<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) GLOBAL
GOVERNMENTS FUND
SEMIANNUAL REPORT o MAY 31, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 24
MFS' Year 2000 Readiness Disclosure ....................................... 35
Trustees and Officers ..................................................... 37
MFS(R) ORIGINAL RESEARCH(SM)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
It has been almost two years since financial turmoil began to rock markets in
Asia, Russia, and Latin America. Even developed markets such as Europe and the
United States were not immune. In the U.S. equity market, for example,
investors focused on a narrow group of 50 of the largest-company growth stocks
because they seemed to offer less volatility in uncertain times. Fixed-income
investors also became more concerned about risk, moving money into U.S.
Treasury securities and out of corporate and municipal bonds and mortgage-
backed securities.
The narrowness of the market was just one of three broad issues that dominated
the U.S. equity market until recently. The other two were a slowdown in
corporate earnings growth and high valuations, with stocks of many companies
selling at extremely high prices relative to their earnings.
Although these have been challenging issues, we now see signs that we feel
demonstrate each one is changing for the better. Today, we believe the markets
are presenting more opportunities for investors to diversify, for our
portfolio managers to find good values, and for us to show the benefits of
staying with our long-term objectives and strategies. Investors seem to be
regaining confidence in a wider range of companies. Stocks of some small and
mid-sized companies, as well as some large industrial companies, have begun to
perform better in the past few months than they had for the previous year or
so. These companies appear to have benefited from early signs of stability in
emerging markets and a continuation of economic growth in the United States.
U.S. companies also have produced better earnings. Corporate earnings were, on
average, relatively flat in 1998. However, we expect earnings to grow 12% to
14% this year because more companies have benefited from the strong economy
and from aggressive consolidation and cost-cutting measures they have taken
over the past several years.
Based on their earnings projections, our analysts estimate that the U.S. stock
market is still about 30% overvalued. While there has been some shift to a
wider group of stocks, many investors are still focusing on the large-company
stocks. As a result, most of the overvaluation is in the 50 largest stocks in
the Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged
index of common stock total return performance. That means about 450 stocks
are selling at more attractive prices, particularly given what we see as the
improved earnings outlooks for these and many small and mid-sized companies
not in the S&P 500. These companies also benefit from consolidation, cost
cutting, and global growth. Because they are smaller, they may be able to
respond to changes more quickly, and thus they have the potential to grow
faster than the big companies.
The fixed-income markets, meanwhile, seem to be approaching the level of
relative stability they enjoyed before the Asian turmoil. Some credit for this
stability goes to the Federal Reserve Board (the Fed), which has reassured
investors that it will act to prevent rapid economic growth from causing
higher inflation and reduced purchasing power. Also, once investors saw that
the overseas turmoil had little, if any, effect on the financial strength of
most domestic bond issuers, the major non-Treasury markets -- corporate,
municipal, and mortgage -- began to rebound. Our portfolio managers are now
finding more opportunities to buy bonds with relatively stable prices and
attractive yields.
The past two years have challenged investors. However, we believe we are well
positioned for the current environment because our analysts and portfolio
managers continue to rely on MFS(R) Original Research(SM) to help evaluate the
long-term investment potential of each holding being considered for our
portfolios. Also, we believe our discipline of maintaining diversified
portfolios and of staying with our funds' clearly defined investment
strategies can help us offer investment products with the potential to sustain
returns over a variety of market cycles.
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)
June 17, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
For the six months ended May 31, 1999, Class A shares of the Fund provided a
total return of -1.58%, Class B shares -1.90%, Class C shares -1.88%, and
Class I shares -1.41%. These returns assume the reinvestment of distributions
but exclude the effects of any sales charges.
During the same period, the average global income fund tracked by Lipper
Analytical Services, Inc., an independent firm that reports mutual fund
performance, returned -1.74%. The Fund's returns also compare to a -3.83%
return for the J.P. Morgan Global Government Bond Index (the Morgan Index), an
aggregate index of actively traded government bonds issued by 13 countries,
including the United States, with remaining maturities of at least one year.
Q. HOW IS THE FUND ALLOCATED AMONG VARIOUS MARKETS?
A. Approximately 18% of the portfolio is invested in high-yield U.S. corporate
bonds, 22% in U.S. Treasuries, and 6% in U.S. investment-grade corporate
bonds. We also have 8% in emerging market bonds, 7% in European corporate
bonds, 5% in mortgage-backed securities, 5% in bonds of dollar-bloc
countries such as New Zealand and Australia, and the rest in European and
Japanese government bonds. The Fund is managed for a combination of income
and capital appreciation -- that is, total return. We seek our objective by
investing in fixed-income securities from around the world. Because the
Fund invests in a variety of markets, it can seek the best potential
returns while helping to diversify risk.
Q. HAVE YOU CHANGED YOUR EMERGING MARKET WEIGHTING?
A. At the beginning of the year, our emerging market holdings accounted for
about 15% of portfolio assets. As these markets recovered from their crisis
levels of 1998, we gradually reduced our exposure. It is currently about 8%
of assets. Now the question is whether the economic recovery in Asia and
Latin America is sustainable. We think it probably is and, as we see more
concrete signs of recovery, our emerging markets exposure may increase.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST
SIX MONTHS?
A. The performance of the Fund's emerging market and corporate holdings has
improved over the past six months. Also, the U.S. dollar has been strong
thanks to the strength of the U.S. economy. The Fund has a relatively heavy
weighting in the dollar, and this position contributed to performance.
Finally, the Fund has benefited from the rebound of the high-yield corporate
market, a sector in which the strong U.S. economy has boosted corporate
earnings and given companies the capital they need to meet debt payments.
Q. WHY DID EMERGING MARKETS AND CORPORATE BONDS IMPROVE SO MUCH?
A. During last fall's emerging market turmoil, the Federal Reserve Board (the
Fed) cut short-term interest rates three times, and almost every other
central bank in the world also cut rates. By making borrowing cheaper,
these central banks provided a heavy injection of liquidity into the
world's financial markets. That, in turn, gave investors more confidence in
emerging market and corporate issuers, which made their bonds more
attractive. Also, countries such as South Korea were quick and resourceful
in shoring up their banking systems and forcing structural changes in their
economies. These moves helped assure investors that some of the structural
problems underlying the Asian financial crisis were being addressed.
Q. WHAT'S YOUR VIEW ON JAPAN?
A. We think Japan is bottoming out economically, and the Japanese government
is promising a 0.5% growth rate this year. Most people, including us, do
not think growth will be that high, partly because demand at the consumer
level continues to be very weak. The Bank of Japan has lowered short-term
interest rates to zero in an attempt to stimulate demand. At the same time,
the government is running a very large deficit, with no prospect of closing
that gap any time soon. With the economy so weak and the Bank of Japan
willing to keep short-term rates at zero to inject liquidity into the
financial markets, we think that domestic investors -- public and private
-- will support government bonds near current levels. So we have about 8%
of the portfolio in long-term Japanese government bonds.
Q. GROWTH IN EUROPE HAS BEEN SLOW THIS YEAR. WHY IS THAT?
A. This is the first year of the European monetary union (EMU), and growth
among EMU countries has been somewhat disappointing. European countries are
still facing fiscal constraints after several years of trying to get their
budget deficits low enough to meet the criteria for joining EMU. Also, Europe
has suffered from the Asian crisis more than most government officials had
expected. Italy's exports, in particular, have been weak because Italy
competes directly with Asia in such products as textiles. Currency
devaluations in Asia in 1997 and 1998 made exports from that region cheaper.
Europe also has some fairly severe structural issues such as high labor costs
and inflexible product markets. For these reasons, the price of the euro
relative to the dollar has fallen.
Q. HOW IS YOUR VIEW REFLECTED IN THE PORTFOLIO?
A. Because European governments have kept interest rates down to help
stimulate growth, prices of European bonds have outperformed U.S.
Treasuries over the past six months. For this reason, we have emphasized
European bonds and deemphasized Treasuries. We also have favored markets
such as Sweden, Denmark, Greece, and the United Kingdom. All of these
countries are candidates for EMU in the next two to five years. As these
countries get closer to joining EMU, we expect yields in their bond markets
to decline toward those of current EMU members.
Q. HOW HAVE YOUR U.S. CORPORATE BONDS PERFORMED?
A. We have gotten good performance from our holdings in U.S. cable and
telecommunications companies such as Time Warner which is benefiting from
continuing consolidation and the rapid growth in its industry. The Fund also
has been helped by its holdings in "Yankee" banks. Those are healthy,
non-U.S. banks, such as Union Bank of Norway, that issue bonds in U.S.
dollars.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. We think the U.S. dollar will stay firm and may appreciate against the yen
and the euro. The strength of the euro will depend on whether European
growth picks up and whether the Fed succeeds in slowing U.S. growth. The
Fed has signaled that it is determined to slow things down to keep
inflation at bay, and that probably means an annual growth rate of 2.5% to
3%. Although somewhat slower than the growth rate we've seen over the past
several months we believe the 2.5% to 3% rate should continue to support
our holdings in high-yield corporate bonds and in the rest of the non-
Treasury market. Based on this outlook, we expect to keep a fair amount of
this portfolio invested in both of these markets. Furthermore, if central
bankers and other policymakers can find a way to slow growth in the United
States, increase growth in the rest of the world, and deal with some of the
structural problems that led to the emerging market turmoil, we think our
positions in emerging market bonds should do well.
/s/ Christopher D. Piros /s/ James T. Swanson
Christopher D. Piros James T. Swanson
Portfolio Manager Portfolio Manager
Note to Shareholders: On January 1, 1999, Christopher D. Piros joined
James T. Swanson as a portfolio manager of the Fund.
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.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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CHRISTOPHER D. PIROS IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND A PORTFOLIO MANAGER OF MFS(R) GLOBAL GOVERNMENTS FUND.
HE ALSO MANAGES THE NOMURA GLOBAL BALANCED OPEN FUND UNDER SUBADVISORY
AGREEMENTS WITH NOMURA ASSET MANAGEMENT CO. OF JAPAN. MR. PIROS JOINED
MFS IN 1989 AS VICE PRESIDENT IN THE FIXED INCOME DEPARTMENT AND WORKED
IN THE INTERNATIONAL FIXED INCOME AREA BEFORE BEING NAMED A PORTFOLIO
MANAGER IN 1992. HE WAS NAMED SENIOR VICE PRESIDENT IN 1997. PRIOR TO
JOINING MFS, HE HAD BEEN A VICE PRESIDENT AND SENIOR ECONOMIST IN THE
QUANTITATIVE ASSET MANAGEMENT AREA AT A MAJOR CHICAGO-BASED SECURITIES
FIRM AND AN ASSISTANT PROFESSOR AT THE FUQUA SCHOOL OF BUSINESS AT DUKE
UNIVERSITY. HE IS A GRADUATE OF NORTHWESTERN UNIVERSITY AND HOLDS A
PH.D. FROM HARVARD UNIVERSITY.
JAMES T. SWANSON IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R). HE IS PORTFOLIO MANAGER OF MFS(R) STRATEGIC INCOME FUND,
MFS(R) GLOBAL GOVERNMENTS FUND, MFS(R) GLOBAL GOVERNMENTS SERIES (PART
OF MFS(R) VARIABLE INSURANCE TRUST(SM)), THE STRATEGIC INCOME SERIES
OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND TWO CLOSED-END
FUNDS, MFS(R) CHARTER INCOME TRUST, AND MFS(R) MULTIMARKET INCOME TRUST.
MR. SWANSON JOINED MFS IN 1985 AS VICE PRESIDENT AND WAS NAMED SENIOR
VICE PRESIDENT IN 1989. HE IS A GRADUATE OF COLGATE UNIVERSITY AND THE
HARVARD UNIVERSITY GRADUATE SCHOOL OF BUSINESS ADMINISTRATION. MR.
SWANSON IS A CHARTERED FINANCIAL ANALYST.
ALL PORTFOLIO MANAGERS AT MFS INVESTMENT MANAGEMENT(R) ARE SUPPORTED BY
AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R) ORIGINAL
RESEARCH(SM), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS INCOME AND CAPITAL APPRECIATION.
COMMENCEMENT OF
INVESTMENT OPERATIONS: FEBRUARY 26, 1981
CLASS INCEPTION: CLASS A FEBRUARY 26, 1981
CLASS B SEPTEMBER 7, 1993
CLASS C JANUARY 3, 1994
CLASS I JANUARY 2, 1997
SIZE: $180.3 MILLION NET ASSETS AS OF MAY 31, 1999
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes
to Performance Summary for more information.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH MAY 31, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return -1.58% -1.58% +9.18% +27.69% +105.34%
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -1.58% +2.97% + 5.01% + 7.46%
- -------------------------------------------------------------------------------------------------------------
SEC Results -- -6.26% +1.31% + 3.99% + 6.94%
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return -1.90% -2.35% +6.65% +22.72% +96.16%
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -2.35% +2.17% + 4.18% + 6.97%
- -------------------------------------------------------------------------------------------------------------
SEC Results -- -6.03% +1.26% + 3.87% + 6.97%
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
<S> <C> <C> <C> <C> <C>
6 Months 1 Year 3 Years 5 Years 10 Years/Life
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return -1.88% -2.32% +6.65% +22.96% + 97.08%
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -2.32% +2.17% + 4.22% + 7.02%
- -------------------------------------------------------------------------------------------------------------
SEC Results -- -3.24% +2.17% + 4.22% + 7.02%
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
<S> <C> <C> <C> <C> <C>
6 Months 1 Year 3 Years 5 Years 10 Years/Life
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return -1.41% -1.32% +9.81% +28.42% +106.49%
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -1.32% +3.17% + 5.13% + 7.52%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 4.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
B and C results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of B and C. Because
operating expenses of B and C are higher than those of A, B and C performance
generally would have been lower than A performance. The A performance included
in the B and C SEC performance has been adjusted to reflect the CDSC generally
applicable to B and C rather than the initial sales charge generally
applicable to A.
I results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of I. Because operating
expenses of A are greater than those of I, I performance generally would have
been higher than A performance. The A performance included in the
I performance has been adjusted to reflect the fact that I have no initial
sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and
capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably
affected by changes in interest rates and currency exchange rates, market
conditions, and the economic and political conditions of the countries where
investments are made. These risks may increase share price volatility. See the
prospectus for details.
Lower-rated securities may provide greater returns, but they are also
associated with greater-than-average risk. These risks may increase share
price volatility. See the prospectus for details.
PORTFOLIO CONCENTRATION AS OF MAY 31, 1999
PORTFOLIO STRUCTURE
International 37.2%
U.S. Treasuries 22.4%
High-Yield Corporates 18.1%
Emerging Markets 7.8%
High-Grade Corporates 6.4%
Mortgage Backed 5.2%
Yankee 2.5%
Cash 0.4%
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 1999
<CAPTION>
Bonds - 89.2%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
U.S. Bonds - 44.0%
Airlines - 1.2%
Continental Airlines, Inc., 9.5s, 2001 $ 1,994 $ 2,078,745
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Auto Parts - 1.0%
Federal Mogul Corp., 7.5s, 2009## $ 2,000 $ 1,867,420
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Banks and Credit Companies - 2.1%
Bayerische Landesbank NY, 5.875s, 2008 $ 2,000 $ 1,875,140
Providian National Bank, 6.75s, 2002 1,900 1,893,920
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$ 3,769,060
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Building - 2.3%
Building Materials Corp., 8.625s, 2006 $ 2,000 $ 2,045,000
Nortek Inc., 9.125s, 2007 2,000 2,060,000
------------
$ 4,105,000
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Business Services - 0.8%
Unisystem Corp., 7.875s, 2008 $ 1,400 $ 1,414,000
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Coal - 1.1%
P&L Coal Holdings Corp., 8.875s, 2008 $ 2,000 $ 2,015,000
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Consumer Goods and Services - 1.6%
Revlon Consumer Products Corp., 8.125s, 2006 $ 1,500 $ 1,492,500
Pierce Leahy Corp., 11.125s, 2006 1,275 1,415,250
------------
$ 2,907,750
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Entertainment - 3.7%
AMC Entertainment, Inc., 9.5s, 2009 $ 1,750 $ 1,680,000
Park Place Entertainment Corp., 7.875s, 2005 2,000 1,920,000
Time Warner Entertainment Co. LP, 8.375s, 2033 2,773 3,113,025
------------
$ 6,713,025
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Government National Mortgage Association - 5.2%
GNMA, 7s, 2027 - 2028 $ 9,368 $ 9,367,603
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Industrial - 0.6%
Mark IV Industries, Inc., 7.5s, 2007 $ 1,100 $ 1,023,000
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Insurance - 0.5%
Conseco, Inc., 6.4s, 2001 $ 859 $ 844,672
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Medical and Health Technology and Services - 0.9%
Tenet Healthcare Corp., 8.625s, 2003 $ 1,685 $ 1,706,062
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Metals and Minerals - 0.3%
Ryerson Tull, Inc., 9.125s, 2006 $ 500 $ 520,175
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Oil Services - 0.5%
Husky Oil Ltd., 8.9s, 2028 $ 990 $ 943,886
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Printing and Publishing - 1.1%
Hollinger International Publishing Inc., 8.625s, 2005 $ 2,000 $ 2,065,000
- --------------------------------------------------------------------------------------------------------
Restaurants and Lodging - 1.0%
Red Roof Inns, Inc., 9.625s, 2003 $ 1,800 $ 1,822,500
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Stores - 0.2%
Southland Corp., 5s, 2003 $ 300 $ 267,750
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Supermarkets - 0.5%
Marsh Supermarkets, Inc., 8.875s, 2007 $ 900 $ 927,000
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Telecommunications - 2.4%
Chancellor Media Corp., 8s, 2008## $ 1,725 $ 1,707,750
CSC Holdings, Inc., 9.25s, 2005 1,600 1,704,000
Worldcom Inc. Georgia, 6.95s, 2028 938 913,312
------------
$ 4,325,062
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U.S. Treasury Obligations - 16.4%
U.S. Treasury Bonds, 5.25s, 2028 $ 2,488 $ 2,252,411
U.S. Treasury Notes, 3.875s, 2009 2,809 2,808,540
U.S. Treasury Notes, 4s, 2000 2,200 2,160,466
U.S. Treasury Notes, 4.25s, 2003 12,995 12,282,354
U.S. Treasury Notes, 4.75s, 2008 1,520 1,414,071
U.S. Treasury Notes, 5.25s, 2001 6,000 5,979,844
U.S. Treasury Notes, 5.625s, 2008 2,619 2,594,853
------------
$ 29,492,539
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Utilities - Electric - 0.6%
El Paso Electric Co., 8.9s, 2006 $ 1,000 $ 1,092,270
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Total U.S. Bonds $ 79,267,519
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Foreign Bonds - 45.2%
Argentina - 0.3%
Argentina Republic, 11.447s, 2005 $ 700 $ 616,000
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Brazil - 1.3%
Federal Republic of Brazil, 5s, 2014 $ 3,383 $ 2,122,608
Federal Republic of Brazil, 11.625s, 2004 380 344,850
------------
$ 2,467,458
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Canada - 0.8%
Gulf Canada Resources Ltd., 9.25s, 2004 (Oil Services) $ 1,400 $ 1,416,464
- --------------------------------------------------------------------------------------------------------
Denmark - 4.1%
Kingdom of Denmark, 7s, 2007 DKK 22,006 $ 3,642,554
Nykredit, 6s, 2029 (Banks and Credit Cos.) 27,766 3,781,739
------------
$ 7,424,293
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Germany - 2.9%
Federal Republic of Germany, 6s, 2007 EUR 1,096 $ 1,293,847
Treuhandanstalt, 6.625s, 2003 1,865 2,187,085
Federal Republic of Germany, 4.75s, 2028 1,750 1,726,604
------------
$ 5,207,536
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Greece - 2.1%
Hellenic Republic, 5.75s, 2008 EUR 1,331 $ 1,488,717
Republic of Greece, 8.01s, 2003 GRD 653,000 2,278,857
------------
$ 3,767,574
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Italy - 4.3%
Republic of Italy, 5s, 2008 EUR 7,066 $ 7,749,343
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Mexico - 2.4%
Petroleos Mexicanos, 9.5s, 2027 (Oil Services) $ 1,300 $ 1,204,125
United Mexican States, 6.25s, 2019 1,175 873,965
United Mexican States, 9.75s, 2005 860 844,950
United Mexican States, 10.375s, 2009 1,530 1,522,350
------------
$ 4,445,390
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Morocco - 1.3%
Morroco Restructuring & Consolidating Agreement, 6.063s, 2009+ $ 2,928 $ 2,298,555
- --------------------------------------------------------------------------------------------------------
New Zealand - 5.0%
Government of New Zealand, 8s, 2004 NZD 6,226 $ 3,627,105
Government of New Zealand, 7s, 2009 4,800 2,703,786
Government of New Zealand, 8s, 2006 4,570 2,711,325
------------
$ 9,042,216
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Norway - 0.8%
Union Bank Norway, 7.35s, 2049 (Banks and Credit Cos.)## $ 1,400 $ 1,392,552
- --------------------------------------------------------------------------------------------------------
Panama - 0.6%
Republic of Panama, 4s, 2014 $ 1,440 $ 1,033,200
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Peru - 0.3%
Republic of Peru, 4.5s, 2017 $ 840 $ 508,200
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Philippines - 0.5%
Republic of Philippines, 9.875s, 2019 $ 985 $ 950,525
- --------------------------------------------------------------------------------------------------------
Poland - 0.8%
Telekomunikacja Polska SA Finance BV, 7.75s, 2008
(Utilities - Telephone)## $ 1,500 $ 1,469,400
- --------------------------------------------------------------------------------------------------------
Spain - 5.1%
Government of Spain, 6s, 2008 EUR 7,836 $ 9,169,237
- --------------------------------------------------------------------------------------------------------
Sweden - 4.5%
Kingdom of Sweden, 6s, 2005 SEK 31,400 $ 3,997,898
Kingdom of Sweden, 9s, 2009 26,100 4,081,808
------------
$ 8,079,706
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United Kingdom - 6.7%
Colt Telecom Group PLC, 8.875s, 2007 (Telecommunications) DEM 1,800 $ 1,029,859
Halifax, 6.083s, 2012 (Banks and Credit Cos.) GBP 1,700 2,660,488
Lloyds Bank, 7.375s, 2004 (Banks and Credit Cos.) 1,500 2,538,769
Polestar Corp., 10.5s, 2008 (Industrial) 575 907,332
U.K. Treasury, 7s, 2002 1,341 2,261,066
Woolwich Building Society, 5.819s, 2012
(Banks and Credit Cos.) 1,700 2,626,446
-------------
$ 12,023,960
- --------------------------------------------------------------------------------------------------------
Venezuela - 1.4%
Corporacion Andina De Fomento, 7.75s, 2004 (Industrial) $ 1,200 $ 1,205,880
Corporacion Andina De Fomento, 4.75s, 2004 (Industrial)## EUR 1,300 1,340,755
------------
$ 2,546,635
- --------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 81,608,244
- --------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $166,703,416) $160,875,763
- --------------------------------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------------------------------
Republic of Venezuela* (Identified Cost, $0) 12,500 $ --
- --------------------------------------------------------------------------------------------------------
Call Options Purchased - 0.4%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Japan Government Bonds/August/135.31 JPY 980,000 $ 90,846
British Pounds June/1.645 GBP 15,104 406,635
British Pounds June/1.6725 1,743 8,262
Euro July/1.0515 EUR 9,373 148,350
- --------------------------------------------------------------------------------------------------------
Total Call Options Purchased (Premiums Paid, $458,133) $ 654,093
- --------------------------------------------------------------------------------------------------------
Put Options Purchased - 0.4%
- --------------------------------------------------------------------------------------------------------
Japanese Yen June/120 JPY 1,980,272 $ 119,642
British Pounds June/1.645 GBP 15,104 11,690
British Pounds June/1.5875 1,654 7,128
Deutsche Marks November/0.997 EUR 375 164,916
Deutsche Marks November/0.997 694 269,855
Hong Kong Dollar June/8.5 HKD 40,205 0
Hong Kong Dollar June/9 43,200 0
Japanese Yen July/121.7 JPY 1,874,472 181,824
- --------------------------------------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $708,634) $ 755,055
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 12.1%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Consolidated Discount Notes,
due 6/01/99 $ 16,850 $ 16,850,000
Federal National Mortgage Association Discount Notes,
due 6/22/99 5,000 4,986,233
- --------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 21,836,233
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $189,706,416) $184,121,144
- --------------------------------------------------------------------------------------------------------
Call Options Written - (0.2)%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
OF CONTRACTS
ISSUER/EXPIRATION MONTH/STRIKE PRICE (000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Australian Dollar April/0.625 AUD 10,088 $ (126,700)
British Pounds June/1.56 GBP 5,024 (5,928)
Euro July/1.0515 EUR 9,373 (145,088)
Japanese Yen July/112.75 JPY 1,736,621 (22,576)
- --------------------------------------------------------------------------------------------------------
Total Call Options Written (Premiums Paid, $(400,004)) $ (300,292)
- --------------------------------------------------------------------------------------------------------
Put Options Written - (0.1)%
- --------------------------------------------------------------------------------------------------------
Japan Government Bonds/August/135.31 JPY 980,000 $ (161,414)
Hong Kong Dollar June/8.5 HKD 44,272 0
Hong Kong Dollar June/9 44,000 0
- --------------------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Paid, $(418,191)) $ (161,414)
- --------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (1.8)% (3,360,329)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $180,299,109
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
Abbreviations have been used throughout this report to indicate amounts shown in currencies other than
the U.S. dollar. A list of abbreviations is shown below.
AUD = Australian Dollars GRD = Greek Drachma
CAD = Canadian Dollars HKD = Hong Kong Dollar
DEM = Deutsche Marks NZD = New Zealand Dollars
DKK = Danish Kroner SEK = Swedish Kroner
EUR = Euro JPY = Japanese Yen
GBP = British Pounds
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
MAY 31, 1999
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $189,706,416) $184,121,144
Net receivable for forward foreign currency exchange
contracts sold 241,322
Net receivable for forward foreign currency exchange
contracts subject to master netting agreement 326,558
Receivable for investments sold 1,278,473
Receivable for Fund shares sold 133,052
Receivable for daily variation margin on open futures
contracts 5,990
Interest receivable 2,614,822
Other assets 387,091
------------
Total assets $189,108,452
------------
Liabilities:
Cash overdraft $ 4,821
Payable for investments purchased 7,333,115
Payable for Fund shares reacquired 338,733
Net payable for forward foreign currency exchange
contracts purchased 338,678
Written options outstanding, at value (premiums received,
$818,195) 461,706
Payable to affiliates -
Management fee 15,404
Administrative fee 297
Distribution and service fee 84,721
Shareholder servicing agent fee 2,076
Payable for swap agreement 36,845
Accrued expenses and other liabilities 192,947
------------
Total liabilities $ 8,809,343
------------
Net assets $180,299,109
============
Net assets consist of:
Paid-in capital $194,462,707
Unrealized depreciation on investments and translation of
assets and liabilities in foreign currencies (5,106,579)
Accumulated undistributed net realized loss on
investments and foreign currency transactions (11,849,859)
Accumulated undistributed net investment income 2,792,840
------------
Total $180,299,109
============
Shares of beneficial interest outstanding 17,561,991
==========
Class A shares:
Net asset value per share
(net assets of $114,448,170 / 11,087,671 shares of
beneficial interest outstanding) $10.32
======
Offering price per share (100 / 95.25 of net asset value
per share) $10.83
======
Class B shares:
Net asset value and offering price per share
(net assets of $59,341,316 / 5,838,668 shares of
beneficial interest outstanding) $10.16
======
Class C shares:
Net asset value and offering price per share
(net assets of $4,685,016 / 458,819 shares of
beneficial interest outstanding) $10.21
======
Class I shares:
Net asset value and offering price per share
(net assets of $1,824,607 / 176,833 shares of
beneficial interest outstanding) $10.32
======
On sales of $100,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
FOR SIX MONTHS ENDED MAY 31, 1999
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 6,360,037
------------
Expenses -
Management fee $ 730,048
Trustees' compensation 17,187
Shareholder servicing agent fee 105,609
Distribution and service fee (Class A) 150,451
Distribution and service fee (Class B) 301,828
Distribution and service fee (Class C) 26,389
Administration 12,003
Custodian fee 62,080
Printing 29,728
Postage 24,067
Auditing 19,000
Legal 4,885
Miscellaneous 98,190
------------
Total expenses $ 1,581,465
Fees paid indirectly (30,765)
------------
Net expenses $ 1,550,700
------------
Net investment income $ 4,809,337
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (9,186,847)
Written option transactions 1,529,418
Foreign currency transactions 4,797,985
Futures contracts 37,938
------------
Net realized loss on investments and foreign currency
transactions $ (2,821,506)
------------
Change in unrealized appreciation (depreciation) -
Investments $ (5,044,111)
Written options (99,960)
Translation of assets and liabilities in foreign currencies 119,090
Futures contracts (18,209)
Swap agreements (36,845)
------------
Net unrealized loss on investments and foreign currency
transactions $ (5,080,035)
------------
Net realized and unrealized loss on investments and
foreign currency $ (7,901,541)
------------
Decrease in net assets from operations $ (3,092,204)
============
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1999 NOVEMBER 30, 1998
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 4,809,337 $ 14,176,452
Net realized loss on investments and foreign currency
transactions (2,821,506) (9,004,817)
Net unrealized gain (loss) on investments and foreign
currency translation (5,080,035) 2,068,038
------------ ------------
Increase (decrease) in net assets from operations $ (3,092,204) $ 7,239,673
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (8,915,136) $ (6,952,221)
From net investment income (Class B) (3,474,564) (2,402,143)
From net investment income (Class C) (333,062) (224,741)
From net investment income (Class I) (132,660) (84,491)
From net realized gain on investments and foreign
currency transactions (Class A) -- (900,629)
From net realized gain on investments and foreign
currency transactions (Class B) -- (392,688)
From net realized gain on investments and foreign
currency transactions (Class C) -- (41,406)
From net realized gain on investments and foreign
currency transactions (Class I) -- (10,151)
------------ ------------
Total distributions declared to shareholders $(12,855,422) $(11,008,470)
------------ ------------
Net decrease in net assets from Fund share transactions $(10,010,622) $(66,644,760)
------------ ------------
Total decrease in net assets $(25,958,248) $(70,413,557)
Net assets:
At beginning of period 206,257,357 276,670,914
------------ ------------
At end of period (including accumulated undistributed net
investment income of $2,792,840 and $10,838,925,
respectively) $180,299,109 $206,257,357
============ ============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
PERIOD ENDED -------------------------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of year $11.20 $11.34 $11.70 $12.46 $11.39 $13.37
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.27 $ 0.70 $ 0.64 $ 0.65 $ 0.76 $ 0.63
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions (0.42) (0.34) (0.68) 0.17 0.76 (1.17)
------ ------ ------ ------ ------ ------
Total from investment operations $(0.15) $ 0.36 $(0.04) $ 0.82 $ 1.52 $(0.54)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.73) $(0.44) $(0.25) $(1.58) $ -- $(1.15)
From net realized gain on
investments and foreign
currency transactions -- (0.06) (0.06) -- (0.45) (0.29)
In excess of net realized gain
on investments and foreign
currency transactions -- -- (0.01) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.73) $(0.50) $(0.32) $(1.58) $(0.45) $(1.44)
------ ------ ------ ------ ------ ------
Net asset value - end of year $10.32 $11.20 $11.34 $11.70 $12.46 $11.39
====== ====== ====== ====== ====== ======
Total return(+) (1.58)% 3.27% (0.29)% 7.36% 13.93% (4.63)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.37% 1.35% 1.35% 1.42% 1.51% 1.54%
Net investment income 5.19% 6.28% 5.75% 5.70% 6.42% 5.45%
Portfolio turnover 130% 334% 335% 370% 277% 358%
Net assets at end of year
(000 omitted) $114,448 $139,648 $187,152 $283,770 $343,188 $370,110
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
PERIOD ENDED -------------------------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of year $10.99 $11.13 $11.50 $12.28 $11.32 $13.35
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.23 $ 0.60 $ 0.55 $ 0.54 $ 0.65 $ 0.56
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions (0.42) (0.33) (0.68) 0.17 0.76 (1.19)
------ ------ ------ ------ ------ ------
Total from investment operations $(0.19) $ 0.27 $(0.13) $ 0.71 $ 1.41 $(0.63)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.64) $(0.35) $(0.17) $(1.49) $ -- $(1.11)
From net realized gain on
investments and foreign
currency transactions -- (0.06) (0.06) -- (0.45) (0.29)
In excess of net realized gain
on investments and foreign
currency transactions -- -- (0.01) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.64) $(0.41) $(0.24) $(1.49) $(0.45) $(1.40)
------ ------ ------ ------ ------ ------
Net asset value - end of year $10.16 $10.99 $11.13 $11.50 $12.28 $11.32
====== ====== ====== ====== ====== ======
Total return (1.90)% 2.46% (1.08)% 6.39% 13.01% (5.39)%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.13% 2.12% 2.10% 2.27% 2.33% 2.38%
Net investment income 4.42% 5.53% 5.03% 4.89% 5.59% 4.81%
Portfolio turnover 130% 334% 335% 370% 277% 358%
Net assets at end of year
(000 omitted) $59,341 $58,646 $77,962 $102,717 $90,978 $73,458
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
PERIOD ENDED -------------------------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $11.03 $11.13 $11.51 $12.29 $11.31 $12.30
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.23 $ 0.60 $ 0.55 $ 0.55 $ 0.66 $ 0.50
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions (0.42) (0.33) (0.68) 0.17 0.77 (1.35)
------ ------ ------ ------ ------ ------
Total from investment operations $(0.19) $ 0.27 $(0.13) $ 0.72 $ 1.43 $(0.85)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.63) $(0.31) $(0.18) $(1.50) $ -- $(0.14)
From net realized gain on
investments and foreign
currency transactions -- (0.06) (0.06) -- (0.45) --
In excess of net realized gain
on investments and foreign
currency transactions -- -- (0.01) -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.63) $(0.37) $(0.25) $(1.50) $(0.45) $(0.14)
------ ------ ------ ------ ------ ------
Net asset value - end of period $10.21 $11.03 $11.13 $11.51 $12.29 $11.31
====== ====== ====== ====== ====== ======
Total return (1.88)% 2.46% (1.10)% 6.56% 13.11% (6.92)%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.13% 2.12% 2.10% 2.20% 2.26% 2.32%+
Net investment income 4.43% 5.52% 5.02% 4.97% 5.67% 5.06%+
Portfolio turnover 130% 334% 335% 370% 277% 358%
Net assets at end of period
(000 omitted) $4,685 $5,953 $9,534 $14,487 $11,813 $8,687
* For the period from the inception of Class C, January 3, 1994, through November 30, 1994.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
PERIOD ENDED ------------------------------------
MAY 31, 1999 1998 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $11.22 $11.37 $11.24
------ ------ ------
Income from investment operations# -
Net investment income $ 0.29 $ 0.73 $ 0.61
Net realized and unrealized loss on investments and
foreign currency transactions (0.43) (0.35) (0.48)
------ ------ ------
Total from investment operations $(0.14) $ 0.38 $ 0.13
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.76) $(0.47) $ --
From net realized gain on investments and foreign
currency transactions -- (0.06) --
------ ------ ------
Total distributions declared to shareholders $(0.76) $(0.53) $ --
------ ------ ------
Net asset value - end of period $10.32 $11.22 $11.37
====== ====== ======
Total return (1.41)% 3.49% 1.16%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.13% 1.12% 0.99%+
Net investment income 5.43% 6.58% 5.54%+
Portfolio turnover 130% 334% 335%
Net assets at end of period (000 omitted) $1,825 $2,010 $2,023
* For the period from the inception of Class I, January 2, 1997, to November 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Global Governments Fund (the Fund) is a non-diversified series of MFS
Series Trust VII (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 - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, forward contracts,
and swap agreements, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and other
market data, without exclusive reliance upon exchange or over-the-counter
prices.
Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value.
Futures contracts, options, and options on futures contracts listed on
commodities exchanges are reported at market value using closing settlement
prices. Over-the-counter options on securities are valued by brokers. Over-
the-counter currency options are valued through the use of a pricing model
which takes into account foreign currency exchange spot and forward rates,
implied volatility, and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund requires
that the securities collateral in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a default under the repurchase agreement. The Fund
monitors, on a daily basis, the value of the collateral to ensure that its
value, including accrued interest, is greater than amounts owed to the Fund
under each such repurchase agreement. The Fund, along with other affiliated
entities of Massachusetts Financial Services Company (MFS), may utilize a
joint trading account for the purpose of entering into one or more repurchase
agreements.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Written Options - The Fund may write call or put options in exchange for a
premium. The premium is initially recorded as a liability which is
subsequently adjusted to the current value of the options contract. When a
written option expires, the Fund realizes a gain equal to the amount of the
premium received. When a written call option is exercised or closed, the
premium received is offset against the proceeds to determine the realized gain
or loss. When a written put option is exercised, the premium reduces the cost
basis of the security purchased by the Fund. The Fund, as writer of an option,
may have no control over whether the underlying securities may be sold (call)
or purchased (put) and, as a result, bears the market risk of an unfavorable
change in the price of the securities underlying the written option. In
general, written call options may serve as a partial hedge against decreases
in value in the underlying securities to the extent of the premium received.
Written options may also be used as part of an income producing strategy
reflecting the view of the Fund's management on the direction of interest
rates.
Futures Contracts - The Fund may enter into futures contracts for the delayed
delivery of securities or currency, or contracts based on financial indices at
a fixed price on a future date. In entering such contracts, the Fund is
required to deposit with the broker either in cash or securities an amount
equal to a certain percentage of the contract amount. Subsequent payments are
made or received by the Fund each day, depending on the daily fluctuations in
the value of the contract, and are recorded for financial statement purposes
as unrealized gains or losses by the Fund. The Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
or exchange rates or securities prices. Investments in interest rate futures
for purposes other than hedging may be made to modify the duration of the
portfolio without incurring the additional transaction costs involved in
buying and selling the underlying securities. Investments in currency futures
for purposes other than hedging may be made to change the Fund's relative
position in one or more currencies without buying and selling portfolio
assets. Investments in equity index contracts or contracts on related options
for purposes other than hedging, may be made when the Fund has cash on hand
and wishes to participate in anticipated market appreciation while the cash is
being invested. Should interest or exchange rates or securities prices move
unexpectedly, the Fund may not achieve the anticipated benefits of the futures
contracts and may realize a loss.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Fund 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. The Fund may also use contracts in a manner intended to
protect foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on foreign currency transactions.
Swap Agreements - The Fund may enter into swap agreements. A swap is an
exchange of cash payments between the Fund and another party which is based on
a specific financial index. Cash payments are exchanged at specified intervals
and the expected income or expense is recorded on the accrual basis. The value
of the swap is adjusted daily and the change in value is recorded as
unrealized appreciation or depreciation. Risks may arise upon entering into
these agreements from the potential inability of counterparties to meet the
terms of their contract and from unanticipated changes in the value of the
financial index on which the swap agreement is based. The Fund uses swaps for
both hedging and non-hedging purposes. For hedging purposes, the Fund may use
swaps to reduce its exposure to interest and foreign exchange rate
fluctuations. For non-hedging purposes, the Fund may use swaps to take a
position on anticipated changes in the underlying financial index.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code, which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized
gain reported on these financial statements may differ from that reported on
the Fund's tax return and, consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as 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
At November 30, 1998, the Fund, for federal income tax purposes, had a capital
loss carryforward of $8,420,466 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on November 30, 2006.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual rates:
First $500 million of average net assets 0.75%
Next $500 million of average net assets 0.70%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $6,652
for the period ended May 31, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$6,453 for the period ended May 31, 1999, as its portion of the sales charge
on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum (reduced to 0.15% per annum for assets sold prior to
October 1, 1989) of the Fund's average daily net assets attributable to Class
A shares which are attributable to that securities dealer and a distribution
fee to MFD of up to 0.10% per annum of the Fund's average daily net assets
attributable to Class A shares. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $36,716 for the period
ended May 31, 1999. Payment of the 0.10% per annum Class A distribution fee
will commence on such date as the Trustees of the Fund may determine. Fees
incurred under the distribution plan during the period ended May 31, 1999,
were 0.24% of average daily net assets attributable to Class A shares on an
annualized basis.
The Trustees have adopted a distribution plan relating solely to Class B and
Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $6,173 and $3,299 for Class B and Class C shares, respectively, for
the period ended May 31, 1999. Fees incurred under the distribution plan during
the period ended May 31, 1999, were 1.00% of each class' average daily net
assets attributable to Class B and Class C shares on an annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the period ended May 31,
1999, were $109, $78,258, and $542 for Class A, Class B, and Class C shares,
respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the Fund's average daily net assets at an effective annual
rate of 0.10%. Prior to April 1, 1999, the fee was calculated as a percentage
of the Fund's average daily net assets at an effective 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:
PURCHASES SALES
- -----------------------------------------------------------------------------
U.S. government securities $ 54,097,168 $ 43,781,093
------------ ------------
Investments (non-U.S. government securities) $185,450,162 $215,477,416
------------ ------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $190,599,763
------------
Gross unrealized depreciation $ (7,336,088)
Gross unrealized appreciation 857,469
------------
Net unrealized depreciation $ (6,478,619)
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 557,286 $ 5,973,765 1,693,765 $ 18,654,349
Shares issued to shareholders
in reinvestment of
distributions 719,649 7,570,720 598,017 6,524,492
Shares reacquired (2,654,004) (28,052,095) (6,327,946) (70,140,851)
---------- ------------ ---------- ------------
Net decrease (1,377,069) $(14,507,610) (4,036,164) $(44,962,010)
========== ============ ========== ============
<CAPTION>
Class B Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,175,964 $ 12,347,029 1,120,857 $ 12,158,372
Shares issued to shareholders
in reinvestment of
distributions 271,878 2,824,809 207,895 2,241,109
Shares reacquired (944,864) (9,805,035) (2,996,797) (32,622,270)
---------- ------------ ---------- ------------
Net increase (decrease) 502,978 $ 5,366,803 (1,668,045) $(18,222,789)
========== ============ ========== ============
<CAPTION>
Class C Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 46,964 $ 495,345 92,283 $ 1,004,163
Shares issued to shareholders
in reinvestment of
distributions 20,706 216,177 15,866 171,670
Shares reacquired (148,454) (1,553,122) (425,019) (4,649,784)
---------- ------------ ---------- ------------
Net decrease (80,784) $ (841,600) (316,870) $ (3,473,951)
========== ============ ========== ============
<CAPTION>
Class I Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,562 $ 47,985 16,150 $ 178,874
Shares issued to shareholders
in reinvestment of
distributions 12,634 132,656 8,683 94,640
Shares reacquired (19,614) (208,856) (23,573) (259,524)
---------- ------------ ---------- ------------
Net increase (decrease) (2,418) $ (28,215) 1,260 $ 13,990
========== ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $720 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the
period ended May 31, 1999, was $715. The Fund had no significant borrowings
during the period.
(7) Financial Instruments
The Fund trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include written options, forward foreign currency
exchange contracts, swap agreements, and futures contracts. The notional or
contractual amounts of these instruments represent the investment the Fund has
in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the
risks associated with these instruments is meaningful only when all related
and offsetting transactions are considered.
<TABLE>
<CAPTION>
Written Option Transactions
1999 CALLS 1999 PUTS
--------------------------------- -----------------------------------
PRINCIPAL AMOUNTS PRINCIPAL AMOUNTS
OF CONTRACTS OF CONTRACTS
(000 OMITTED) PREMIUMS (000 OMITTED) PREMIUMS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OUTSTANDING, BEGINNING OF PERIOD -
Australian Dollars 9,101 $ 171,185 -- $ --
Canadian Dollars 8,814 74,929 -- --
Deutsche Marks/British Pounds -- -- 20,340 91,753
Hong Kong Dollars -- -- 88,272 291,273
Japanese Yen/Euro 836,034 100,078 -- --
OPTIONS WRITTEN -
Australian Dollars 26,288 241,261 17,253 110,745
British Pounds 14,374 88,311 -- --
Canadian Dollars 12,916 18,770 13,369 21,300
Deutsche Marks/British Pounds -- -- 37,808 14,294
Euro 9,373 56,155 17,093 106,363
Euro/British Pounds 3,185 36,862 3,064 16,914
Japanese Government Bonds -- -- 980,000 126,918
Japanese Yen 6,706,916 691,745 1,256,478 96,811
Swedish Kroners/British Pounds 83,868 121,590 -- --
OPTIONS TERMINATED IN CLOSING TRANSACTIONS -
Australian Dollars (9,101) (171,185) (17,253) (110,745)
Deutsche Marks/British Pounds -- -- (37,808) (14,294)
Euro/British Pounds (3,185) (36,862) (3,064) (16,914)
Japanese Yen (838,468) (185,430) -- --
Japanese Yen/Euro (836,034) (100,078) -- --
OPTIONS EXPIRED -
Australian Dollars (16,200) (126,657) -- --
British Pounds (9,350) (69,309) -- --
Canadian Dollars (21,730) (93,699) (13,369) (21,300)
Deutsche Marks/British Pounds -- -- (20,340) (91,753)
Euro -- -- (17,093) (106,363)
Japanese Yen (4,131,827) (296,072) (1,256,478) (96,811)
Swedish Kroners/British Pounds (83,868) (121,590) -- --
---------- ------------
OUTSTANDING, END OF PERIOD $ 400,004 $ 418,191
========== ============
OPTIONS OUTSTANDING AT END OF PERIOD
CONSIST OF:
Australian Dollars 10,088 $ 114,604 -- $ --
British Pounds 5,024 19,002 -- --
Euro 9,373 56,155 -- --
Hong Kong Dollars -- -- 88,272 291,273
Japanese Government Bonds -- -- 980,000 126,918
Japanese Yen 1,736,621 210,243 -- --
---------- ------------
OUTSTANDING, END OF PERIOD $ 400,004 $ 418,191
========== ============
</TABLE>
Certain options denominated in foreign currencies have been redenominated in
accordance with the Euro conversion.
At May 31, 1999, the Fund had sufficient cash and/or securities at least equal
to the value of the written options.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET
UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 06/16/99 AUD $12,496,814 $ 12,775,277 $(278,463)
06/16/99 CAD 13,150,629 13,218,251 (67,622)
06/16/99 DKK 7,924,215 7,570,086 354,129
06/16/99 GBP 7,479,357 7,362,914 116,443
04/17/00 HKD 18,145,733 18,135,015 10,718
06/16/99 JPY 8,342,889 8,164,026 178,863
06/16/99 NZD 9,469,086 9,541,832 (72,746)
----------- ------------- ---------
$77,008,723 $ 76,767,401 $ 241,322
=========== ============= =========
Purchases 06/16/99 AUD $14,480,354 $ 14,787,194 $ 306,840
06/16/99 CAD 8,865,710 8,788,582 (77,128)
06/16/99 EUR 9,698,077 9,459,596 (238,481)
06/16/99 GBP 13,621,329 13,480,343 (140,986)
06/24/99 HKD 11,366,021 11,381,482 15,461
06/07/99 JPY 15,474,952 15,270,568 (204,384)
----------- ------------- ---------
$73,506,443 $ 73,167,765 $(338,678)
=========== ============= =========
</TABLE>
Forward foreign currency purchases and sales under master netting agreements
excluded above amounted to a net payable of $813,440 with Deutsche Bank and a
net receivable of $588,317 with CS First Boston and $551,681 with Merrill
Lynch at May 31, 1999.
At May 31, 1999, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
Futures Contracts
UNREALIZED
DESCRIPTION EXPIRATION CONTRACTS POSITION DEPRECIATION
- --------------------------------------------------------------------------------
Japan Government Bonds September 1999 5 Long $ 18,209
--------
At May 31, 1999, the Fund had sufficient cash and/or securities to cover any
margin requirements under these contracts.
Swap Agreements
Interest Rate Swaps
<TABLE>
<CAPTION>
CASH FLOWS CASH FLOWS
NOTIONAL PRINCIPAL PAID BY RECEIVED BY UNREALIZED
EXPIRATION AMOUNT OF CONTRACT THE FUND THE FUND DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
3/22/03 SEK 30,300,000 Fixed - 4.38% Floating - 3M STIBOR $ 32,549
3/22/03 EUR 3,290,000 Floating - 6M EURIBOR Fixed - 3.76% 4,296
--------
$ 36,845
========
</TABLE>
(8) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At May 31, 1999,
the Fund owned the following restricted securities (constituting 1.27% of net
assets) 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
securities be registered. The value of these securities is determined by
valuations furnished by dealers or by a pricing service, or if not available,
are valued at fair value as determined in good faith by or at the direction of
the Trustees.
<TABLE>
<CAPTION>
DATE OF SHARE/PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morocco Restructuring & Consolidating
Agreement, 6.063s, 2009 11/19/1998 2,928,095 $2,345,424 $2,298,555
</TABLE>
<PAGE>
<TABLE>
MFS(R) GLOBAL GOVERNMENTS FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified services
company) INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Lawrence T. Perera - Partner, Hemenway call toll free: 1-800-637-4458 anytime from
& Barnes (attorneys) a touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard For information on MFS mutual funds, call your
University Graduate School of Business financial adviser or, for an information kit, call
Administration toll free: 1-800-637-2929 any business day from 9
a.m. to 5 p.m. Eastern time (or leave a message
Charles W.Schmidt - Private Investor anytime).
Arnold D. Scott* - Senior Executive INVESTOR SERVICE
Vice President, Director, and Secretary, MFS Service Center, Inc.
MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief
Executive Officer, and Director, For general information, call toll free:
MFS Investment Management 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
Elaine R. Smith - Independent Consultant
For service to speech- or hearing-impaired, call
David B. Stone - Chairman and Director, toll free: 1-800-637-6576 any business day from 9
North American Management Corp. a.m. to 5 p.m. Eastern time. (To use this service,
(investment advisers) your phone must be equipped with a
Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, and exchanges,
500 Boylston Street call toll free: 1-800-MFS-TALK (1-800-637-8255)
Boston, MA 02116-3741 anytime from a touch-tone telephone.
DISTRIBUTOR WORLD WIDE WEB
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGERS
Christopher D. Piros*
James T. Swanson*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
MFS(R) GLOBAL GOVERNMENTS FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MWG-3 7/99 35M 20/220/320/820
