<PAGE>
[Logo}
THE FIRST NAME IN MUTUAL FUNDS
MFS(R)/
FOREIGN &
COLONIAL
INTERNATIONAL
FUNDS
MFS(R)/Foreign & Semiannual Report
Colonial Emerging January 31, 1996
Markets Equity Fund
MFS(R)/Foreign &
Colonial International
Growth and Income
Fund
MFS(R)/Foreign &
Colonial International
Growth Fund
<PAGE>
TABLE OF CONTENTS
Chairman's Letter to Shareholders ......................................... 1
MFS/Foreign & Colonial International Funds Overview ....................... 2
Investment Strategies ..................................................... 4
Objectives and Policies ................................................... 9
EMERGING MARKETS EQUITY FUND
PORTFOLIO CONCENTRATION .............................................. 10
PORTFOLIO OF INVESTMENTS ............................................. 11
INTERNATIONAL GROWTH AND INCOME FUND
PORTFOLIO CONCENTRATION .............................................. 13
PORTFOLIO OF INVESTMENTS ............................................. 14
INTERNATIONAL GROWTH FUND
PORTFOLIO CONCENTRATION .............................................. 16
PORTFOLIO OF INVESTMENTS ............................................. 17
Financial Statements ..................................................... 21
Notes to Financial Statements ............................................ 25
Report of Independent Auditors ........................................... 30
HIGHLIGHTS
* THE ALLIANCE WITH FOREIGN & COLONIAL BRINGS MFS SHAREHOLDERS THE
POTENTIAL BENEFITS OF F&C'S 127 YEARS OF EXPERIENCE IN INTERNATIONAL
INVESTING, PLUS WIDER EXPOSURE TO EQUITY INVESTMENTS OUTSIDE THE UNITED
STATES.
* AS MORE COUNTRIES REDUCE TRADE BARRIERS, ADOPT MARKET-BASED ECONOMIC
REFORMS, AND ENCOURAGE CROSS-BORDER CAPITAL FLOWS, THE NUMBER OF
INVESTMENT OPPORTUNITIES AROUND THE WORLD HAS CONTINUED TO INCREASE.
* FOREIGN & COLONIAL'S INVESTMENT DISCIPLINE BEGINS WITH A PROCESS OF
TOP-DOWN SELECTION OF COUNTRIES AND REGIONS AROUND THE WORLD. ONCE A
COUNTRY HAS BEEN SELECTED, F&C THEN USES FUNDAMENTAL, BOTTOM-UP COMPANY
RESEARCH AND ANALYSIS TO SELECT INDIVIDUAL STOCKS FOR THE PORTFOLIOS.
* WE BELIEVE THE CURRENT ROUND OF MONETARY EASING BY MOST CENTRAL BANKS
COULD HAVE A POSITIVE EFFECT ON MAJOR ECONOMIES IN 1996 AND 1997,
RESULTING IN MODERATE ECONOMIC GROWTH.
* A YEAR OF POOR PERFORMANCE IN 1995 RESULTED IN WHAT WE BELIEVE ARE
EXCESSIVE DECLINES IN EMERGING MARKETS, PARTICULARLY GIVEN THE FACT THAT
ECONOMIC GROWTH REMAINED STRONG DURING THE PAST TWO YEARS.
<PAGE>
LETTER TO SHAREHOLDERS
- ----------------- Dear Shareholders:
I am pleased to welcome you to the MFS/Foreign &
[Photo of Colonial International Funds. Last spring, when MFS
A. Keith Brodkin] announced an alliance with Foreign & Colonial Management
A. Keith Brodkin Ltd. (F&C), a London-based firm with 127 years of
- ----------------- experience in international investing, equity markets in
the United States were well into a year in which major
market averages surged to record levels, while most
overseas markets underperformed. In 1996, however, we
are seeing what we believe are early indications of a
rebound in some of the world's markets, as investors
seek what appear to be better values in several
countries, particularly in some of the emerging markets.
The alliance with F&C and its 78 investment
professionals allows MFS to enhance its research
coverage of all the world's markets. It also gives Fund
shareholders a chance to participate in the dynamic
growth of markets around the world. Based on gross
domestic product, many countries, in fact, are growing
faster than the United States. The repudiation of
communism, falling trade barriers, and freer cross-
border flows of capital are helping to unleash the
potential of countries whose prosperity has long trailed
that of the United States, providing fresh impetus to
their securities markets. However, even though Morgan
Stanley Capital International reports that 63% of the
world's stock market capitalization is outside the
United States, less than 7% of U.S. investors' mutual
fund assets are in international funds, according to the
Investment Company Institute.
For investors looking for new growth opportunities, as
well as increased diversification away from U.S.
markets, we believe international investing can offer
significant long-term potential and are pleased to be
able to offer three Funds focused on the world's
developed and emerging markets.
This is the first report to shareholders for these
Funds, and it covers all three -- MFS/Foreign & Colonial
International Growth and Income Fund, MFS/Foreign &
Colonial International Growth Fund, and MFS/Foreign &
Colonial Emerging Markets Equity Fund. Each of these
Funds has varying objectives, which are outlined on page
nine of this report.
We appreciate your support and welcome any questions
or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman
February 20, 1996
<PAGE>
MFS/FOREIGN & COLONIAL INTERNATIONAL FUNDS OVERVIEW
- ----------------- The MFS/Foreign & Colonial (F&C) International Funds:
International Growth and Income, International Growth,
[Photo of and Emerging Markets Equity, were launched on October
Tony Thomson] 24, 1995. The performance of each Fund from that date
Tony Thomson through January 31, 1996 is detailed on the following
- ----------------- pages. Although the brief period of measurement is not
that relevant to a long-term investment, it is pleasing
to have a positive start for each of the Funds.
While U.S. stock markets experienced an extraordinary
year of positive performance in 1995, we believe many of
today's best stock opportunities lie outside the United
States, particularly as more and more countries embrace
market-based economic reforms, reduce trade barriers,
and encourage capital flows across borders. At the same
time, diversifying around the world has the potential to
reduce the risks associated with investing in just one
country -- even if that country is the United States --
because markets from different countries do not often
move in the same direction. A study by the MFS Research
Department, for example, found that, from 1984 to 1994,
a diversified portfolio including 70% U.S. stocks and
30% foreign stocks provided the best balance of
potential risk and reward. The study looked at past
performance of two market indices, the Morgan Stanley
Capital International (MSCI) Europe Australia Far East
(EAFE) Index, for international stocks, and the Standard
& Poor's 500 Composite Index (the S&P 500) for U.S.
stocks. These indices are unmanaged and offer no
guarantees of how an individual's future investments
will fare, and while investing in foreign and emerging
market securities may provide greater returns, it also
involves greater risk than owning U.S. investments.
The MFS/F&C International Funds give investors
exposure to non-U.S. equity and fixed-income markets
around the world. They are managed by Foreign &
Colonial, the manager of the world's oldest closed-end
fund, in an alliance with MFS, the firm that launched
the first mutual fund in the United States. The Foreign
& Colonial group employs over 78 investment
professionals, including 29 dedicated to emerging
markets and 10 with expertise in small-cap investing.
We believe that economic fundamentals continue to
justify further loosening of monetary policy by most
central banks, particularly as there are hardly any
inflationary pressures visible in the major economies.
As a consequence, we believe interest rates will trend
moderately lower for some months despite the substantial
decline in rates that has occurred since 1994. However,
we anticipate the current round of monetary easing to
have a positive effect on the major economies in 1996
and 1997, resulting in moderate economic growth which
ultimately may put some modest upward pressure on
interest rates later in the period.
In Japan, the massive fiscal and monetary stimulus
seen since mid-1995 has finally produced the desired
results: a weaker yen and a recovery in the stock
market. We continue to overweight Japan, believing that
increased liquidity may support the stock market, while
the growth of corporate profits may surprise on the
upside due to the lower yen and the long-term process of
corporate restructuring and deregulation. Within Europe,
we believe the United Kingdom has the edge over the
Continent in fundamental terms. However, the political
situation has eroded this advantage due to the declining
position of the Conservative government in the opinion
polls. On the Continent, the outlook for growth
<PAGE>
MFS/FOREIGN & COLONIAL INTERNATIONAL FUNDS OVERVIEW - continued
deteriorated for most of last year and led to a rash of
earnings reductions, a trend which we believe is
approaching an end. Lower interest rates are also a clear
positive. In the United Kingdom, we believe smaller
companies may do well under this scenario. Within Europe,
we prefer France over Germany and continue to overweight
the Netherlands and Sweden.
After a very poor year in 1995, we believe that
emerging markets have seen excessive declines,
particularly given the fact that economic growth
remained strong during the past two years. The strong
performance of emerging market stocks in early 1996 is
certainly encouraging. We continue to favor Latin
America over other regions, with an emphasis on
Argentina, Brazil, and Colombia. In Asia, we have
increased our exposure to South Korea, Malaysia, and
Hong Kong. We believe the latter may benefit from
improving fundamentals in China as well as from a change
in sentiment toward emerging markets as an asset class.
We continue to believe in the long-term attractiveness
of emerging markets where we believe superior growth and
attractive valuations exist. The underperformance of
small-cap companies on an international basis over the
past five years, we believe, is set for a reversal over
the next two years. Our asset allocations, therefore,
are overweighted in emerging market and small-cap
stocks, where permitted. Within our blue-chip portfolios
we remain overweighted in Japan and Asia relative to the
United Kingdom and Europe. More detailed information on
the investment style of the three Funds and their
objectives is given on the following pages.
Respectfully,
/s/ Tony Thomson
Tony Thomson
Chief Investment Officer
Foreign & Colonial Management Ltd.
<PAGE>
INVESTMENT STRATEGIES
MFS/F&C EMERGING MARKETS EQUITY FUND
- -------------------- From commencement of operations on October 24, 1995
through January 31, 1996, Class A shares of the Fund
[Photo of provided a total return of 7.97%, while Class B shares
Arnab Kumar Banerji] provided a total return of 7.78%. These returns assume
Arnab Kumar Banerji the reinvestment of distributions but exclude the
- -------------------- effects of any sales charges, and they compare to a
8.27% return for the Lipper Emerging Markets Funds Index
(the Lipper Index) and a 9.86% return for the MSCI
Emerging Markets Free (EMF) Index. The Lipper Mutual
Fund Indices are unmanaged indices of the largest
qualifying mutual funds within their respective
investment objectives, adjusted for the reinvestment of
capital gain distributions and income dividends, while
the MSCI EMF Index is a broad, unmanaged market-
capitalization-weighted index of equities in 19 emerging
markets. It is not possible to invest in an index.
The Fund is well-diversified at the country level,
with major industry weightings in telecommunications,
banking, basic industries, building materials, and
engineering. Within Asia, we have built up a strong
position in Hong Kong, which we believe will benefit
from increased global liquidity and an improved economic
picture in China. We are also positive on India despite
the fall in currency and the short-term decline in the
market. National elections are due within the next six
months, and the stock market has traditionally improved
in post-election periods. Thailand is another country
where we believe the bad news on inflation and corporate
profits is already factored into stock prices and
monetary easing is anticipated. We currently favor
Thailand's telecommunications, banking, and construction
sectors. In South Korea, the short-term outlook is not
as attractive, but we believe the longer-term picture
appears brighter based on prospects for deregulation of
the bond market, which we believe will be a major
positive factor for the stock market.
Our largest position in Latin America is in Brazil.
That nation's structural adjustment, which has brought
the annual inflation rate from 50% to 1.5%, was a
tremendous achievement, while the currency scare of 1995
was well-managed. Assuming that the government is now
able to attack the deficit situation, which we
anticipate to happen on a gradual basis, a decline in
real (adjusted for inflation) interest rates could lead
to strong market performance. We believe the Brazilian
market remains attractive on a valuation basis, and the
Fund favors the utility, steel, and retail sectors. In
Argentina, the political risk has decreased in the wake
of Mexico weathering its fiscal crisis. The Argentine
market still carries some economic risk but valuations
are attractive, particularly in the food and beverage
sector. We remain neutral on Mexico, balancing an
improving short-term picture against a more uncertain
view for the longer term. Currently, the Mexican market
is inexpensive and we favor exporting, construction,
food and beverage stocks.
<PAGE>
INVESTMENT STRATEGIES - continued
MFS/F&C EMERGING MARKETS EQUITY FUND
Finally, while South Africa has seen major
achievements in economic policy and, just as important,
a significant reduction in political risk, we believe
that the market's current level already reflects most of
this good news.
Respectfully,
/s/ Arnab Kumar Banerji
Arnab Kumar Banerji
Portfolio Manager
PORTFOLIO MANAGER PROFILE
ARNAB BANERJI IS CHIEF INVESTMENT OFFICER OF FOREIGN
& COLONIAL EMERGING MARKETS LTD. DR. BANERJI EARNED
DEGREES IN PHYSIOLOGY AND MEDICINE FROM OXFORD
UNIVERSITY BEFORE ENTERING THE INVESTMENT MANAGEMENT
BUSINESS WITH J. HENRY SCHRODER WAGG IN LONDON. HE
LEFT THAT FIRM TO BECOME A RESEARCH ANALYST AND
LATER DIRECTOR OF NOMURA SECURITIES. HE JOINED
CITIBANK INITIALLY AS HEAD OF EQUITY RESEARCH AT
CITIBANK SCRIMGEOUR VICKERS BEFORE MOVING TO
CITIBANK GLOBAL ASSET MANAGEMENT TO SET UP THEIR
EMERGING MARKETS OPERATION, WHICH HE HEADED UNTIL
1993, WHEN HE JOINED FOREIGN & COLONIAL.
<PAGE>
INVESTMENT STRATEGIES - continued
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
- ------------------- From commencement of operations on October 24, 1995
through January 31, 1996, Class A shares of the Fund
[Photo of provided a total return of 4.17%, while Class B shares
Atul Patel] provided a total return of 4.10%. These returns assume
Atul Patel the reinvestment of distributions but exclude the
- ------------------- effects of any sales charges, and they compare to a
5.69% return for the Lipper International Funds Index,
and a 5.14% return for a blend of the unmanaged MSCI
- ------------------- EAFE and the J.P. Morgan Global Government Bond indices.
The EAFE Index is an unmanaged index of international
[Photo of stocks, while the Morgan Index is an unmanaged index of
Richard O. Hawkins] bonds issued from 13 countries with remaining maturities
Richard O. Hawkins of at least one year.
- ------------------- The Fund is currently overweighted in Japan, at
approximately 45% of the equity portfolio versus 41% for
the EAFE Index. This is a reflection of our view that the
Japanese market is attractive on the basis of monetary
policy, an improved outlook for the growth of corporate
profits, and a favorable view of the long-term prospects
for the financial system. We believe that a domestic
economic recovery will benefit such holdings as Omron in
electronics and the industrial conglomerate Mitsubishi
Heavy Industries, while companies such as Nippon Yusen in
the transport sector will benefit from the lower yen. We
are slightly overweighted in cyclical stocks, including
NKK in the steel sector and Ito Yokado (Japan's largest
department store chain) in the consumer sector. We are
underweighted in the financial services sector, although
holdings do include such quality financial services
companies as Industrial Bank of Japan.
The Fund is also overweighted in the Far East, in
addition to Japan, and under-weighted in continental
Europe and the United Kingdom, areas which we believe
are less attractive because of slow growth and earnings
disappointments. Over the longer term, however, we
believe the benefits of lower interest rates and a
consequent pickup in economic activity make European
valuations attractive. In Europe, we have invested in
cyclical stocks such as Bayer, a German chemical
company, and Solvay, Belgium's largest chemical company.
European investments also favor the Netherlands,
Switzerland, and France. In the United Kingdom, we are
positive on the construction sector as well as the
consumer sector, with the exception of pharmaceutical
stocks, which had strong performance in 1995. We also
favor capital goods companies, which we believe are
attractively priced and could benefit from an
improvement in economic activity.
Within the fixed-income area, we have, in this early
stage of the Fund's history, invested in a limited
number of countries. Going forward in the near term,
however, we expect to be underweighted in Japan
(relative to the J.P. Morgan index), neutral to the
dollar-bloc markets (Canada, Australia and New Zealand),
and overweighted in European bonds, although currency
exposures there are being partially hedged into U.S.
dollars.
Respectfully,
/s/ Tony Thomson /s/ Atul Patel /s/ Richard O. Hawkins
Tony Thomson Atul Patel Richard O. Hawkins
Portfolio Manager Portfolio Manager Portfolio Manager
<PAGE>
INVESTMENT STRATEGIES - continued
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
PORTFOLIO MANAGER PROFILES
TONY THOMSON IS CHIEF INVESTMENT OFFICER OF FOREIGN
& COLONIAL MANAGEMENT LTD. HE JOINED FOREIGN &
COLONIAL IN 1994 FROM BANKERS TRUST INVESTMENT
MANAGEMENT IN LONDON, WHERE HE HAD BEEN CHIEF
INTERNATIONAL INVESTMENT OFFICER. PRIOR TO BANKERS
TRUST, HE HAD BEEN INTERNATIONAL DIRECTOR WITH
GARTMORE INVESTMENT MANAGEMENT, DIRECTOR OF EQUITIES
WITH POSTHORN ASSET MANAGEMENT AND VICE PRESIDENT/
PORTFOLIO MANAGER WITH MORGAN GUARANTY. MR. THOMSON
IS A GRADUATE OF YALE UNIVERSITY AND HAS A MASTER'S
DEGREE FROM OXFORD UNIVERSITY AND AN M.B.A. FROM
STANFORD UNIVERSITY. HE IS A CHARTERED FINANCIAL
ANALYST.
ATUL PATEL IS ASSISTANT DIRECTOR AND GLOBAL FUNDS
MANAGER OF FOREIGN & COLONIAL MANAGEMENT LTD. MR.
PATEL JOINED FOREIGN & COLONIAL IN 1994 FROM BANKERS
TRUST INVESTMENT MANAGEMENT IN LONDON, WHERE HE HAD
BEEN INVESTMENT MANAGER FOR INTERNATIONAL EQUITIES.
PRIOR TO BANKERS TRUST, HE HAD BEEN GLOBAL FUND
MANAGER WITH GARTMORE INVESTMENT MANAGEMENT. MR.
PATEL IS A GRADUATE OF BRUNEL UNIVERSITY AND HAS AN
M.B.A. FROM THE WARWICK BUSINESS SCHOOL.
RICHARD HAWKINS JOINED MFS IN 1988 AS ASSISTANT
VICE PRESIDENT - INVESTMENTS. A GRADUATE OF BROWN
UNIVERSITY AND THE UNIVERSITY OF PENNSYLVANIA'S
WHARTON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION,
HE WAS NAMED VICE PRESIDENT - INVESTMENTS IN 1991
AND SENIOR VICE PRESIDENT IN 1993. ON JANUARY 1,
1996, MR. HAWKINS BECAME DIRECTOR OF THE
INTERNATIONAL FIXED INCOME DEPARTMENT OF MFS.
MFS/F&C INTERNATIONAL GROWTH FUND
From commencement of operations on October 24, 1995
through January 31, 1996, Class A shares of the Fund
provided a total return of 5.50%, while Class B shares
provided a total return of 5.33%. These returns assume
the reinvestment of distributions but exclude the
effects of any sales charges, and they compare to a
5.69% return for the Lipper International Funds Index
and a 7.44% return for the unmanaged EAFE Index.
In the Fund's first two months, the emerging market
asset category exhibited poor performance relative to
the EAFE Index, a factor strongly reversed in January.
The small-cap asset class also underperformed the EAFE
Index through most of the period, although this category
also showed some improvement in January.
The Fund is invested in three asset classes on an
international basis, including blue-chip stocks, which
currently comprise 30% of the equity portfolio; small-
capitalization stocks, which comprise 46%; and emerging
market stocks, which comprise 24%.
The blue-chip segment is currently overweighted in
Japan, at approximately 46% of the segment versus 41%
for the EAFE Index. This segment is also overweighted in
the Far East, exclusive of Japan, but underweighted in
continental Europe and the United Kingdom. In
continental Europe, we favor cyclical stocks over
financials, whilein the United Kingdom, we've overweighted
<PAGE>
INVESTMENT STRATEGIES - continued
MFS/F&C INTERNATIONAL GROWTH FUND
the consumer sector. In continental Europe, we favor the
Netherlands, Sweden and France and are underweighted in
Germany and Italy.
In the small-cap section, the Fund's largest position
is in Japan, although it is neutral relative to the EAFE
Index. We believe the potential for small-cap stocks in
Japan is favorable as the country goes through its
process of deregulation and embraces such concepts as
outsourcing. Stocks like Maruko (a manufacturer and
retailer of body suits for women) give exposure to a
unique and fast-growing area of the domestic economy.
NAC is active in home and business services like air
cleaners, water purifiers, vending machines, and flower
leasing. In the United Kingdom, we believe that the
valuations of small-cap stocks remain attractive after a
substantial improvement in their balance sheets. As a
result, takeover activity, already prevalent in the
large-cap market, seems likely to spill over into the
small-cap area. In Europe, the small-cap position seems
well-supported by valuations after a poor 1995, although
some evidence of economic recovery will be required
before this area is likely to outperform. Stocks like
the Dutch brewer Grolsch continue to offer an attractive
way into growing markets like Poland, while also having
solid balance sheets. The Italian furniture group
Natuzzi continues to benefit from increased demand for
its quality products both at home and -- significantly
-- in the United States. Colruyt in Belgium remains that
country's premier food discounter and has enough permits
for new sites to be able to avoid the impact of new
legislation designed to slow further retail development.
In the Far East, the Fund is focusing on specific stocks
such as Trust Bank of New Zealand and Associated
International Hotels in Hong Kong.
The emerging market section of the Fund is well-
diversified at the country level, with major industry
weightings in telecommunications, banking, basic
industries, building materials, and engineering. After a
poor showing late in 1995, this asset class saw a strong
recovery in the first few weeks of 1996. With the
exception of Mexico, the emerging market segment of the
Fund is overweighted in Latin America, as well as in
Hong Kong and, to a lesser extent, a few other Asian
markets. We are underweighted in South Africa and
Malaysia, where we believe valuations are closer to fair
value.
Respectfully,
/s/ Tony Thomson
Tony Thomson
Chief Investment Officer
Foreign & Colonial Management Ltd.
<PAGE>
OBJECTIVES AND POLICIES
MFS/F&C Emerging Markets Equity Fund
The Fund seeks capital appreciation by investing
primarily in companies whose principal activities are
located in emerging market countries. The Fund also has
the ability to invest up to 35% of assets in lower-rated
or unrated fixed-income securities. The Fund's exposure
to emerging markets is highly diversified across
countries and regions in order to seek to capture the
long-term returns from emerging market equities without
allowing specific countries to dominate the portfolio.
Markets are selected on a top-down basis using a core
and satellite approach, while stocks are selected after
fundamental research and on a basis of seeking growth at
the right price.
MFS/F&C International Growth and Income Fund
The Fund seeks capital appreciation and current income
by investing primarily in companies and issuers whose
principal activities are located outside of the United
States. It seeks to capture this above-average growth
potential by investing in a combination of foreign blue-
chip and growth stocks and foreign fixed-income
instruments. In addition, up to 10% of assets may be
invested in emerging market securities. The Fund defines
foreign blue-chip stocks as companies having a market
capitalization of more than $1 billion. The Fund may
allocate up to 50% of net assets to foreign government
and corporate fixed-income securities, although no more
than 25% of net assets will be invested in below-
investment-grade instruments. The Fund places emphasis
on country allocation based on relative economic,
political, and market factors supplemented by
fundamental research on stocks. Characteristics such as
strong management, dominant market position, and above-
average earnings growth are considered when looking for
valuations which may be depressed.
MFS/F&C International Growth Fund
The Fund seeks capital appreciation through investing,
under normal market conditions, at least 65% of its
total assets in companies whose principal activities are
located outside the United States and which offer above-
average growth potential over the long term. The Fund
seeks to capture this above-average growth potential by
investing in a combination of asset classes encompassing
foreign small-cap stocks, foreign blue-chip stocks, and
emerging market securities. The Fund places emphasis on
country allocation based on relative economic,
political, and market factors supplemented by
fundamental research on stocks. Characteristics such as
strong management, dominant market position, and above-
average earnings growth are considered when looking for
valuations which may be depressed.
<PAGE>
PORTFOLIO CONCENTRATION AS OF JANUARY 31, 1996
MFS/F&C EMERGING MARKETS EQUITY FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
Brazil ..................... 13.9%
Malaysia ................... 13.9%
Mexico ..................... 8.3%
South Africa ............... 10.6%
Thailand ................... 9.9%
Other ...................... 43.4%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Telecommunications 16.9%
Banks 12.1%
Extractive Industries 7.9%
Building Materials 7.6%
Engineering 6.1%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Telecomunicacoes Brasileiras S.A., ADR 4.2%
Brazilian telecommunications company
Bank of Ayudhya Ltd. 3.8%
Thai bank
TelecomAsia Corp. Ltd. 3.5%
Thai telecommunications company
Malayan Banking Berhad 3.0%
Malaysian bank
Sime Darby Berhad 2.9%
Largest Malaysian conglomerate
South African Breweries Ltd. 2.9%
Brewer; also has investments in
hotels and retailing
Nedcor Ltd. 2.7%
South African bank holding company
Tenaga Nasional Berhad 2.7%
Malaysian electric utility
Usinas Siderurgicas de Minas Gerais S.A., ADR 2.6%
Brazilian iron and steel manufacturer
Cia Acos Especia Itab, ADR 2.6%
Brazilian steel manufacturer
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 89.9%
Cash 10.1%
<PAGE>
PORTFOLIO OF INVESTMENTS - January 31, 1996
MFS/F&C EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
Common Stocks - 89.9%
- -------------------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina - 4.8%
Buenos Aires Embotelladora S.A., ADR (Beverages) 12,700 $ 269,875
Molinos Rio de la Plata S.A. (Food) 13,012 117,770
Perez Companc S.A. (Oil and Gas) 40,602 256,224
Telefonica de Argentina, ADR
(Utilities - Telephone) 16,250 520,000
-----------
$ 1,163,869
- --------------------------------------------------------------------------------------------
Brazil - 13.9%
Centrais Electricas Brasile, ADR
(Utilities - Electric) 38,050 $ 575,316
Cia Acos Especia Itab, ADR (Iron/Steel)* 49,400 629,850
Lojas Americanas S.A., ADR (Retail)* 23,180 527,345
Telecomunicacoes Brasileiras S.A., ADR (Telecommunications) 18,450 1,028,588
Usinas Siderurgicas de Minas Gerais S.A., ADR (Iron/Steel) 9,600 105,600
Usinas Siderurgicas de Minas Gerais S.A., ADR, Preferred
(Iron/Steel) 47,000 537,445
-----------
$ 3,404,144
- --------------------------------------------------------------------------------------------
Chile - 6.2%
Chilgener S.A., ADR (Utilities - Electric) 8,800 $ 206,800
Compania Telecomunicacion Chile S.A., ADR (Utilities -
Telephone) 4,700 376,588
Embotelladora Andina S.A., ADR (Beverages) 9,020 313,445
Quimica Minera Chile, "B", ADR (Chemicals) 12,420 616,343
-----------
$ 1,513,176
- --------------------------------------------------------------------------------------------
Colombia - 2.5%
Banco Industrial Colombiano, ADR (Finance) 35,450 $ 620,375
- --------------------------------------------------------------------------------------------
Hong Kong - 2.4%
Hong Kong Electric (Utilities - Electric) 79,500 $ 269,915
Wharf Holdings Ltd. (Real Estate) 77,000 303,753
-----------
$ 573,668
- --------------------------------------------------------------------------------------------
Hungary - 1.5%
Magyar Olaj es Gas (Miscellaneous) 17,700 $ 194,700
Pannonplast Muanuagipari (Chemicals) 8,000 169,396
-----------
$ 364,096
- --------------------------------------------------------------------------------------------
India - 5.1%
Grasim Industries Ltd., GDR (Chemicals)*## 19,400 $ 329,800
ITC Ltd., GDR (Tobacco)* 18,100 119,913
Indian Aluminum Co. Ltd., GDR (Metals)## 39,600 172,260
Reliance Industries Ltd., GDR
(Consumer Goods and Services) 53,200 625,100
-----------
$ 1,247,073
- --------------------------------------------------------------------------------------------
Indonesia - 2.2%
PT Indofood Sukses Makmur (Food) 13,500 $ 70,712
PT Indosat (Telecommunications) 49,000 196,770
PT Inti Indorayon Utama
(Forest and Paper Products) 54,000 55,391
PT Telekomunikasi Indonesia, ADR (Telecommunications)* 7,200 221,400
-----------
$ 544,273
- --------------------------------------------------------------------------------------------
Malaysia - 13.9%
Malayan Banking Berhad (Finance) 82,600 $ 739,172
Nylex (Malaysia) Berhad (Chemicals) 60,000 194,607
Perusahaan Otomobl (Automobiles) 66,000 247,597
Resorts World Berhad (Entertainment) 63,000 334,818
Sime Darby Berhad (Holding Company) 267,000 714,713
Telekom Malaysia Berhad (Telecommunications) 59,000 491,090
Tenaga Nasional Berhad (Utilities - Electric) 180,000 668,230
-----------
$ 3,390,227
- --------------------------------------------------------------------------------------------
Mexico - 8.3%
Cemex S.A., "B" (Construction) 106,506 $ 434,689
Fomento Economico Mexicano S.A., "B" (Brewery) 179,376 503,469
Gruma S.A., "B" (Food) 69,219 224,786
Grupo Carso (Conglomerate)* 80,201 555,698
Tubos de Acero de Mexico S.A. (Iron/Steel)* 38,678 309,948
-----------
$ 2,028,590
- --------------------------------------------------------------------------------------------
Philippines - 2.1%
Ayala Land, Inc., "B" (Real Estate) 88,600 $ 113,386
Manila Electric Co., "B" (Utilities - Electric) 15,700 151,440
Philippine Long Distance Telephone Co., ADR (Utilities -
Telephone) 2,200 140,352
Philippine Telegraph & Telephone Corp. (Telecommunications) 99,500 114,031
-----------
$ 519,209
- --------------------------------------------------------------------------------------------
South Africa - 10.6%
Nedcor Ltd. (Financial Services) 36,722 $ 669,228
Sasol Ltd. (Oils) 69,861 627,007
South African Breweries Ltd. (Brewery) 19,122 712,686
South African Iron & Steel Industries
(Iron/Steel) 674,699 593,528
-----------
$ 2,602,449
- --------------------------------------------------------------------------------------------
South Korea - 3.1%
Korea Electric Power Corp., ADR
(Utilities - Electric) 14,400 $ 374,400
Korea International Trust (Finance)*+ 7 395,500
-----------
$ 769,900
- --------------------------------------------------------------------------------------------
Taiwan - 1.6%
Taipei Fund (Financial Services)* 6 $ 396,000
- --------------------------------------------------------------------------------------------
Thailand - 9.9%
Bank of Ayudhya Ltd. (Banks) 135,300 $ 934,761
Siam City Cement Co. Ltd.
(Building Materials) 19,000 291,038
Siam City Cement Co. Ltd., Foreign Registered (Building
Materials) 28,000 338,255
TelecomAsia Corp. Ltd.
(Utilities - Telephone)* 100,000 305,961
TelecomAsia Corp. Ltd., Foreign Registered (Utilities -
Telephone)* 175,000 552,704
-----------
$ 2,422,719
- --------------------------------------------------------------------------------------------
Turkey - 1.8%
Netas Telekomunik (Telecommunications) 619,000 $ 226,595
Trakya Cam Sanayil (Manufacturing) 1,638,000 203,348
-----------
$ 429,943
- --------------------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $20,635,234) $21,989,711
- --------------------------------------------------------------------------------------------
<PAGE>
Repurchase Agreement - 20.1%
- --------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------------
State Street Bank and Trust Co.,
dated 1/29/96, due 2/01/96, total to be received $4,924,581
(secured by $5,145,000 U.S. Treasury Bills, due
7/25/96, market value $5,023,254), at Cost $4,924 $ 4,924,000
- ---------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $25,559,234) $26,913,711
Other Assets, Less Liabilities - (10.0)% (2,453,797)
- ---------------------------------------------------------------------------------------------
Net Assets - 100.0% $24,459,914
- ---------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
<PAGE>
PORTFOLIO CONCENTRATION AS OF JANUARY 31, 1996
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
Canada ..................... 6.3%
France ..................... 6.2%
Germany .................... 8.3%
Japan ...................... 31.3%
United Kingdom ............. 10.0%
Other ...................... 37.9%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Electronic/Electrical 8.9%
Banks 7.9%
Property 4.5%
Diversified Industrials 3.9%
Engineering 3.4%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Matsushita Electric Industries 1.7%
Japanese consumer electronics conglomerate
Isetan 1.6%
Japanese department store chain
Ito Yokado Co. 1.6%
Japan's largest department store chain
Honshu Paper Co. 1.5%
Leading Japanese paper manufacturer
Kajima Corp. 1.5%
Japanese engineering and construction company
Ricoh Co. Ltd. 1.5%
Japanese office and business equipment company
Marubeni Corp. 1.4%
Japanese distributor and wholesaler
NKK Corp. 1.4%
Leading Japanese steel company
Nippon Yusen KK 1.4%
Japanese shipping company
Industrial Bank of Japan 1.4%
Leading Japanese long-term credit bank
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 69.1%
Bonds 19.9%
Cash 11.0%
<PAGE>
PORTFOLIO OF INVESTMENTS - January 31, 1996
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Common Stocks - 69.1%
- ------------------------------------------------------------------------------------------------
Issuer Shares Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Australia - 1.5%
Broken Hill Proprietary (Mining) 8,300 $ 117,209
Mayne Nickless Ltd. (Commercial Services) 17,800 79,322
Westpac Bank Corp. (Finance) 16,300 78,104
-----------
$ 274,635
- -------------------------------------------------------------------------------------------------
Belgium - 0.7%
Generale de Banque (Finance) 250 $ 93,848
Solvay et Cie (Chemicals) 40 22,802
-----------
$ 116,650
- -------------------------------------------------------------------------------------------------
France - 3.8%
Accor (Lodging) 920 $ 120,286
Credit Local de France (Finance) 1,410 118,847
Eaux (Cie Generale) (Utilities - Water) 1,150 122,180
Lafarge-Coppee (Building Materials) 1,860 125,750
Legrand (Electrical Equipment) 800 93,776
TOTAL S.A. (Oils) 1,660 113,790
-----------
$ 694,629
- -------------------------------------------------------------------------------------------------
Germany - 4.0%
BASF AG (Chemicals) 400 $ 95,529
Bayer AG (Chemicals) 650 194,480
Deutsche Bank AG (Finance) 1,250 62,445
Mannesmann AG (Diversified Machinery) 350 121,546
Preussag AG (Metals/Hardware) 300 88,852
Siemens AG (Electrical Equipment) 110 62,474
VEBA AG (Oil and Gas) 800 35,624
Volkswagen AG (Automobiles) 180 65,656
-----------
$ 726,606
- -------------------------------------------------------------------------------------------------
Hong Kong - 3.5%
Cheung Kong Holdings Ltd. (Real Estate) 21,000 $ 156,177
HSBC Holdings PLC (Finance) 6,800 112,577
Hong Kong Electric (Utilities - Electric) 26,000 88,274
New World Development Co. (Real Estate) 32,000 161,415
Swire Pacific Air Ltd. (Transportation - Air) 12,000 104,765
-----------
$ 623,208
- -------------------------------------------------------------------------------------------------
Italy - 0.7%
Fiat S.p.A. (Automobiles) 14,000 $ 47,323
Italgas (Utilities - Gas) 12,800 42,660
Telecom Italia S.p.A. (Telecommunications) 22,150 37,786
-----------
$ 127,769
- -------------------------------------------------------------------------------------------------
Japan - 31.3%
Asahi Chemical Industry Co. Ltd. (Chemicals) 30,000 $ 217,973
Canon, Inc. (Consumer Goods) 11,000 207,780
DDI Corp. (Telecommunications) 30 220,497
Fujisawa Pharmaceutical (Pharmaceuticals) 26,000 234,618
Hitachi (Electronics) 16,000 161,586
Hitachi Zosen Corp. (Manufacturing) 47,000 239,527
Honshu Paper Co. (Forest and Paper Products) 43,000 279,858
Industrial Bank of Japan (Finance) 9,000 249,953
Isetan (Retail) 22,000 290,069
Ito Yokado Co. (Retail) 5,000 284,739
Kajima Corp. (Engineering and Construction) 26,000 274,734
Kyocera Corp. (Electronics) 3,000 $ 212,923
Marubeni Corp. (Distribution/Wholesale) 49,000 258,883
Matsushita Electric Industrial Co.
(Electrical Equipment) 18,000 299,607
Mitsubishi Estate Co. Ltd. (Real Estate) 19,000 230,971
Mitsubishi Heavy Industries Ltd.
(Aerospace/Defense) 30,000 238,171
Mitsubishi Trust & Banking (Finance) 10,000 155,227
NKK Corp. (Steel)* 90,000 256,686
Nippon Yusen Kabushiki Kaish
(Transportation - Marine) 45,000 252,057
Nomura Securities Co. Ltd. (Finance) 10,000 216,944
Omron Corp. (Electronics) 11,000 242,753
Ricoh Co. Ltd. (Office/Business Equipment) 25,000 266,505
Sakura Bank Ltd. (Finance) 20,000 230,036
Tokyo Broadcasting System (Broadcasting) 9,000 148,120
-----------
$ 5,670,217
- -------------------------------------------------------------------------------------------------
Malaysia - 1.2%
Genting Berhad (Entertainment) 4,000 $ 36,264
Malayan Banking Berhad (Finance) 9,000 80,539
Sime Darby Berhad (Holding Company) 36,000 96,366
-----------
$ 213,169
- -------------------------------------------------------------------------------------------------
Netherlands - 3.7%
ABN Amro Holding N.V. (Finance) 1,800 $ 79,121
Ahold (Koninklijke) N.V. (Retail - Grocery) 3,440 141,707
Akzo Nobel (Chemicals) 500 53,174
KNP BT (Koninklijke) N.V.
(Forest and Paper Products) 5,550 140,975
Philips Electronics N.V. (Manufacturing) 3,580 142,959
Verenigde Nederlandse Uitgeversbedrijven (Publishing) 800 118,417
-----------
$ 676,353
- -------------------------------------------------------------------------------------------------
Singapore - 1.7%
City Developments Ltd. (Real Estate) 22,000 $ 178,269
Keppel Corp. Ltd. (Transportation - Marine) 5,000 46,857
Overseas-Chinese Banking Corp. Ltd. (Finance) 6,000 82,441
-----------
$ 307,567
- -------------------------------------------------------------------------------------------------
Spain - 2.2%
Acerinox S.A. (Steel) 1,130 $ 114,903
Repsol S.A. (Oils) 5,050 175,736
Telefonica de Espana (Utilities - Telephone) 7,150 105,004
-----------
$ 395,643
- -------------------------------------------------------------------------------------------------
Sweden - 1.4%
ASTRA AB, Free Shares, "A" (Pharmaceuticals) 2,400 $ 97,765
Ericsson LM, "B" (Telecommunications) 4,720 95,113
Volvo AB, "B" (Automotive) 3,200 60,092
-----------
$ 252,970
- -------------------------------------------------------------------------------------------------
Switzerland - 3.4%
Alusuisse Lonza Holding AG (Metals) 210 $ 163,407
Nestle AG, Registered Shares
(Food and Beverage Products) 130 136,916
Roche Holding AG (Pharmaceuticals) 20 146,374
Winterthur (Insurance) 250 159,425
-----------
$ 606,122
- -------------------------------------------------------------------------------------------------
United Kingdom - 10.0%
Allied Domecq PLC (Food and Beverage Products) 9,450 $ 73,879
BAT Industries (Tobacco) 9,850 87,155
BTR PLC (Holding Company) 15,240 76,428
Bass (Beverages) 8,200 92,806
British Gas (Utilities - Gas) 22,450 81,294
British Petroleum (Oil and Gas) 11,200 89,767
British Telecom (Telecommunications) 11,350 61,391
Caradon PLC (Holding Company) 29,330 99,097
Dalgety (Food Products) 12,050 76,497
General Accident PLC (Insurance) 8,700 85,415
General Electric Co. (Manufacturing) 16,300 89,647
Granada Group PLC (Leisure) 10,960 119,061
Inchcape PLC (Commercial Services) 33,770 135,587
Kingfisher (Retail) 12,000 97,633
Land Securities PLC (Real Estate) 9,350 88,539
National Westminster (Finance) 9,000 90,474
Peninsular & Oriental
(Transportation - Marine) 15,020 124,935
Sainsbury (J.) PLC (Retail) 13,950 83,275
Shell Transport & Trading Co. PLC
(Oil and Gas) 3,590 46,233
Wimpey (George) (Construction) 53,600 117,754
-----------
$ 1,816,867
- -------------------------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $11,943,025) $12,502,405
- -------------------------------------------------------------------------------------------------
Bonds - 19.9%
- -------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------------
Canada - 6.3%
Government of Canada, 8.75s, 2005 CAD 1,400 $ 1,139,926
- -------------------------------------------------------------------------------------------------
Denmark - 4.1%
Kingdom of Denmark, 8s, 2001 DKK 4,000 $ 752,393
- -------------------------------------------------------------------------------------------------
France - 2.4%
Republic of France, 7s, 2000 FRF 2,050 $ 428,163
- -------------------------------------------------------------------------------------------------
Germany - 4.3%
German Unity Fund, 8.5s, 2001 DEM 1,000 $ 772,877
- -------------------------------------------------------------------------------------------------
Spain - 2.8%
Government of Spain, 10.9s, 2003 ESP 60,000 $ 515,188
- -------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $3,646,954) $ 3,608,547
- -------------------------------------------------------------------------------------------------
Repurchase Agreement - 9.3%
- -------------------------------------------------------------------------------------------------
State Street Bank and Trust Co.,
dated 1/31/96, due 2/01/96, total to be
received $1,687,199 (secured by $1,765,000 U.S. Treasury
Bills, due 7/25/96, market value $1,723,235),
at Cost $1,687 $ 1,687,000
- -------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $17,276,979) $17,797,952
Other Assets, Less Liabilities - 1.7% 310,414
- -------------------------------------------------------------------------------------------------
Net Assets - 100.0% $18,108,366
- -------------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
<PAGE>
PORTFOLIO CONCENTRATION AS OF JANUARY 31, 1996
MFS/F&C INTERNATIONAL GROWTH FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
Netherlands ................ 4.0%
Malaysia ................... 4.1%
France ..................... 4.9%
United Kingdom ............. 12.7%
Japan ...................... 31.0%
Other ...................... 43.3%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Engineering 7.1%
Electronic/Electrical 6.8%
Banks 6.8%
Telecommunications 5.8%
Other Business Services 5.6%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Telecomunicacoes Brasileiras S.A., ADR 1.1%
Leading Brazilian telecommunications company
Korea International Trust 1.1%
Closed-end South Korean country fund
Centrais Electricas Brasileiras 0.9%
Brazilian electric utility
Sime Darby Berhad 0.9%
Largest Malaysian conglomerate
Bank of Ayudhya 0.9%
Thai bank
Malayan Banking Berhad 0.8%
Malaysian bank
Memtec Ltd. 0.8%
Australian manufacturer of environmental
control products
Lojas Americanas S.A. 0.8%
Brazilian retail chain
Matsuda Sangyo Co. Ltd. 0.8%
Japanese food wholesaler and metals recycler
Banco Industrial Colombiano 0.7%
Colombian bank
PORTFOLIO STRUCTURE (ASSET CLASS % OF EQUITY)
Small Cap 46%
Blue Chip 30%
Emerging Markets 24%
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 91.4%
Cash 8.6%
<PAGE>
PORTFOLIO OF INVESTMENTS - January 31, 1996
MFS/F&C INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
Common Stocks - 91.4%
- -----------------------------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina - 1.1%
Buenos Aires Embotelladora S.A., ADR (Beverages) 5,200 $ 110,500
Molinos Rio de la Plata S.A. (Food) 10,470 94,763
Perez Companc S.A. (Oil and Gas) 18,200 114,853
Telefonica de Argentina, ADR
(Utilities - Telephone) 7,200 230,400
-----------
$ 550,516
- -----------------------------------------------------------------------------------------------
Australia - 2.1%
Broken Hill Proprietary (Mining) 11,100 $ 156,749
Futuris Corp. Ltd. (Machines) 253,000 286,574
Mayne Nickless Ltd. (Commercial Services) 26,700 118,983
Memtec Ltd. (Manufacturing) 200,624 426,089
Westpac Bank Corp. (Finance) 14,600 69,958
------------
$ 1,058,353
- ------------------------------------------------------------------------------------------------
Belgium - 0.9%
Colruyt S.A. (Stores) 1,100 $ 323,508
Generale de Banque (Finance) 250 93,848
Solvay et Cie (Chemicals) 100 57,004
------------
$ 474,360
- ------------------------------------------------------------------------------------------------
Brazil - 3.4%
Centrais Electricas Brasile, ADR
(Utilities - Electric) 30,980 $ 468,418
Cia Acos Especia Itab, ADR (Iron/Steel)* 24,065 306,829
Lojas Americanas S.A., ADR (Retail)* 17,900 407,225
Telecomunicacoes Brasileiras S.A., ADR (Telecommunications) 10,350 577,013
------------
$ 1,759,485
- ------------------------------------------------------------------------------------------------
Chile - 1.7%
Chilgener S.A., ADR (Utilities - Electric) 6,600 $ 155,100
Compania Telecomunicacion Chile S.A., ADR (Utilities -
Telephone) 2,800 224,350
Embotelladora Andina S.A., ADR (Beverages) 4,500 156,375
Quimica Minera Chile, "B", ADR (Chemicals) 6,865 340,676
------------
$ 876,501
- ------------------------------------------------------------------------------------------------
Colombia - 0.8%
Banco Industrial Colombiano, ADR (Finance) 21,800 $ 381,500
- ------------------------------------------------------------------------------------------------
France - 4.9%
Accor (Lodging) 1,200 $ 156,895
Credit Local de France (Finance) 800 67,431
Eaux (Cie Generale) (Utilities - Water) 1,950 207,174
Ecco Travail Temporaire S.A.
(Commercial Services) 4,630 345,787
Guilbert S.A. (Distributing) 2,570 320,904
Lafarge-Coppee (Building Materials) 1,800 121,694
Lapeyre S.A. (Building Materials) 6,110 328,166
Legrand (Electrical Equipment) 860 100,810
Primagaz Cie (Oil and Gas) 3,800 332,961
SEB S.A. (Household Goods) 2,500 344,016
TOTAL S.A. (Oils) 2,550 174,799
------------
$ 2,500,637
- ------------------------------------------------------------------------------------------------
Germany - 3.8%
BASF AG (Chemicals) 400 $ 95,529
Bayer AG (Chemicals) 850 254,320
Berentzen Gruppe AG (Beverages) 9,010 351,362
Buderus AG (Manufacturing) 773 321,715
Grohe (Friedrich) AG (Construction Materials) 1,362 311,356
Mannesmann AG (Diversified Machinery) 500 173,637
Preussag AG (Metals/Hardware) 300 88,852
Siemens AG (Electrical Equipment) 100 56,794
VEBA AG (Oil and Gas) 1,600 71,249
Volkswagen AG (Automobiles) 200 72,951
WMF-Wuerttembergische Metallwarenfabrik AG (Household
Products) 620 118,806
------------
$ 1,916,571
- ------------------------------------------------------------------------------------------------
Hong Kong - 3.2%
Associated International Hotels (Lodging) 414,000 $ 283,796
Chen Hsong Holdings (Machines) 456,000 265,404
Cheung Kong Holdings Ltd. (Real Estate) 38,000 282,606
Dah Sing Financial Group (Banks) 91,200 260,686
HSBC Holdings PLC (Finance) 9,200 152,310
Hong Kong Electric (Utilities - Electric) 63,000 213,895
Swire Pacific Air Ltd. (Transportation - Air) 13,000 113,495
Wharf Holdings Ltd. (Real Estate) 20,000 78,897
------------
$ 1,651,089
- ------------------------------------------------------------------------------------------------
Hungary - 0.4%
Magyar Olaj es Gas (Miscellaneous) 8,900 $ 97,900
Pannonplast Muanuagipari (Chemicals)* 5,750 121,753
------------
$ 219,653
- ------------------------------------------------------------------------------------------------
India - 1.2%
Grasim Industries Ltd., GDR (Chemicals)*## 9,000 $ 153,000
ITC Ltd., GDR (Tobacco)* 11,000 72,875
Indian Aluminum Co. Ltd., GDR (Metals)## 20,800 90,480
Reliance Industries, GDR
(Consumer Goods and Services)* 26,770 314,547
------------
$ 630,902
- ------------------------------------------------------------------------------------------------
Indonesia - 0.6%
PT Indofood Sukses Makmur (Food) 8,500 $ 44,522
PT Indosat (Telecommunications) 29,000 116,456
PT Inti Indorayon Utama
(Forest and Paper Products) 32,000 32,824
PT Telekomunikasi Indonesia, ADR (Telecommunications)* 4,000 123,000
------------
$ 316,802
- ------------------------------------------------------------------------------------------------
Italy - 0.9%
Fiat S.p.A. (Automobiles) 18,000 $ 60,843
Industrie Natuzzi S.p.A., ADR (Furniture) 6,910 336,863
Italgas (Utilities - Gas) 13,600 45,326
Telecom Italia S.p.A. (Telecommunications) 16,600 28,318
------------
$ 471,350
- ------------------------------------------------------------------------------------------------
Japan - 31.0%
Ariake Japan Co. Ltd. (Food) 10,000 $ 369,366
Asahi Chemical Industry Co. Ltd. (Chemicals) 38,000 276,099
Canon, Inc. (Consumer Goods) 15,000 283,336
Chofu Seisakusho Co. (Machines) 14,000 335,141
DDI Corp. (Telecommunications) 30 220,497
DMS, Inc. (Commercial Services) 13,000 280,812
Daimei Telecom Engineer Corp. (Telecommunications) 40,000 334,767
Daiwa Industries Co. Ltd. (Distributor) 33,000 327,099
Diamond Computer Service Co.
(Computers - Software) 18,000 304,657
Exedy Corp. (Automotive Parts) 20,700 340,677
Fujisawa Pharmaceuticals (Pharmaceuticals) 30,000 270,713
Fukuda Denshi (Electronics) 13,000 333,084
Hitachi Zosen Tomioka (Automotive)* 56,000 285,394
Homac Corp. (Retail) 17,300 355,901
Honshu Paper Co. Ltd.
(Forest and Paper Products) 32,000 208,266
Industrial Bank of Japan (Finance) 10,000 277,726
Isetan (Retail) 23,000 303,254
Ito-Yokado Co. Ltd. (Retail) 3,000 170,843
Japan Transcity Corp. (Storage) 56,000 343,520
Kajima Corp. (Engineering/Construction) 30,000 317,000
Kasumi Convenience Networks (Retail) 14,000 346,924
Kato Denki (Retail) 13,800 290,350
Kyocera Corp. (Electronics) 4,000 283,898
Marubeni Corp. (Distribution/Wholesale) 37,000 195,483
Maruko Co. Ltd. (Textiles) 5,100 338,601
Matsuda Sangyo Co. Ltd. (Food) 15,000 388,536
Matsushita Electric Industrial Co.
(Electrical Equipment) 19,000 316,252
Mitsubishi Estate Co. Ltd. (Real Estate) 19,000 230,971
Mitsubishi Heavy Industries Ltd.
(Aerospace/Defense) 30,000 238,171
Mitsubishi Trust & Banking (Finance) 19,000 294,932
Miura (Machines) 21,000 327,941
NAC Co. Ltd. (Commercial Services)* 14,000 341,687
NKK Corp. (Steel)* 116,000 330,840
Nippon Yusen Kabushiki Kaish (Transportation - Marine) 47,000 263,260
Nissha Printing (Manufacturing) 24,000 332,149
Nomura Securities Co. Ltd. (Finance) 13,000 282,027
Oi Electric Co. (Electronics) 11,000 331,214
Omron Corp. (Electronics) 12,000 264,821
Ricoh Co. Ltd. (Office/Business Equipment) 22,000 234,524
Ryohin Keikaku Co. Ltd. (Retail) 4,000 331,401
Sakura Bank Ltd. (Finance) 27,000 310,548
Sanshin Electronics Co. Ltd. (Electronics) 19,000 337,572
Sato Corp. (Machines) 13,000 314,849
Sawai Pharmaceutical Co. Ltd. (Pharmaceuticals) 10,000 336,637
Sundrug Co. Ltd. (Retail) 8,000 314,195
Taihei Dengyo (Engineering and Construction) 22,000 333,271
Tochigi Fuji Industrial (Automotive Parts) 43,000 336,955
Tokyo Broadcasting System (Broadcasting) 18,000 296,241
Topre Corp. (Automotive Parts) 46,000 351,001
Tsukishima Kikai (Machines) 16,000 333,645
Tsutsunaka Plastic Industry (Chemicals) 36,000 350,103
Yaoko (Retail) 21,000 333,832
------------
$ 15,850,983
- ------------------------------------------------------------------------------------------------
Malaysia - 4.1%
Genting Berhad (Entertainment) 6,000 $ 54,396
Malayan Banking Berhad (Finance) 48,000 429,543
Nylex (Malaysia) Berhad (Chemicals) 102,000 330,832
Perusahaan Otomobl (Automobiles) 39,000 146,307
Resorts World Berhad (Entertainment) 27,000 143,494
Sime Darby Berhad (Holding Company) 170,500 456,399
Telekom Malaysia Berhad (Telecommunications) 30,000 249,707
Tenaga Nasional Berhad (Utilities - Electric) 82,000 304,416
------------
$ 2,115,094
- ------------------------------------------------------------------------------------------------
Mexico - 1.9%
Cemex S.A., "B" (Construction) 50,200 $ 204,884
Fomento Economico Mexicano S.A., "B" (Brewery) 86,950 244,049
Gruma S.A., "B" (Food) 27,788 90,240
Grupo Carso (Conglomerate)* 42,800 296,553
Tubos de Acero de Mexico S.A. (Iron/Steel)* 17,340 138,955
------------
$ 974,681
- ------------------------------------------------------------------------------------------------
Netherlands - 4.0%
ABN Amro Holding N.V. (Finance) 3,900 $ 171,429
Ahold (Koninklijke) N.V. (Retail - Grocery) 3,500 144,178
Akzo Nobel (Chemicals) 500 53,174
Grolsch N.V. (Brewery) 8,500 309,824
Hagemeyer N.V. (Distributing) 5,900 331,616
KNP BT (Koninklijke) N.V.
(Forest and Paper Products) 6,000 152,405
Macintosh N.V. (Retail) 13,000 320,062
Philips Electronics N.V. (Manufacturing) 2,800 111,812
Sphinx Kon Gustavsberg N.V.
(Building Materials) 16,100 305,506
Verenigde Nederlandse Uitgeversbedrijven (Publishing) 1,150 170,225
------------
$ 2,070,231
- ------------------------------------------------------------------------------------------------
New Zealand - 0.5%
Trust Bank of New Zealand Ltd. (Banks) 173,000 $ 234,907
- ------------------------------------------------------------------------------------------------
Philippines - 0.6%
Ayala Land, Inc., "B" (Real Estate) 45,000 $ 57,589
Manila Electric Co., "B" (Utilities - Electric) 10,000 96,459
Philippine Long Distance Telephone Co., ADR (Utilities -
Telephone) 1,300 82,935
Philippine Telegraph & Telephone Corp. (Telecommunications) 50,700 58,104
------------
$ 295,087
- ------------------------------------------------------------------------------------------------
Singapore - 1.1%
City Developments Ltd. (Real Estate) 14,000 $ 113,444
Inchcape Berhad (Automotive) 70,000 245,631
Keppel Corp. Ltd. (Transportation - Marine) 12,000 112,458
Overseas-Chinese Banking Corp. Ltd. (Finance) 8,000 109,921
------------
$ 581,454
- ------------------------------------------------------------------------------------------------
South Africa - 2.4%
Nedcor Ltd. (Financial Services) 17,460 $ 318,194
Sasol Ltd. (Oils) 32,975 295,953
South African Breweries Ltd. (Brewery) 9,236 344,230
South African Iron & Steel Industries
(Iron/Steel) 325,464 286,308
------------
$ 1,244,685
- ------------------------------------------------------------------------------------------------
South Korea - 1.5%
Korea Electric Power Corp., ADR
(Utilities - Electric) 8,000 $ 208,000
Korea International Trust (Finance)*+ 10 565,000
------------
$ 773,000
- ------------------------------------------------------------------------------------------------
Spain - 0.5%
Acerinox S.A. (Steel) 650 $ 66,095
Repsol S.A. (Oils) 1,900 66,119
Telefonica de Espana (Utilities - Telephone) 9,500 139,516
------------
$ 271,730
- ------------------------------------------------------------------------------------------------
Sweden - 1.8%
ASTRA AB, Free Shares, "A" (Pharmaceuticals) 3,300 $ 134,427
Ericsson LM, "B" (Telecommunications) 4,200 84,635
Munksjo AB (Forest and Paper Products) 51,100 324,787
Securitas AB, "B" (Commercial Services) 7,420 322,623
Volvo AB, "B" (Automotive) 3,400 63,848
------------
$ 930,320
- ------------------------------------------------------------------------------------------------
Switzerland - 1.2%
Alusuisse Lonza Holding AG (Metals) 140 $ 108,938
Nestle AG, Registered Shares
(Food and Beverage Products) 100 105,320
Roche Holding AG (Pharmaceuticals) 22 161,011
Winterthur (Insurance) 330 210,441
------------
$ 585,710
- ------------------------------------------------------------------------------------------------
Taiwan - 0.4%
Taipei Fund (Financial Services)* 3 $ 198,000
- ------------------------------------------------------------------------------------------------
Thailand - 2.2%
Bank of Ayudhya Ltd. (Banks) 64,100 $ 442,854
Siam City Cement Co. Ltd.
(Building Materials) 4,000 61,271
Siam City Cement Co. Ltd., Foreign Registered (Building
Materials) 18,000 217,450
TelecomAsia Corp. Ltd.
(Utilities - Telephone)* 22,000 67,311
TelecomAsia Corp. Ltd., Foreign Registered (Utilities -
Telephone)* 111,500 352,152
------------
$ 1,141,038
- ------------------------------------------------------------------------------------------------
Turkey - 0.5%
Netas Telekomunik (Telecommunications) 345,400 $ 126,440
Trakya Cam Sanayil (Maufacturing) 913,000 113,344
------------
$ 239,784
- ------------------------------------------------------------------------------------------------
United Kingdom - 12.7%
Allied Domecq PLC (Food and Beverage Products) 12,600 $ 98,506
Anglian Group PLC (Building Materials) 58,300 123,663
Asda Property Holdings PLC (Real Estate) 87,900 153,154
BAT Industries (Tobacco) 13,150 116,354
BTR PLC (Holding Company) 10,600 53,159
Bass (Beverages) 8,700 98,465
Blick PLC (Electrical) 25,600 178,418
British Gas (Utilities - Gas) 29,900 108,271
British Petroleum (Oil and Gas) 11,900 95,377
British Telecom (Telecommunications) 15,100 81,675
British-Borneo Petroleum Syndicate PLC
(Oil and Gas) 32,100 199,402
Caradon PLC (Holding Company) 28,750 97,137
City Centre Restaurants PLC (Restaurants) 114,400 162,928
Close Brothers Group PLC (Banks) 29,200 163,692
Dalgety (Food Products) 16,050 101,890
David Brown Group PLC
(Engineering and Construction) 52,800 153,595
Devro International PLC (Food) 44,500 180,017
Fairey Group PLC (Manufacturing) 15,500 131,158
General Accident PLC (Insurance) 9,250 90,815
General Electric Co. (Manufacturing) 21,750 119,621
Graham Group PLC (Distributing) 51,300 158,170
Granada Group PLC (Leisure) 5,200 56,489
Hunting PLC (Holding Company) 50,800 153,934
Inchcape PLC (Commercial Services) 19,250 77,289
Independent Insurance Group PLC (Insurance) 33,100 207,119
Kingfisher (Retail) 15,950 129,771
Laird Group PLC (Automotive Parts) 23,000 137,298
Land Securities PLC (Real Estate) 9,950 94,220
Marley PLC (Building Materials) 68,200 129,679
Meggitt Holdings PLC (Engineering) 89,500 123,397
NFC PLC (Transportation) 23,200 56,943
National Westminster (Finance) 12,000 120,632
Nelson Hurst PLC (Insurance) 51,300 130,577
OGC International PLC (Oil and Gas) 48,200 150,072
Peninsular & Oriental
(Transportation - Marine) 7,000 58,225
RJB Mining PLC (Mining) 25,800 208,348
Robert Wiseman Dairies PLC (Food) 53,700 119,601
Roxboro Group PLC (Manufacturing) 39,700 155,186
SIG PLC (Building Materials) 58,300 196,093
Sainsbury (J.) PLC (Retail) 14,800 88,349
Scapa Group PLC (Building Materials) 41,400 153,363
Serco Group PLC (Commercial Services) 28,100 183,921
Seton Healthcare Group PLC
(Medical Supplies) 30,600 195,648
Shell Transport & Trading Co. PLC
(Oil and Gas) 4,200 54,089
T & S Stores PLC (Retail) 54,200 157,667
Vardon PLC (Entertainment) 70,500 125,507
Wagon Industrial Holdings PLC (Manufacturing) 29,900 189,360
Walker Greenbank PLC (Manufacturing) 107,700 135,436
Wimpey (George) (Construction) 108,000 237,266
------------
$ 6,490,946
- ------------------------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $44,427,278) $ 46,805,369
- ------------------------------------------------------------------------------------------------
Repurchase Agreement - 9.4%
- ------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------------------------------------------------------------------------------------------------
State Street Bank and Trust Co., dated 1/29/96, due 2/01/96,
total to be received $4,817,569 (secured by $5,035,000 U.S.
Treasury Bills, due 7/25/96, market value $4,915,857), at
Cost $4,817 $ 4,817,000
- ------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $49,244,278) $ 51,622,369
Other Assets, Less Liabilities - (0.8)% (398,509)
- ------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 51,223,860
- ------------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
Portfolio Footnotes:
*Non-income producing security.
+Restricted security.
##SEC Rule 144A restriction.
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.
CAD = Canadian Dollars ESP = Spanish Pesetas
DEM = Deutsche Marks FRF = French Francs
DKK = Danish Kroner
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
Emerging International
Markets Growth International
January 31, 1996 Equity and Income Growth
- -----------------------------------------------------------------------------
Assets:
Investments, at value
(identified cost, $20,635,234,
$15,589,979, and $44,427,278,
respectively) $21,989,711 $16,110,952 $46,805,369
Repurchase agreement, at value 4,924,000 1,687,000 4,817,000
------------ ------------ -----------
Total investments, at value
(identified cost,
$25,559,234, $17,276,979,
and $49,244,278,
respectively) $26,913,711 $17,797,952 $51,622,369
Cash 683 485 116
Foreign currency, at value
(identified cost, $1,425) -- 1,415 --
Net receivable for forward
foreign currency exchange
contracts sold -- 39,584 --
Receivable for Fund shares sold 600,278 253,218 1,227,107
Interest and dividends
receivable 13,721 127,391 30,076
Other assets 9,610 -- 41,623
----------- ----------- -----------
Total assets $27,538,003 $18,220,045 $52,921,291
----------- ----------- -----------
Liabilities:
Cash overdraft $ 66,683 $ -- $ 251,913
Payable for Fund shares
reacquired 22,842 100,879 5,249
Payable for investments
purchased 2,979,572 -- 1,408,032
Payable to affiliates -
Management fee 811 474 1,329
Shareholder servicing agent
fee 118 90 248
Distribution fee 4,832 4,041 11,117
Accrued expenses and other
liabilities 3,231 6,195 19,543
----------- ----------- -----------
Total liabilities $ 3,078,089 $ 111,679 $ 1,697,431
----------- ----------- -----------
Net assets $24,459,914 $18,108,366 $51,223,860
----------- ----------- -----------
Net assets consist of:
Paid-in capital $23,142,031 $17,608,536 $49,051,539
Unrealized appreciation on
investments and translation of
assets and liabilities in
foreign currencies 1,354,602 556,975 2,375,872
Accumulated net realized loss on
investments and foreign
currency transactions (10,142) (35,192) (145,917)
Accumulated distributions in
excess of net investment
income (26,577) (21,953) (57,634)
----------- ----------- -----------
Total $24,459,914 $18,108,366 $51,223,860
=========== =========== ===========
Shares of beneficial interest
outstanding 1,512,637 1,160,843 3,240,523
=========== =========== ===========
Class A shares:
Net asset value and redemption
price per share
(net assets of $13,140,396,
$8,770,298, and $27,610,622 /
812,260, 562,101, and
1,745,731 shares of beneficial
interest outstanding,
respectively) $16.18 $15.60 $15.82
====== ====== ======
Offering price per share (100/
95.25 of net asset value per
share) $16.99 $16.38 $16.61
====== ====== ======
Class B shares:
Net asset value and offering
price per share
(net assets of $11,319,518,
$9,338,068, and $23,613,238 /
700,377, 598,742, and
1,494,792 shares of beneficial
interest outstanding,
respectively) $16.16 $15.60 $15.80
====== ====== ======
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
and Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Operations
- ------------------------------------------------------------------------------
Emerging International
Markets Growth International
Period Ended January 31, 1996* Equity and Income Growth
- ------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 59,051 $ 75,770 $ 128,542
Dividends 38,610 21,105 55,569
Foreign taxes withheld (5,283) (3,223) (1,545)
----------- ----------- ----------
Total investment income $ 92,378 $ 93,652 $ 182,566
----------- ----------- ----------
Expenses -
Management fee $ 48,606 $ 33,516 $ 95,580
Trustees' compensation 367 367 367
Shareholder servicing agent fee
(Class A) 3,328 2,709 8,627
Shareholder servicing agent fee
(Class B) 3,674 3,589 8,913
Distribution and service fee
(Class A) 11,092 9,031 28,758
Distribution and service fee
(Class B) 16,701 16,315 40,516
Custodian fee 3,344 3,179 9,026
Registration fees 28,382 27,320 28,870
Printing 1,808 310 2,806
Postage 588 145 526
Auditing fees 3,500 200 5,500
Amortization of organization
expenses 955 955 955
Legal fees 194 44 294
Miscellaneous 1,614 726 2,809
----------- ----------- ----------
Total expenses $ 124,153 $ 98,406 $ 233,547
Preliminary reduction of expenses
by investment adviser (17,420) -- --
Fees paid indirectly -- (2,326) --
----------- ----------- ----------
Net expenses $ 106,733 $ 96,080 $ 233,547
----------- ----------- ----------
Net investment loss $ (14,355) $ (2,428) $ (50,981)
----------- ----------- ----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ -- $ -- $ (12,546)
Foreign currency transactions (10,142) (35,192) (133,371)
----------- ----------- ----------
Net realized loss on
investments and foreign
currency transactions $ (10,142) $ (35,192) $ (145,917)
----------- ----------- ----------
Change in unrealized appreciation (depreciation) -
Investments $ 1,354,477 $ 520,973 $2,378,091
Translation of assets and
liabilities in foreign currencies 125 36,002 (2,219)
----------- ----------- ----------
Net unrealized gain on
investments $ 1,354,602 $ 556,975 $2,375,872
----------- ----------- ----------
Net realized and unrealized
gain on investments and
foreign currency $ 1,344,460 $ 521,783 $2,229,955
----------- ----------- ----------
Increase in net assets from
operations $ 1,330,105 $ 519,355 $2,178,974
=========== =========== ==========
*The Funds commenced investment operations on October 24, 1995.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Changes in Net Assets
- -----------------------------------------------------------------------------
Emerging International
Markets Growth International
Period Ended January 31, 1996* Equity and Income Growth
- -----------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment loss $ (14,355) $ (2,428) $ (50,981)
Net realized loss on investments and
foreign currency transactions (10,142) (35,192) (145,917)
Net unrealized gain on
investments and foreign
currency translation 1,354,602 556,975 2,375,872
------------ ------------ -----------
Increase in net assets from
operations $ 1,330,105 $ 519,355 $ 2,178,974
------------ ------------ -----------
Distributions declared to shareholders -
From net investment income
(Class A) $ -- $ (4,499) $ --
In excess of net investment
income (Class A) (8,868) (7,727) (6,653)
In excess of net investment
income (Class B) (3,354) (7,299) --
------------ ------------ -----------
Total distributions declared
to shareholders $ (12,222) $ (19,525) $ (6,653)
------------ ------------ -----------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 23,856,086 $ 8,527,669 $49,584,717
Net asset value of shares issued
to shareholders in
reinvestment of distributions 12,183 15,767 5,219
Cost of shares reacquired (726,238) (934,900) (538,397)
------------ ------------ -----------
Increase in net assets from
Fund share transactions $ 23,142,031 $ 7,608,536 $ 49,051,539
------------ ----------- -----------
Total increase in net assets $ 4,459,914 $ 8,108,366 $ 1,223,860
Net assets:
At beginning of period -- -- --
------------ ------------ -----------
At end of period (including
accumulated distributions in
excess of net investment
income of $26,577, $21,953,
and $57,634, respectively) $24,459,914 $18,108,366 $51,223,860
=========== =========== ===========
*The Funds commenced investment operations on October 24, 1995.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity International Growth and Income International Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Period Ended January 31, 1996* Class A Class B Class A Class B Class A Class B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout the period):
Net asset value - beginning of
period $15.00 $15.00 $15.00 $15.00 $15.00 $15.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $ -- $(0.03) $ 0.01 $(0.01) $(0.01) $(0.04)
Net realized and unrealized gain
on investments and foreign
currency transactions 1.20 1.20 0.62 0.62 0.84 0.84
------ ------ ------ ------ ------ ------
Total from investment
operations $ 1.20 $ 1.17 $ 0.63 $ 0.61 $ 0.83 $ 0.80
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.01) $ -- $ -- $ --
In excess of net investment
income (0.02) (0.01) (0.02) (0.01) (0.01) --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.02) $(0.01) $(0.03) $(0.01) $(0.01) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $16.18 $16.16 $15.60 $15.60 $15.82 $15.80
====== ====== ====== ====== ====== ======
Total return++ 7.97%++ 7.78%++ 4.17%++ 4.10%++ 5.50%++ 5.33%++
Ratios (to average daily net assets)/Supplemental data@:
Expenses## 2.50%+ 3.07%+ 2.53%+ 3.18%+ 2.11%+ 2.72%+
Net investment income (loss) (0.07)%+ (0.76)%+ 0.25%+ (0.42)%+ (0.22)%+ (0.93)%+
Portfolio turnover 0% 0% 0% 0% 1% 1%
Net assets at end of period
(000 omitted) $13,140 $11,320 $ 8,770 $ 9,338 $27,611 $23,613
<FN>
*For the period from the commencement of investment operations, October 24, 1995 to January 31, 1996.
+Annualized.
++Not annualized.
#Per share data is based on average shares outstanding.
##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.
@The investment adviser did not impose a portion of the general expenses of the Fund. If these fees had been incurred by the Fund,
the net investment loss per share and the ratios would have been:
</FN>
Net investment loss $ (0.02) $ (0.05) -- -- -- --
Ratios (to average net assets):
Expenses 2.92%+ 3.50%+ -- -- -- --
Net investment loss (0.51)%+ (1.20)%+ -- -- -- --
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS/Foreign & Colonial Emerging Markets Equity Fund (Emerging Markets Equity),
MFS/Foreign & Colonial International Growth and Income Fund (International
Growth and Income), and MFS/Foreign & Colonial International Growth Fund
(International Growth) (the Funds) are each a non-diversified series of MFS
Series Trust X (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-ended management investment company. The Funds commenced investment
operations on October 24, 1995.
(2) Significant Accounting Policies
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are
not available are valued at last quoted bid prices. Debt securities (other
than short-term obligations which mature in 60 days or less), including listed
issues and forward contracts, are valued on the basis of valuations furnished
by dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Non-U.S. dollar denominated
short-term obligations are valued at amortized cost as calculated in the base
currency and translated into U.S. dollars at the closing daily exchange rate.
Repurchase Agreements - The Funds may enter into repurchase agreements with
institutions that the Funds' investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Funds require
that the securities purchased in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Funds to obtain those
securities in the event of a default under the repurchase agreement. The Funds
monitor, on a daily basis, the value of the securities transferred to ensure
that the value, including accrued interest, of the securities under each
repurchase agreement is greater than amounts owed to the Funds under each such
repurchase agreement.
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.
Deferred Organization Expenses - Costs incurred by the Funds in connection
with their organization have been deferred and are being amortized on a
straight-line basis over a five-year period beginning on the date of
commencement of operations of the Funds.
Forward Foreign Currency Exchange Contracts - The Funds may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Funds will enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, the Funds may enter into contracts to deliver
or receive foreign currency they will receive from or require for their normal
investment activities. They may also use contracts in a manner intended to
protect foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Funds may
enter into contracts, with the intent of changing the relative exposure of
their 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 for financial statement purposes as unrealized until
the contract settlement date.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend and interest payments received in additional securities are
recorded on the ex-dividend or ex-interest date in an amount equal to the
value of the security on such date.
Fees Paid Indirectly - The Funds' custodian bank calculates its fee based on
each Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Funds. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Funds' 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 their taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
The Funds file 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 Funds' 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. Foreign taxes have been provided
for on interest and dividend income earned on foreign investments in
accordance with the applicable country's tax rates and to the extent
unrecoverable are recorded as a reduction of investment income. Distributions
to shareholders are recorded on the ex-dividend date.
The Funds distinguish between distributions on a tax basis and a financial
reporting basis and require that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
Multiple Classes of Shares of Beneficial Interest - The Funds offer both Class
A and Class B shares. The two classes of shares differ in their respective
shareholder servicing agent, distribution and service fees. All shareholders
bear the common expenses of each Fund pro rata based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - Each Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate
of 0.975% of average daily net assets for the International Growth Fund and
the International Growth and Income Fund, and 1.25% of average daily net
assets for the Emerging Markets Equity Fund. The advisory agreements permit
the adviser to engage one or more subadvisers, and the adviser, MFS, has
engaged Foreign & Colonial Management Ltd., a London, England corporation, to
assist in the performance of its services.
MFS has agreed to pay until December 31, 2005 the expenses of the Emerging
Markets Equity Fund such that the aggregate operating expenses of Class A and
Class B shares do not exceed 2.50% and 3.07% of net assets, respectively. The
Emerging Markets Equity Fund in turn will pay MFS an expense reimbursement fee
such that the aggregate operating expenses of the Fund will not exceed 2.50%
for Class A shares and 3.07% for Class B shares. To the extent that the
expense reimbursement fee exceeds the Emerging Markets Equity Fund's actual
expenses, the excess will be applied to amounts paid by MFS in prior years. At
January 31, 1996, the aggregate unreimbursed expenses owed to MFS by the
Emerging Markets Equity Fund amounted to $17,420. The expense reimbursement
agreement terminates on the earlier of the date on which payments made
thereunder by the Emerging Markets Equity Fund equal the prior payment of such
reimbursable expenses by MFS or December 31, 2005.
The Funds pay no compensation directly to their Trustees who are officers of
the investment adviser, or to officers of the Funds, all of whom receive
remuneration for their services to the Funds from MFS. Certain of the officers
and Trustees of the Funds are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC).
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$5,852, $6,376 and $17,695 for the Emerging Markets Equity Fund, International
Growth and Income Fund and International Growth Fund, respectively, for the
period ended January 31, 1996 as its portion of the sales charge on sales of
Class A shares of each Fund. The Trustees have adopted separate distribution
plans for Class A and Class B shares of each Fund pursuant to Rule 12b-1 of
the Investment Company Act of 1940 as follows:
Each Class A 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
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, 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, commissions to dealers and payments to MFD
wholesalers for sales at or above a certain dollar level, and other such
distribution-related expenses that are approved by the Fund. MFD retains the
service fee for accounts not attributable to a securities dealer, which
amounted to $1,008, $16 and $226 for the Emerging Markets Equity Fund,
International Growth and Income Fund and International Growth Fund,
respectively, for the period ended January 31, 1996. Fees incurred under each
Class A distribution plan during the period ended January 31, 1996 were 0.50%
of the Fund's average daily net assets attributable to Class A shares on an
annualized basis.
Each Class B 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 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 shares. The
service fee is intended to be additional consideration for services rendered
by the dealer with respect to Class B shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $24, $0
and $0 for the Emerging Markets Equity Fund, International Growth and Income
Fund and International Growth Fund, respectively, for the period ended January
31, 1996. Fees incurred under each Class B distribution plan during the period
ended January 31, 1996 were 1.00% of the Fund's average daily net assets
attributable to Class B shares on an annualized basis.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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. There were no
contingent deferred sales charges imposed during the period ended January 31,
1996 for Class A shares. Contingent deferred sales charges for Class B shares
imposed during the period ended January 31, 1996 were $452, $3,987 and $4,801
for the Emerging Markets Equity Fund, International Growth and Income Fund and
International Growth Fund, 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 average daily net assets of each class of shares of each
Fund at an effective annual rate of up to 0.15% and up to 0.22% attributable
to Class A and Class B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$20,619,564 and $0, $15,589,978 and $0, and $44,698,211 and $258,387 for the
Emerging Markets Equity Fund, International Growth and Income Fund and
International Growth Fund, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Funds, as computed on a federal income tax basis, are
as follows:
<TABLE>
<CAPTION>
Emerging International Growth
Markets Equity and Income International Growth
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate cost $25,559,234 $17,276,979 $49,244,278
=========== =========== ===========
Gross unrealized appreciation $ 1,884,013 $ 736,800 $ 3,165,402
Gross unrealized depreciation (529,536) (215,827) (787,311)
----------- ----------- -----------
Net unrealized appreciation $ 1,354,477 $ 520,973 $ 2,378,091
=========== =========== ===========
</TABLE>
(5) Shares of Beneficial Interest
The Funds' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
International Growth
Emerging Markets Equity and Income International Growth
Class A Shares ------------------------------ ----------------------------- ------------------------------
Period Ended January 31, 1996* Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares in public offering 829,547 $12,676,781 579,781 $8,763,094 1,763,317 $26,636,803
Shares issued to shareholders in
reinvestment of distributions 514 7,966 658 10,210 361 5,219
Shares reacquired (17,801) (273,201) (18,338) (273,579) (17,947) (272,338)
------- ----------- ------- ---------- --------- -----------
Net increase 812,260 $12,411,546 562,101 $8,499,725 1,745,731 $26,369,684
======= =========== ======= ========== ========= ===========
International Growth
Emerging Markets Equity and Income International Growth
Class B Shares ------------------------------ ----------------------------- ------------------------------
Period Ended January 31, 1996* Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Shares in public offering 730,033 $11,179,305 642,125 $9,764,575 1,512,133 $22,947,914
Shares issued to shareholders in
reinvestment of distributions 268 4,217 358 5,557 -- --
Shares reacquired (29,924) (453,037) (43,741) (661,321) (17,341) (266,059)
------- ----------- ------- ---------- --------- -----------
Net increase 700,377 $10,730,485 598,742 $9,108,811 1,494,792 $22,681,855
======= =========== ======= ========== ========= ===========
*For the period from the commencement of investment operations, October 24, 1995 to January 31, 1996.
</TABLE>
(6) Line of Credit
The Funds entered into an agreement which enables them to participate with
other funds managed by MFS in an unsecured line of credit with a bank which
permits borrowings up to $350 million, collectively. 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 Funds were not allocated any commitment fees for the period ended
January 31, 1996.
(7) Financial Instruments
The Funds trade in financial instruments with off-balance sheet risk in the
normal course of their investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
the Funds have in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
International Growth and Income Fund
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
Contracts to In Exchange Contracts Net Unrealized
Settlement Date Deliver for at Value Appreciation
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 2/08/96 ESP 67,744,721 $ 546,858 $ 540,400 $ 6,458
2/12/96 FRF 2,226,596 442,664 436,598 6,066
2/29/96 CAD 1,541,899 1,127,036 1,122,109 4,927
4/12/96 DKK 4,341,940 778,000 755,867 22,133
---------- ---------- -------
$2,894,558 $2,854,974 $39,584
========== ========== =======
</TABLE>
At January 31, 1996, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.
(8) Restricted Securities
The Funds may invest not more than 15% of their net assets in securities which
are subject to legal or contractual restrictions on resale. At January 31,
1996, the Funds owned the following restricted securities (constituting 3.7%
and 1.6% of net assets for the Emerging Markets Equity Fund and the
International Growth Fund, respectively) which may not be publicly sold
without registration under the Securities Act of 1933 (the 1933 Act). The
Funds do not have the right to demand that such securities be registered. The
value of these securities is determined by valuations supplied by a pricing
service or brokers. Certain of these securities may be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act.
Emerging Markets Equity Fund
Date of Share
Description Acquisition Amount Cost Value
- ------------------------------------------------------------------------------
Grasim Industries Ltd., GDR 11/21/95 19,400 $342,250 $329,800
Indian Aluminum Co. Ltd. 11/09/95 39,600 224,795 172,260
Korea International Trust 11/08/95 7 424,556 395,500
--------
$897,560
========
International Growth Fund
Date of Share
Description Acquisition Amount Cost Value
- ------------------------------------------------------------------------------
Grasim Industries Ltd., GDR 11/21/95 9,000 $158,000 $153,000
Indian Aluminum Co. Ltd. 11/09/95 20,800 122,190 90,480
Korea International Trust 11/08/95 10 586,626 565,000
--------
$808,480
========
There are no restricted securities for the International Growth and Income
Fund as of January 31, 1996.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust X and Shareholders of MFS/Foreign & Colonial
International Funds:
We have audited the accompanying statements of assets and liabilities of
MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS/Foreign & Colonial
International Growth and Income Fund, and MFS/Foreign & Colonial International
Growth Fund (the Funds) (three of the portfolios constituting MFS Series Trust
X) including the schedules of portfolio investments, as of January 31, 1996, the
related statements of operations and the statements of changes in net assets and
financial highlights for the period from October 24, 1995 (commencement of
operations) to January 31, 1996. 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 audits 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. Our procedures included confirmation of securities owned as of
January 31, 1996, 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 position of
MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS/Foreign & Colonial
International Growth and Income Fund, and MFS/ Foreign & Colonial International
Growth Fund at January 31, 1996, and the results of their operations, the
changes in their net assets and financial highlights for the period from October
24, 1995 (commencement of operations) to January 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 8, 1996
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>
<TABLE>
<S> <C>
MFS/FOREIGN & COLONIAL INTERNATIONAL FUNDS
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Ernst & Young LLP
Massachusetts Financial Services Company; INVESTOR INFORMATION
Director, Cambridge Bancorp; Director, For MFS stock and bond market outlooks, call toll free:
Cambridge Trust Company 1-800-637-4458 anytime from a touch-tone telephone.
Peter G. Harwood - Private Investor For information on MFS mutual funds, call your
J. Atwood Ives - Chairman and Chief Executive Officer, financial adviser or, for an information kit, call toll
Eastern Enterprises free:
Lawrence T. Perera - Partner, Hemenway & Barnes 1-800-637-2929 any business day from 9 a.m. to 5 p.m.
William J. Poorvu - Adjunct Professor, Harvard University Eastern time (or leave a message anytime).
Graduate School of Business Administration INVESTOR SERVICE
Charles W. Schmidt - Private Investor MFS Service Center, Inc.
Arnold D. Scott* - Senior Executive Vice President, P.O. Box 2281
Director and Secretary, Massachusetts Financial Services Boston, MA 02107-9906
Company For general information, call toll free: 1-800-225-2606
Jeffrey L. Shames* - President and Director, any business day from 8 a.m. to 8 p.m. Eastern time.
Massachusetts Financial Services Company For service to speech- or hearing-impaired, call toll free:
Elaine R. Smith - Independent Consultant 1-800-637-6576 any business day from 9 a.m. to 5 p.m.
David B. Stone - Chairman, North American Management Eastern time. (To use this service, your phone must be
Corp. (investment adviser) equipped with a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER For share prices, account balances and exchanges, call
Massachusetts Financial Services Company toll free: 1-800-MFS-TALK (1-800-637-8255) anytime from
500 Boylston Street a touch-tone telephone.
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGERS
Arnab K. Banerji* DALBAR TOP-RATED SERVICE
Richard O. Hawkins LOGO FOR THE SECOND YEAR IN A ROW, MFS EARNED
Atul Patel* A #1 RANKING IN DALBAR, INC.'S
Tony Thomson* BROKER/DEALER SURVEY, MAIN OFFICE
TREASURER OPERATIONS SERVICE QUALITY CATEGORY. THE FIRM
W. Thomas London* ACHIEVED A 3.49 OVERAL SCORE -- ON A SCALE OF 1
ASSISTANT TREASURER TO 4 -- IN THE 1995 SURVEY. A TOTAL OF 71 FIRMS RESPONDED, OFFERING INPUT
James O. Yost* ON THE QUALITY OF SERVICE THEY RECEIVE FROM 36 MUTUAL FUND COMPANIES
SECRETARY NATIONWIDE. THE SURVEY CONTAINED QUESTIONS ABOUT SERVICE QUALITY IN
Stephen E. Cavan 17 CATEGORIES, INCLUDING "KNOWLEDGE OF PHONE SERVICE CONTRACTS,"
ASSISTANT SECRETARY "ACCURACY OF TRANSACTION PROCESSING," AND "OVERAL EASE OF DOING
James R. Bordewick, Jr.* BUSINESS WITH THE FIRM."
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
IT'S EASY TO CONTACT US
[phone symbol] [envelope symbol]
MFS AUTOMATED INFORMATION MFS MAILING ADDRESSES
ACCOUNT INFORMATION: FOR PERSONAL ACCOUNTS:
Call 1-800-MFS-TALK (1-800-637-8255) MFS Service Center, Inc.
anytime. P.O. Box 2281
Boston, MA 02107-9906
MARKET OUTLOOK:
Call 1-800-637-4458 anytime for the MFS outlook FOR IRA ACCOUNTS:
on the bond and stock markets. MFS Service Center, Inc.
[question mark symbol] J.W. McCormack Station
MFS PERSONAL SERVICE P.O. Box 4501
Boston, MA 02101-9817
ACCOUNT SERVICE:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
PRODUCT INFORMATION:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
IRA SERVICE:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.
SERVICE FOR THE HEARING-IMPAIRED:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).
<PAGE>
MFS/ Bulk Rate
FOREIGN & U. S. Postage
COLONIAL DALBAR P A I D
INTERNATIONAL LOGO Permit #55638
FUNDS Boston, MA
500 Boylston Street
Boston, MA 02116
[MFS Logo]
85
86
88
288
MFC-3 3/96/15M 388
