------------------------------------------
United Kingdom - 11.0%
AstraZeneca Group PLC (Medical and Health Products) 179 $ 7,466
BP Amoco PLC (Oils) 404 7,380
BP Amoco PLC, ADR (Oils) 66 7,314
British Aerospace PLC (Aerospace) 1,000 6,583
British Telecommunications PLC (Telecommunications) 350 5,299
Cable & Wireless Communication PLC
(Telecommunications)* 160 8,340
Capital Radio PLC (Broadcasting) 810 11,798
Colt Telecom Group PLC (Telecommunications)* 110 10,588
Compass Group (Restaurants and Food Service) 800 7,887
HSBC Holdings PLC (Banks and Credit Cos.) 417 4,773
Kingston Communications (Hull) PLC
(Telecommunications)* 500 3,382
Lloyds TSB Group PLC (Banks and Credit Cos.) 700 8,560
Next PLC (Stores) 1,100 11,061
Sema Group PLC (Computer Software - Systems) 400 4,885
TeleWest Communications PLC (Entertainment)* 3,200 11,639
Zeneca Group PLC (Medical and Health Products) 120 5,036
----------
$ 121,991
- ------------------------------------------------------------------------------
Venezuela - 1.2%
Ca la Electricidad de Caracas, ADR (Utilities -
Electric) 200 $ 4,050
Mavesa S.A. (Consumer Goods and Services) 3,000 9,000
----------
$ 13,050
- ------------------------------------------------------------------------------
Total Foreign Stocks $1,008,644
- ------------------------------------------------------------------------------
U.S. Stocks - 6.6%
Agricultural Products - 1.6%
AGCO Corp. 1,350 $ 17,550
- ------------------------------------------------------------------------------
Business Services - 0.3%
IMRglobal Corp.* 365 $ 3,011
- ------------------------------------------------------------------------------
Computer Software - Systems - 0.3%
Alteon Websystems, Inc.* 25 $ 2,350
Bluestone Software, Inc.* 25 578
----------
$ 2,928
- ------------------------------------------------------------------------------
Conglomerates - 1.5%
Sodexho Marriott Services, Inc. 970 $ 16,490
- ------------------------------------------------------------------------------
Consumer Goods and Services - 1.4%
Galileo International, Inc. 375 $ 15,094
- ------------------------------------------------------------------------------
Internet
Keynote Systems, Inc.* 25 $ 625
- ------------------------------------------------------------------------------
Telecommunications - 1.5%
Global TeleSystems Group, Inc.* 150 $ 2,958
Nortel Networks Corp. 270 13,770
----------
$ 16,728
- ------------------------------------------------------------------------------
Total U.S. Stocks $ 72,426
- ------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,051,401) $1,081,070
- ------------------------------------------------------------------------------
Short-Term Obligations - 6.3%
- ------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp.,
due 10/01/99, at Amortized Cost $ 70 $ 70,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,121,401) $1,151,070
Other Assets, Less Liabilities - (4.0)% (44,303)
- ------------------------------------------------------------------------------
Net Assets - 100.0% $1,106,767
- ------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
See notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS -- September 30, 1999
MFS INTERNATIONAL STRATEGIC GROWTH FUND
Stocks - 95.2%
- ------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------
Foreign Stocks - 93.1%
Australia - 1.9%
QBE Insurance Group Ltd. (Insurance)* 6,100 $ 23,424
- ------------------------------------------------------------------------------
Canada - 4.4%
Aliant, Inc. (Telecommunications)* 830 $ 12,432
BCE, Inc. (Telecommunications)* 220 10,934
Bell Canada International, Inc. (Telecommunications)* 1,150 11,744
Canadian National Railway Co. (Railroads) 700 21,219
----------
$ 56,329
- ------------------------------------------------------------------------------
Finland - 2.7%
Helsingin Puhelin Oyj (Telecommunications) 460 $ 19,476
HPY Holding - HTF Holding Oyj Abp
(Telecommunications)* 300 5,620
Perlos Corp. (Electronics)* 200 2,691
Pohjola Group Insurance Corp. (Insurance) 146 6,912
----------
$ 34,699
- ------------------------------------------------------------------------------
France - 12.3%
Bouygues (Construction)* 45 $ 14,256
Castorama Dubois Investisse (Stores) 78 21,922
Pernod Ricard Co. (Beverages) 345 23,158
Rhone-Poulenc S.A. (Pharmaceuticals) 270 13,931
Television Francaise (Entertainment) 85 23,754
Total S.A., "B" (Oils) 280 35,148
Union des Assurances Federales S.A. (Insurance) 140 17,425
Wavecom S.A., ADR (Electronics)* 400 6,550
----------
$ 156,144
- ------------------------------------------------------------------------------
Germany - 6.7%
GfK AG (Business Services)* 50 $ 1,303
Henkel KGaA, Preferred (Chemicals) 260 16,319
Mannesmann AG (Conglomerate) 305 48,669
Porsche AG (Automotive) 2 5,446
Wella AG, Preferred (Consumer Goods and Services) 450 13,404
----------
$ 85,141
- ------------------------------------------------------------------------------
Greece - 0.8%
Antenna TV S.A., ADR (Broadcasting)* 1,050 $ 9,712
- ------------------------------------------------------------------------------
Ireland - 2.0%
Anglo Irish Bank PLC (Banks and Credit Cos.) 10,285 $ 25,222
Trintech Group PLC, ADR (Computer Software -
Products)* 50 656
----------
$ 25,878
- ------------------------------------------------------------------------------
Italy - 2.9%
Banca Carige S.p.A. (Banks and Credit Cos.) 950 $ 8,651
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications)* 7,500 27,605
----------
$ 36,256
- ------------------------------------------------------------------------------
Japan - 15.5%
Canon, Inc., ADR (Special Products and Services) 720 $ 21,330
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 2,000 24,077
Chukyo Coca-Cola Bottling Co. Ltd. (Food and Beverage
Products) 1,000 14,006
Coca-Cola West Japan Co. Ltd. (Food and Beverage
Products) 200 9,181
Eiden Co. Ltd. (Retail) 1,000 12,179
Fuji Heavy Industries Ltd. (Automotive) 2,000 15,852
Hitachi Ltd. (Electronics) 1,000 11,055
Hitachi Ltd., ADR (Electronics) 260 28,372
Mikuni Coca-Cola Bottling Co. Ltd. (Food and Beverage
Products) 1,000 22,250
Mimasu Semiconductor Industry Co. Ltd. (Electronics) 600 12,648
Mitsubishi Motor (Automotive) 2,000 10,830
Toshiba Corp. (Electronics) 2,000 14,859
----------
$ 196,639
- ------------------------------------------------------------------------------
Netherlands - 7.6%
Akzo Nobel N.V. (Chemicals) 500 $ 21,170
Fugro N.V. (Engineering) 166 5,510
ING Groep N.V. (Financial Services) 525 28,483
Libertel N.V. (Cellular Telephones)* 360 6,491
STMicroelectronics Co. (Electronics) 200 15,574
Wolters Kluwer N.V. (Publishing)* 550 18,840
----------
$ 96,068
- ------------------------------------------------------------------------------
New Zealand - 0.9%
Warehouse Group (Retail) 3,200 $ 11,909
- ------------------------------------------------------------------------------
Norway - 3.5%
P4 Radio Hele Norge ASA (Broadcasting) 2,850 $ 13,249
Sparebanken NOR (Banks and Credit Cos.) 800 17,510
Storebrand ASA (Insurance) 1,800 13,482
----------
$ 44,241
- ------------------------------------------------------------------------------
Portugal - 2.8%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 1,220 $ 24,140
Telecel - Comunicacoes Pessoais S.A.
(Telecommunications) 90 11,094
----------
$ 35,234
- ------------------------------------------------------------------------------
Singapore - 1.6%
DBS Group Holdings Ltd. (Financial Services) 1,000 $ 11,180
Overseas Union Bank Ltd. (Banks and Credit Cos.) 2,142 9,516
----------
$ 20,696
- ------------------------------------------------------------------------------
Spain - 2.1%
Cortefiel S.A. (Retail) 400 $ 10,421
Repsol S.A. (Oils) 800 15,651
----------
$ 26,072
- ------------------------------------------------------------------------------
Sweden - 2.8%
Saab AB, "B" (Aerospace) 4,450 $ 35,870
- ------------------------------------------------------------------------------
Switzerland - 4.4%
Barry Callebaut AG (Food and Beverage Products) 26 $ 4,197
Nestle S.A. (Food and Beverage Products) 10 18,774
UBS AG (Banks and Credit Cos.) 115 32,385
----------
$ 55,356
- ------------------------------------------------------------------------------
United Kingdom - 18.2%
AstraZeneca Group PLC (Medical and Health Products) 900 $ 37,537
BP Amoco PLC (Oils) 1,071 19,565
British Aerospace PLC (Aerospace) 5,000 32,916
British Telecommunications PLC (Telecommunications) 1,950 29,526
Cable & Wireless Communications PLC
(Telecommunications)* 5,150 52,635
Capital Radio PLC (Broadcasting) 250 3,641
Next PLC (Stores) 1,900 19,106
Orange PLC (Telecommunications) 870 17,154
TeleWest Communications PLC (Entertainment)* 3,100 11,275
Tomkins PLC (Conglomerate) 1,900 7,943
----------
$ 231,298
- ------------------------------------------------------------------------------
Total Foreign Stocks $1,180,966
- ------------------------------------------------------------------------------
U.S. Stocks - 2.1%
Consumer Goods and Services - 1.8%
Galileo International, Inc. 550 $ 22,137
- ------------------------------------------------------------------------------
Telecommunications - 0.3%
Global TeleSystems Group, Inc.*
190 $ 3,747
- ------------------------------------------------------------------------------
Total U.S. Stocks $ 25,884
- ------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,174,145) $1,206,850
- ------------------------------------------------------------------------------
Short-Term Obligations - 5.1%
- ------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp.,
due 10/01/99, at Amortized Cost $ 65 $ 65,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,239,145) $1,271,850
Other Assets, Less Liabilities - (0.3)% (3,280)
- ------------------------------------------------------------------------------
Net Assets - 100.0% $1,268,570
- ------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS -- September 30, 1999
MFS INTERNATIONAL VALUE FUND
Stocks - 96.0%
- -------------------------------------------------------------------------------
ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
Foreign Stocks - 80.3%
Australia - 2.2%
Australia & New Zealand Banking Group Ltd. (Banks and
Credit Cos.)* 1,035 $ 6,922
QBE Insurance Group Ltd. (Insurance)* 4,806 18,455
----------
$ 25,377
- -------------------------------------------------------------------------------
Austria - 0.7%
Austria Tabak AG (Tobacco) 161 $ 7,584
- -------------------------------------------------------------------------------
Bermuda - 0.1%
Dairy Farm International Holdings Ltd. (Supermarkets) 1,000 $ 995
- -------------------------------------------------------------------------------
Canada - 2.1%
Canadian National Railway Co. (Railroads) 792 $ 24,008
- -------------------------------------------------------------------------------
Finland - 1.2%
Helsingin Puhelin Oyj (Telecommunications) 317 $ 13,422
- -------------------------------------------------------------------------------
France - 14.4%
Axa (Insurance) 50 $ 6,319
Castorama Dubois Investisse (Stores) 105 29,511
Pernod Ricard Co. (Beverages) 107 7,182
Pin Printemps Redout (Retailer) 197 37,303
Rhone-Poulenc S.A. (Pharmaceuticals) 100 5,159
Sanofi - Synthelabo S.A. (Medical and Health
Products)* 182 7,745
SEITA (Tobacco) 590 35,148
Television Francaise (Entertainment) 106 29,623
Total Fina S.A., ADR (Oils) 82 5,202
----------
$ 163,192
- -------------------------------------------------------------------------------
Germany - 5.5%
GfK AG (Business Services)* 50 $ 1,303
Henkel KGaA, Preferred (Chemicals) 157 9,854
HypoVereinsbank (Banks and Credit Cos.) 107 6,238
Mannesmann AG (Conglomerate) 248 39,573
Porsche AG (Automotive) 2 5,447
----------
$ 62,415
- -------------------------------------------------------------------------------
Greece - 1.2%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 604 $ 14,088
- -------------------------------------------------------------------------------
Ireland - 1.1%
Jefferson Smurfit (Paper Co.) 3,930 $ 11,597
Trintech Group PLC, ADR (Computer Software -
Products)* 50 656
----------
$ 12,253
- -------------------------------------------------------------------------------
Italy - 1.8%
San Paolo - Imi S.p.A (Banks and Credit Cos.) 800 $ 10,383
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications) 1,700 6,257
Unione Immobiliare (Real Estate Trust) 8,104 4,302
----------
$ 20,942
- -------------------------------------------------------------------------------
Japan - 19.5%
Canon, Inc. (Special Products and Services) 1,000 $ 29,042
Coca-Cola West Japan Co. Ltd. (Food and Beverage
Products) 300 13,772
Don Quijote Co., Ltd. (Retail) 100 17,903
East Japan Railway Co. (Railroads) 1 6,352
Fuji Heavy Industries, Ltd. (Automotive) 2,000 15,852
Fujitsu Ltd. (Computer Hardware - Systems) 1,000 31,104
Hitachi Ltd. (Electronics) 1,000 11,055
Hitachi Ltd., ADR (Electronics) 150 16,369
Mitsubishi Motor (Automotive) 1,000 5,415
Olympus Optical Co. (Optical Goods) 1,000 13,491
Orix Corp. (Finance)* 100 12,291
Terumo Corp. (Medical Products) 1,000 30,823
Tokyo Marine & Fire Insurance (Insurance) 1,000 11,804
Uni Charm Corp. (Consumer Goods) 100 6,024
----------
$ 221,297
- -------------------------------------------------------------------------------
Mexico - 0.6%
Pan American Beverage (Food and Beverage Products) 210 $ 3,478
Fomento Economico Mexicano S.A. (Beverages) 100 3,131
----------
$ 6,609
- -------------------------------------------------------------------------------
Netherlands - 7.2%
Akzo Nobel N.V. (Chemicals) 413 $ 17,486
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 456 12,321
ING Groep N.V. (Financial Services)* 63 3,418
Koninklijke Ahold N.V., ADR (Food/Retail) 128 4,240
Royal Dutch Petroleum Co., ADR (Oils) 133 7,855
STMicroelectronics Co. (Electronics)* 75 5,840
Unilever N V (Consumer Goods and Services)* 107 7,290
Wolters Kluwer N.V. (Publishing)* 666 22,814
----------
$ 81,264
- -------------------------------------------------------------------------------
New Zealand - 0.8%
Warehouse Group (Retail) 2,500 $ 9,304
- -------------------------------------------------------------------------------
Portugal - 0.7%
Electricidade de Portugal S.A. (Utilities - Electric) 497 $ 7,835
- -------------------------------------------------------------------------------
Spain - 4.3%
Banco Popular Espanol S.A. (Banks and Credit Cos.) 107 $ 7,382
Repsol S.A. (Oils) 320 6,260
Telefonica Publicidad e Informacion S.A. (Telephone
Directories)* 100 2,314
Telefonica S.A. (Telecommunications)* 2,044 32,681
----------
$ 48,637
- -------------------------------------------------------------------------------
Sweden - 2.3%
Saab AB, "B" (Aerospace) 1,843 $ 14,855
Skandia Forsakrings AB (Insurance) 512 10,693
----------
$ 25,548
- -------------------------------------------------------------------------------
Switzerland - 1.5%
Nestle S.A. (Food and Beverage Products) 9 $ 16,896
- -------------------------------------------------------------------------------
United Kingdom - 13.1%
Allied Zurich (Insurance) 543 $ 6,367
AstraZeneca Group PLC (Medical and Health Products) 184 7,674
Avis Europe PLC (Auto Rental) 2,677 12,777
Boots Company (Retail)* 520 5,798
BP Amoco PLC, ADR (Oils) 246 27,260
British Aerospace PLC (Aerospace and Defense)* 1,814 11,942
British Telecommunications PLC (Telecommunications)* 740 11,205
Cable & Wireless Communications PLC
(Telecommunications) 640 6,541
Compass Group (Consumer Goods & Services) 2,253 22,211
Diageo PLC (Food and Beverage Products)* 1,160 11,836
Rentokil Initial PLC (Environmental Services) 919 3,252
Reuters Group PLC (Business Services) 1,385 15,637
Sainsbury (J.) PLC (Retail) 950 5,926
----------
$ 148,426
- -------------------------------------------------------------------------------
Total Foreign Stocks 910,092
- -------------------------------------------------------------------------------
U.S. Stocks - 15.7%
Advertising - 0.4%
Young & Rubicam, Inc. 100 $ 4,400
- -------------------------------------------------------------------------------
Aerospace - 0.9%
Raytheon Co., "A" 217 $ 10,524
- -------------------------------------------------------------------------------
Automotive - 0.2%
Delphi Automotive Systems Corp. 138 $ 2,217
- -------------------------------------------------------------------------------
Business Services - 0.4%
Galileo International, Inc. 100 $ 4,025
- -------------------------------------------------------------------------------
Computer Software - Systems - 0.8%
Hewlett-Packard Co. 100 $ 9,200
- -------------------------------------------------------------------------------
Consumer Goods and Services - 1.1%
Newell Rubbermaid Inc. 136 $ 3,885
Philip Morris Cos., Inc. 263 8,991
----------
$ 12,876
- -------------------------------------------------------------------------------
Electrical Equipment - 0.6%
Cooper Industries, Inc. 138 $ 6,452
- -------------------------------------------------------------------------------
Financial Services - 0.9%
Associates First Capital Corp., "A" 210 $ 7,560
Goldman Sachs Group, Inc. 50 3,050
----------
$ 10,610
- -------------------------------------------------------------------------------
Food and Beverage Products - 1.0%
Anheuser-Busch Cos., Inc. 156 $ 10,930
- -------------------------------------------------------------------------------
Insurance - 3.3%
Allstate Corp. 300 $ 7,481
American International Group, Inc. 170 14,779
ReliaStar Financial Corp. 466 15,495
----------
$ 37,755
- -------------------------------------------------------------------------------
Manufacturing - 2.9%
Tyco International Ltd. 314 $ 32,420
- -------------------------------------------------------------------------------
Pharmaceuticals - 0.7%
Pharmacia & Upjohn, Inc. 160 $ 7,940
- -------------------------------------------------------------------------------
Special Products and Services - 2.5%
McDonald's Corp. 580 $ 24,940
Xerox Corp. 94 3,942
----------
$ 28,882
- -------------------------------------------------------------------------------
Total U.S. Stocks 178,231
- -------------------------------------------------------------------------------
Total Stocks (Identified Cost, $986,450) $1,088,323
- -------------------------------------------------------------------------------
Short-Term Obligations - 7.5%
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- -------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp.,
due 10/01/99, at Amortized Cost $ 85 $ 85,000
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,071,450) $1,173,323
Other Assets, Less Liabilities - (3.5)% (39,444)
- -------------------------------------------------------------------------------
Net Assets - 100.0% $1,133,879
- -------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC VALUE
SEPTEMBER 30, 1999 FUND GROWTH FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at value (identified cost, $1,121,401,
$1,239,145 and $1,071,450, respectively) $1,151,070 $1,271,850 $1,173,323
Cash 1,373 3,770 1,598
Foreign currency, at value (identified cost $1,012,
$889 and $716, respectively) 1,005 896 713
Receivable for investments sold 20,758 7,046 9,123
Interest and dividends receivable 2,332 3,677 2,605
Other assets 7 7 7
---------- ---------- ----------
Total assets $1,176,545 $1,287,246 $1,187,369
---------- ---------- ----------
Liabilities:
Payable for Fund shares reacquired $ 50,000 $ -- $ --
Payable for investments purchased 19,739 18,616 53,436
Accrued expenses and other liabilities 39 60 54
---------- ---------- ----------
Total liabilities $ 69,778 $ 18,676 $ 53,490
---------- ---------- ----------
Net assets $1,106,767 $1,268,570 $1,133,879
---------- ---------- ----------
Net assets consist of:
Paid-in-capital $ 849,878 $ 967,125 $ 811,701
Unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies 29,590 32,725 101,775
Accumulated undistributed net realized gain on
investments and foreign currency transactions 227,371 267,898 221,069
Accumulated undistributed net investment income
(loss) (72) 822 (666)
---------- ---------- ----------
Total $1,106,767 $1,268,570 $1,133,879
========== ========== ==========
Shares of beneficial interest outstanding:
Class A 9,246 18,840 70,135
Class I 74,874 75,343 15,488
---------- ---------- ----------
Total shares of beneficial interest outstanding 84,120 94,183 85,623
========== ========== ==========
Net assets:
Class A $ 121,579 $ 253,281 $ 928,658
Class I 985,188 1,015,289 205,221
---------- ---------- ----------
Total net assets $1,106,767 $1,268,570 $1,133,879
========== ========== ==========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest
outstanding) $13.15 $13.44 $13.24
====== ====== ======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest
outstanding) $13.16 $13.48 $13.25
====== ====== ======
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statements of Operations
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC VALUE
YEAR ENDED SEPTEMBER 30, 1999 FUND GROWTH FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income (loss):
Income -
Dividends $ 19,055 $ 19,436 $ 19,519
Interest 1,559 3,232 3,475
Foreign taxes withheld (2,331) (2,396) (2,053)
--------- --------- ---------
Total investment income $ 18,283 $ 20,272 $ 20,941
--------- --------- ---------
Expenses -
Management fee $ 11,451 $ 10,108 $ 11,597
Shareholder servicing agent fee 1,163 1,095 1,397
Distribution and service fee (Class A) 1,930 832 5,100
Administrative fee 172 130 226
Custodian fee 11,824 12,029 9,668
Printing 2,822 3,674 561
Postage 232 201 43
Auditing fees 13,361 14,561 13,486
Legal fees 3,097 5,012 3,609
Miscellaneous 3,314 2,195 2,043
--------- --------- ---------
Total expenses $ 49,366 $ 49,837 $ 47,730
Fees paid indirectly (373) (321) (245)
Reduction of expenses by investment adviser and
distributor (28,440) (31,375) (26,639)
--------- --------- ---------
Net expenses $ 20,553 $ 18,141 $ 20,846
--------- --------- ---------
Net investment income (loss) $ (2,270) $ 2,131 $ 95
--------- --------- ---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 247,822 $ 271,445 $ 234,897
Foreign currency transactions (2,806) (965) 26
--------- --------- ---------
Net realized gain on investments and foreign
currency transactions $ 245,016 $ 270,480 $ 234,923
--------- --------- ---------
Change in unrealized appreciation (depreciation) -
Investments $ 141,248 $ 84,530 $ 75,548
Translation of assets and liabilities in foreign
currencies 780 452 (212)
--------- --------- ---------
Net unrealized gain on investments and foreign
currency translation $ 142,028 $ 84,982 $ 75,336
--------- --------- ---------
Net realized and unrealized gain on
investments and
foreign currency $ 387,044 $ 355,462 $ 310,259
--------- --------- ---------
Increase in net assets from operations $ 384,774 $ 357,593 $ 310,354
========= ========= =========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
INTERNATIONAL OPPORTUNITIES FUND SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (2,270) $ 7,483
Net realized gain (loss) on investments and foreign
currency transactions 245,016 (19,918)
Net unrealized gain (loss) on investments and foreign
currency translation 142,028 (112,438)
----------- -----------
Increase (decrease) in net assets from operations $ 384,774 $ (124,873)
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,540) $ --
From net investment income (Class I) (2,627) --
In excess of net investment income (Class A) (118) --
In excess of net investment income (Class I) (201) --
----------- -----------
Total distributions declared to shareholders $ (4,486) $ --
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $ (538,795) $ 1,390,147
----------- -----------
Total increase (decrease) in net assets $ (158,507) $ 1,265,274
Net assets:
At beginning of period 1,265,274 --
----------- -----------
At end of period (including accumulated distributions in
excess of net investment income and undistributed net
investment income of $72 and $4,167, respectively) $ 1,106,767 $ 1,265,274
=========== ===========
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
INTERNATIONAL STRATEGIC GROWTH FUND SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 2,131 $ 4,893
Net realized gain on investments and foreign currency
transactions 270,480 28,142
Net unrealized gain (loss) on investments and foreign
currency translation 84,982 (52,257)
----------- -----------
Increase (decrease) in net assets from operations $ 357,593 $ (19,222)
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (335) $ --
From net investment income (Class I) (3,397) --
From net realized gain on investments and foreign currency
transactions
(Class A) (2,982) --
From net realized gain on investments and foreign currency
transactions
(Class I) (30,212) --
----------- -----------
Total distributions declared to shareholders $ (36,926) $ --
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $ (17,817) $ 984,942
----------- -----------
Total increase in net assets $ 302,850 $ 965,720
Net assets:
At beginning of period 965,720 --
----------- -----------
At end of period (including accumulated undistributed net
investment income of $822 and $1,788, respectively) $ 1,268,570 $ 965,720
=========== ===========
*For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
INTERNATIONAL VALUE FUND SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 95 $ 10,893
Net realized gain on investments and foreign currency
transactions 234,923 8,517
Net unrealized gain on investments and foreign
currency translation 75,336 26,439
----------- -----------
Increase in net assets from operations $ 310,354 $ 45,849
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (9,628) $ --
From net investment income (Class I) (1,179) --
In excess of net investment income (Class A) (618) --
In excess of net investment income (Class I) (76) --
From net realized gain on investments and foreign
currency transactions
(Class A) (20,108) --
From net realized gain on investments and foreign
currency transactions
(Class I) (2,464) --
----------- -----------
Total distributions declared to shareholders $ (34,073) $ --
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $ (256,745) $ 1,068,494
----------- -----------
Total increase in net assets $ 19,536 $ 1,114,343
Net assets:
At beginning of period 1,114,343 --
----------- -----------
At end of period (including accumulated net
investment loss and accumulated undistributed net
investment income of $666 and $10,713,
respectively) $ 1,133,879 $ 1,114,343
=========== ===========
*For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998* SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 9.42 $10.00 $ 9.42 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.01) $ 0.06 $(0.03) $ 0.07
Net realized and unrealized gain (loss)
on investments and foreign currency 3.78 (0.64) 3.81 (0.65)
------ ------ ------ ------
Total from investment operations $ 3.77 $(0.58) $ 3.78 $(0.58)
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $ -- $(0.04) $ --
In excess of net investment income -- ** -- -- ** --
------ ------ ------ ------
Total distributions declared to
shareholders $(0.04) $ -- $(0.04) $ --
------ ------ ------ ------
Net asset value - end of period $13.15 $ 9.42 $13.16 $ 9.42
====== ====== ====== ======
Total return 40.11% (5.80)%++ 40.22% (5.80)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.78% 1.75%+ 1.78% 1.75%+
Net investment income (loss) (0.13)% 0.54%+ (0.23)% 0.65%+
Portfolio turnover 162% 165% 162% 165%
Net assets at end of period (000 omitted) $122 $573 $985 $692
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed under a temporary expense reimbursement agreement to pay all
of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund pays
MFS a fee not greater than 1.75% of average daily net assets. In addition, the investment adviser and the distributor
voluntarily waived their fees for the periods indicated. To the extent actual expenses were over this limitation and the
waivers had not been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.32) $(0.13) $(0.29) $(0.07)
Ratios (to average net assets):
Expenses## 4.54% 3.57%+ 4.04% 3.07%+
Net investment loss (2.89)% (1.32)%+ (2.49)% (0.71)%+
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
** Per share amount was less than $0.01.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL STRATEGIC GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998* SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 9.68 $10.00 $ 9.70 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.05 $ 0.04 $ 0.02 $ 0.05
Net realized and unrealized gain (loss)
on investments and foreign currency 4.08 (0.36) 4.13 (0.35)
------ ------ ------ ------
Total from investment operations $ 4.13 $(0.32) $ 4.15 $(0.30)
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $ -- $(0.04) $ --
From net realized gain on investments
and foreign currency transactions (0.33) -- (0.33) --
------ ------ ------ ------
Total distributions declared to
shareholders $(0.37) $ -- $(0.37) $ --
------ ------ ------ ------
Net asset value - end of period $13.44 $ 9.68 $13.48 $ 9.70
====== ====== ====== ======
Total return 43.79% (3.20)%++ 43.91% (3.00)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.78% 1.77%+ 1.78% 1.77%+
Net investment income 0.44% 0.34%+ 0.16% 0.48%+
Portfolio turnover 175% 103% 175% 103%
Net assets at end of period (000 omitted) $253 $90 $1,015 $876
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed under a temporary expense reimbursement agreement to pay all
of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund pays
MFS a fee not greater than 1.75% of average daily net assets. In addition, the investment adviser and the distributor
voluntarily waived their fees for the periods indicated. To the extent actual expenses were over this limitation and the
waivers had not been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.39) $(0.20) $(0.36) $(0.13)
Ratios (to average net assets):
Expenses## 5.23% 3.88%+ 4.73% 3.38%+
Net investment loss (3.01)% (1.79)%+ (2.79)% (1.15)%+
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
# #Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998* SEPTEMBER 30, 1999 SEPTEMBER 30, 1998*
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $10.46 $10.00 $10.47 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ -- ** $ 0.10 $ 0.01 $ 0.11
Net realized and unrealized gain on
investments and foreign currency 3.10 0.36 3.09 0.36
------ ------ ------ ------
Total from investment operations $ 3.10 $ 0.46 $ 3.10 $ 0.47
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.10) $ -- $(0.10) $ --
In excess of net investment income (0.01) -- (0.01) --
From net realized gain on investments
and foreign currency transactions (0.21) -- (0.21) --
------ ------ ------ ------
Total distributions declared to
shareholders $(0.32) $ -- $(0.32) $ --
------ ------ ------ ------
Net asset value - end of period $13.24 $10.46 $13.25 $10.47
====== ====== ====== ======
Total return 30.01% 4.70%++ 30.11% 4.70%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.77% 1.77%+ 1.77% 1.77%+
Net investment income -- % 0.98%+ 0.08% 1.00%+
Portfolio turnover 107% 71% 107% 71%
Net assets at end of period (000 omitted) $929 $1,002 $205 $112
(S) Subject to reimbursement by the Fund, MFS has voluntarily agreed under a temporary expense reimbursement agreement to pay all
of the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund pays
MFS a fee at not greater than 1.75% of average daily net assets. In addition, the investment adviser and the distributor
voluntarily waived their fees for the periods indicated. To the extent actual expenses were over this limitation and the
waivers had not been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.28) $(0.13) $(0.21) $(0.07)
Ratios (to average net assets):
Expenses## 4.07% 3.92%+ 3.58% 3.42%+
Net investment loss (2.30)% (1.19)%+ (1.73)% (0.67)%+
* For the period from the commencement of the Fund's investment operations, October 9, 1997, through September 30, 1998.
** Per share amount was less than $0.01.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS International Opportunities Fund, MFS International Strategic Growth Fund,
and MFS International Value Fund (the Funds) are each a diversified series of
MFS Series Trust V (the Trust). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued at fair value as determined in good
faith by the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Forward Foreign Currency Exchange Contracts - Each Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund may enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. Each Fund may also use contracts in a manner intended to protect
foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, each Fund may
enter into contracts with the intent of changing the relative exposure of each
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
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 - Each Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by each Fund. 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.
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 be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. During
the year ended September 30, 1999, the following amounts were reclassified among
accumulated undistributed net investment income (loss), accumulated
undistributed net realized gain on investments and foreign currency
transactions, and paid-in-capital due to differences between book and tax
accounting for currency transactions and the offset of net investment loss
against short-term capital gains. These changes had no effect on the net assets
or net asset values per share.
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
INCREASE (DECREASE) FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paid-in-capital $(1,474) $ -- $ --
Accumulated undistributed net realized gain on investments
and foreign currency transactions $(1,043) $(635) $(27)
Accumulated undistributed net investment
income (loss) $ 2,517 $ 635 $ 27
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. 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. The
management fee 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 shown
as a reduction of expenses in the Statement of Operations.
Each Fund has 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. The 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 the Fund's actual
expenses, the excess will be applied to amounts paid by MFS in prior years. At
September 30, 1999, the aggregate unreimbursed expenses owed to MFS by the
Funds amounted to:
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
-----------------------------------------------------------------------
$19,404 $27,572 $17,480
Each Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Trustees are currently not receiving any
payments for their services to each Fund.
Administrator - Each Fund has an administrative services agreement with MFS to
provide each Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, did not
receive any sales charges on sales of Class A shares of each Fund for the year
ended September 30, 1999.
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 the Fund will pay MFD up to 0.50%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of up
to 0.25% per annum of the Fund's average daily net assets attributable to Class
A shares which are attributable to that securities dealer and a distribution fee
to MFD of up to 0.25% per annum of the Fund's average daily net assets
attributable to Class A shares. Distribution and service fees under the Class A
distribution plan are currently being waived.
Certain Class A shares are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following purchase. There
were no contingent deferred sales charges imposed during the year ended
September 30, 1999, on Class A shares of each Fund.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of each Fund's average daily net assets at an annual rate of 0.10%.
Prior to April 1, 1999, the fee was calculated as a percentage of each Fund's
average daily net assets at an annual rate of 0.1125%.
(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
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases
Investments (non-U.S. government securities) $1,834,908 $1,676,052 $1,178,014
---------- ---------- ----------
Sales
Investments (non-U.S. government securities) $2,244,550 $1,686,599 $1,414,655
---------- ---------- ----------
</TABLE>
The cost and unrealized appreciation and depreciation in the value of the
investments owned by each Fund, as computed on a federal income tax basis, are
as follows:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate cost $1,124,182 $1,243,607 $1,072,905
---------- ---------- ----------
Gross unrealized appreciation $ 100,283 $ 74,383 $ 164,456
Gross unrealized depreciation (73,395) (46,140) (64,038)
---------- ---------- ----------
Net unrealized appreciation $ 26,888 $ 28,243 $ 100,418
========== ========== ==========
</TABLE>
(5) Shares of Beneficial Interest
Each Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
Class A Shares
INTERNATIONAL OPPORTUNITIES FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 350 $ 4,265 75,967 $ 780,005
Shares issued to shareholders in
reinvestment of distributions 159 1,657 -- --
Shares reacquired (52,069) (594,263) (15,161) (153,975)
------- --------- ------- ---------
Net increase (decrease) (51,560) $(588,341) 60,806 $ 626,030
======= ========= ======= =========
Class I Shares
INTERNATIONAL OPPORTUNITIES FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 24,543 $ 308,165 73,457 $ 764,117
Shares issued to shareholders in
reinvestment of distributions 272 2,828 -- --
Shares reacquired (23,398) (261,447) -- --
------- --------- ------- ---------
Net increase 1,417 $ 49,546 73,457 $ 764,117
======= ========= ======= =========
Class A Shares
INTERNATIONAL STRATEGIC GROWTH FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 9,673 $ 117,480 38,708 $ 388,757
Shares issued to shareholders in
reinvestment of distributions 320 3,315 -- --
Shares reacquired (435) (4,607) (29,426) (342,377)
------- --------- ------- ---------
Net increase 9,558 $ 116,188 9,282 $ 46,380
======= ========= ======= =========
Class I Shares
INTERNATIONAL STRATEGIC GROWTH FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 26,952 $ 332,055 92,832 $ 965,533
Shares issued to shareholders in
reinvestment of distributions 3,241 33,607 -- --
Shares reacquired (45,157) (499,667) (2,525) (26,971)
------- --------- ------- ---------
Net increase (decrease) (14,964) $(134,005) 90,307 $ 938,562
======= ========= ======= =========
Class A Shares
INTERNATIONAL VALUE FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 279 $ 3,219 96,025 $ 960,810
Shares issued to shareholders in
reinvestment of distributions 2,693 30,353 -- --
Shares reacquired (28,592) (349,000) (270) (3,059)
------- --------- ------- ---------
Net increase (decrease) (25,620) $(315,428) 95,755 $ 957,751
======= ========= ======= =========
Class I Shares
INTERNATIONAL VALUE FUND
-----------------------------------------
YEAR ENDED SEPTEMBER PERIOD ENDED
30, 1999 SEPTEMBER 30, 1998*
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------
Shares sold 6,036 $ 75,977 10,745 $ 110,743
Shares issued to shareholders in
reinvestment of distributions 330 3,718 -- --
Shares reacquired (1,623) (21,012) -- --
------- --------- ------- ---------
Net increase 4,743 $ 58,683 10,745 $ 110,743
======= ========= ======= =========
*For the period from the commencement of each Fund's investment operations,
October 9, 1997, through September 30, 1998.
(6) Line of Credit
Each Fund and other affiliated funds participate in an $820 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
each Fund for the year ended September 30, 1999, were as follows:
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
------------------------------------------------------------------------
$9 $7 $8
The Funds had no significant borrowings during the period.
(7) Restricted Security
Each Fund may invest not more than 15% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At September 30, 1999,
the International Opportunities Fund owned the following restricted security,
which may not be publicly sold without registration under the Securities Act of
1933. The Fund does not have the right to demand that such security be
registered. The value of this security is determined by valuations furnished by
dealers or by a pricing service, or if not available, is valued at fair value as
determined in good faith by the Trustees.
<TABLE>
<CAPTION>
DATES OF % OF
DESCRIPTION ACQUISITION SHARES COST VALUE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hong Leong Finance 1/20/99 - 7/14/99 7,000 $11,949 $11,739 1.0%
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust V and Shareholders of MFS International
Opportunities Fund, MFS International Strategic Growth Fund and MFS
International Value Fund:
We have audited the accompanying statements of assets and liabilities of MFS
International Opportunities Fund, MFS International Strategic Growth Fund and
MFS International Value Fund, including the schedules of portfolio
investments, as of September 30, 1999, and the related statements of
operations for the year then ended, and the statements of changes in net
assets and financial highlights for the year then ended and for the period
from October 9, 1997 (commencement of operations) to September 30, 1998. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 1999, by correspondence
with the custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of MFS
International Opportunities Fund, MFS International Strategic Growth Fund and
MFS International Value Fund at September 30, 1999, and the results of their
operations for the year then ended, the changes in their net assets and the
financial highlights for the year then ended and for the period from October
9, 1997 (commencement of operations) to September 30, 1998, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Boston, Massachusetts
November 9, 1999
<PAGE>
FEDERAL TAX INFORMATION
In January 2000, shareholders will be mailed a Form 1099-DIV reporting the
federal tax status of all distributions paid during the calendar year 1999.
For the year ended September 30, 1999, income from foreign sources and the
foreign taxes withheld were as follows:
INTERNATIONAL INTERNATIONAL INTERNATIONAL
OPPORTUNITIES STRATEGIC GROWTH VALUE
FUND FUND FUND
- -------------------------------------------------------------------------------
Income from foreign sources $15,520 $19,194 $14,316
------- ------- -------
Foreign taxes withheld $ 2,533 $ 2,540 $ 2,124
------- ------- -------
--------------------------------------------
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' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and on behalf of the MFS
funds, is committed to the effective use of technology in managing our portfolio
investments, delivering high-quality service to MFS fund shareholders,
retirement plan participants, and MFS' institutional clients, and supporting the
financial consultants who sell our products. With that in mind, we created a
separately funded Year 2000 Program Management Office in 1996 comprised of a
specialized staff reporting directly to MFS senior management.
The Year 2000 (Y2K) problem arises because calendar-year fields in computers and
software applications traditionally have used two-digit codes so that, for
example, the year 1998 is coded as "98," with the "19" being implied. In the
year 2000, unless necessary corrections have been made, computer applications
may assume "00" refers to 1900 rather than 2000, thus resulting in systems
failures or miscalculations. To address this issue, our team of dedicated
business and technology managers, working with outside experts, is taking steps
to ascertain the Y2K readiness of MFS' internal systems and is working with our
external systems vendors to determine whether they expect their systems to be
ready.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness. Each year, MFS' research analysts and portfolio managers conduct
more than 1,000 on-site meetings with companies whose securities are, or may be,
held in fund and client portfolios, and host an additional 1,500 meetings at
MFS' headquarters. When assessing the Y2K readiness of these companies, MFS'
research analysts and portfolio managers may rely upon discussions at these
meetings as well as SEC disclosure documents and third- party reports.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS, shareholders of MFS funds, participants in retirement
plans administered by MFS, or MFS' institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com or contact the MFS Year 2000 Program
Management Office by e-mail at [email protected] or by letter at 500 Boylston Street,
Boston, MA 02116-3741.
<PAGE>
MFS(R) INTERNATIONAL OPPORTUNITIES FUND
MFS(R) INTERNATIONAL STRATEGIC GROWTH FUND
MFS(R) INTERNATIONAL VALUE FUND
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INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
INC-2-V 11/99 1M
