<PAGE>
[MFS LOGO]
THE FIRST NAME IN MUTUAL FUNDS
MFS(R)/
FOREIGN &
COLONIAL
INTERNATIONAL
FUNDS
[Graphic Omitted: Busy Hong Kong Scene]
MFS(R)/ ANNUAL REPORT
Foreign & Colonial FOR YEAR ENDED
Emerging Markets MAY 31, 1996
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 ..................................................... 3
Objectives and Policies ................................................... 10
EMERGING MARKETS EQUITY FUND
PORTFOLIO CONCENTRATION .............................................. 11
PORTFOLIO OF INVESTMENTS ............................................. 12
INTERNATIONAL GROWTH AND INCOME FUND
PORTFOLIO CONCENTRATION .............................................. 14
PORTFOLIO OF INVESTMENTS ............................................. 15
INTERNATIONAL GROWTH FUND
PORTFOLIO CONCENTRATION .............................................. 18
PORTFOLIO OF INVESTMENTS ............................................. 19
Financial Statements ..................................................... 23
Notes to Financial Statements ............................................ 27
Report of Independent Auditors ........................................... 33
HIGHLIGHTS
* RISING GLOBAL LIQUIDITY HAS PROVIDED SUPPORT FOR INTERNATIONAL STOCK
MARKETS, WITH EQUITIES SO FAR IGNORING THE "GROWTH SCARE" THAT HAS
AFFECTED MOST BOND MARKETS IN 1996.
* LOW INTEREST RATES IN EUROPE AND JAPAN AND GROWING MONEY SUPPLIES, PLUS
SIGNS OF ECONOMIC RECOVERY AND ACCELERATING CORPORATE EARNINGS, HAVE
REINFORCED THE POSITIVE MESSAGE OF THE U.S. EQUITY MARKET, ALTHOUGH THE
INTERNATIONAL MARKETS APPEAR TO BE IN AN EARLIER PHASE OF THEIR CYCLE.
* WHILE THE PERFORMANCE OF EMERGING MARKETS HAS BEEN MIXED, WE EXPECT
RISING GLOBAL LIQUIDITY TO BE GENERALLY POSITIVE FOR THESE MARKETS AS THE
YEAR PROGRESSES.
* THE EMERGING MARKETS EQUITY SERIES AND THE INTERNATIONAL GROWTH SERIES
HAVE BEEN ADDED TO THE MFS REGATTA GOLD ANNUITY, JOINING THE MFS/F&C
GROWTH AND INCOME SERIES, BRINGING THE INVESTMENT OPPORTUNITIES OF ALL
THREE MFS/F&C PRODUCTS TO PEOPLE USING ANNUITIES FOR THEIR LONG-TERM, TAX-
DEFERRED RETIREMENT INVESTING.
* AS OF MAY 31, 1996, ASSETS IN THE THREE MFS/F&C FUNDS, WHICH COMMENCED
OPERATIONS IN OCTOBER 1995, EXCEEDED $150 MILLION.
<PAGE>
LETTER TO SHAREHOLDERS
[Photo of A. Keith Brodkin]
A. Keith Brodkin
Dear Shareholders:
While the MFS/Foreign & Colonial (F&C) International Funds have been in
operation for less than a year, we are pleased to report significant progress
for these Funds as well as news of some positive developments that have occurred
since our last report.
First, we are happy to report that since commencement of operations on
October 24, 1995 through May 31, 1996, shareholders of all three Funds have seen
strong performance, with total returns ranging from 6.37% for Class B shares of
MFS/F&C Growth and Income Fund to 11.43% for Class A shares of MFS/F&C
International Growth Fund.
Second, assets in the three Funds have reached over $150 million as of May
31, 1996, a level we consider encouraging given the facts that these were all
new funds; that London-based F&C Management Ltd. while unfamiliar to most U.S.
investors has over 127 years of experience in international investing; and most
overseas investment markets had been underperforming the U.S. markets when the
Funds were introduced. Much of the credit for this growth, of course, goes to
investors such as you who understand that international investing can give you
greater diversification, which may help to lower a portfolio's overall risk
while providing exposure to a range of dynamic investment markets around the
world.
Third, as planned, three MFS analysts have been assigned to the London
offices of F&C, which will provide even closer ties between MFS and F&C. In the
long run, we believe the synergies that grow out of these ties will benefit
investors as the two companies share their extensive information and research
capabilities.
Finally, MFS/F&C Emerging Markets Equity Series and MFS/F&C International
Growth Series are now available through the MFS Regatta Gold fixed/variable
annuity, joining MFS/F&C Growth and Income Series and, thus, bringing the
investment opportunities of all three MFS/ F&C products to people using
annuities for their long-term, tax-deferred retirement investing.
This annual report to shareholders covers all three MFS/F&C Funds: MFS/F&C
Emerging Markets Equity Fund, MFS/F&C International Growth and Income Fund, and
MFS/ F&C International Growth Fund. Each of these Funds has varying objectives,
which are outlined on page 10 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
June 10, 1996
<PAGE>
MFS/FOREIGN & COLONIAL INTERNATIONAL FUNDS OVERVIEW
[Photo of Tony Thomson]
Tony Thomson
Rising global liquidity underpinned international equity markets during the
period from October 24, 1995 (the inception date of the Funds) through May 31,
1996.
Equities so far have ignored the "growth scare" that has affected most bond
markets in 1996. Low interest rates in Europe and Japan and a growing money
supply, plus signs of economic recovery and accelerating corporate earnings in
those areas, reinforced the positive message coming from the U.S. equity
markets. Investors in these markets believe that the same trends are at work
there as in the United States, but that the international markets are in an
earlier phase of their cycle.
This has caused a shift in performance leadership from the United States to
the large international markets. Through the end of May, the Japanese Nikkei was
up 10.5% for the year, the German DAX was up 11.6%, and the French CAC was up
10.5%, versus a gain of 9.67% for the Standard & Poor's 500 Composite Index (the
S&P 500) over the same period. The United Kingdom has been a laggard, with the
Financial Times Stock Exchange (FTSE 100) rising only 1.6% over the same period,
largely due, in our opinion, to political uncertainty since the U.K.'s economic
performance has been excellent. The above indices are all 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 investing in the United States.
The performance of emerging markets has been mixed, but we believe rising
global liquidity to be generally positive for these markets as the year
progresses. Small companies in the United Kingdom, Japan, and Europe have
generally done well, although stock picking among small companies has proven
beneficial because there has been significant variation in the movement of
small-company stocks.
MFS/F&C International Growth Fund has benefited from its overweighting in
Japan among its larger-company holdings and from its structural overweighting in
selected smaller international companies. The performance of MFS/F&C
International Growth and Income Fund, on the other hand, was held back by its
bond exposure in a period of rising interest rates. Should the long-anticipated
correction in the United States occur, however, we believe the Growth and Income
Fund could offer some protection.
Respectfully,
/s/ Tony Thomson
Tony Thomson
Chief Investment Officer
Foreign & Colonial Management Ltd.
INVESTMENT STRATEGIES
MFS/F&C EMERGING MARKETS EQUITY FUND
[Photo of Arnab Kumar Banerji]
Arnab Kumar Banerji
From the commencement of investment operations on October 24, 1995 through
May 31, 1996, Class A shares of the Fund provided a total return of 10.24%,
while Class B shares provided a total return of 9.85%. These returns assume the
reinvestment of distributions but exclude the effects of any sales charges, and
they compare to a 14.69% return for the Lipper Emerging Markets Funds Index (the
Lipper Index) and a 12.81% return for the Morgan Stanley Capital International
(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 gains
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. Emerging markets have shown
better performance in 1996 after a generally poor performance in 1994 and 1995.
The Fund has underperformed its benchmark, the MSCI EMF Index, by having
above-index weightings in Brazil, Hong Kong, India, Taiwan, Hungary, and Poland,
and below-index weightings in Thailand and South Africa. The Fund has
underperformed the Lipper Index primarily due to the Fund's higher weightings in
Chile, Colombia, Peru, and South Korea, while having lower weightings in Hong
Kong, Indonesia, and the Philippines.
The Fund remains well diversified at the country level, with major industry
weightings in telecommunications, banking, electric utilities, food and
beverages, and oil and gas. The largest country weightings are Brazil, Mexico,
Malaysia, India, and South Africa. Within Asia, we have built up a strong
position in Hong Kong, which we believe will be re-rated upward as the handover
to China in mid-1997 approaches. We are also positive on India following its
recent national elections due to strong earnings growth and improving domestic
liquidity. We have recently purchased a small position in Pakistan because we
expect an economic recovery in the next 12 months and consider valuations there
to be among the cheapest in Asia.
Our largest position in Latin America remains in Brazil, where interest
rates have been steadily easing and reforms are continuing while the stock
market is below its level when Fernando Henrique Cardoso was elected president.
We are also positive on the smaller Latin American markets of Colombia and Peru.
In Colombia, political worries have overshadowed what we believe to be an
improving inflation environment and very attractive valuations. In Peru, an
agreement has recently been signed with the International Monetary Fund, which
we expect to help the economy in the medium term.
In other emerging markets, we find Poland and Hungary attractive. The
Polish economy is growing strongly, led by exporters, and even though it has
been one of the best-performing markets in the world in 1996, stocks with
uncommonly attractive single-digit price-to- earnings multiples are still
available. In Hungary, reforms are starting to take effect and companies there
have announced good results. We have also recently established a small position
in Russia, where we felt the risk/reward picture appeared favorable heading into
mid-June's presidential election. We have reduced our weighting in South Africa
as that market appears expensive given the political and economic risks there.
Respectfully,
/s/ Arnab Kumar Banerji
Arnab Kumar Banerji
Portfolio Manager
PORTFOLIO MANAGER PROFILE
ARNAB BANERJI IS CHIEF INVESTMENT OFFICER OF FOREIGN & COLONIAL 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
[Photo of Atul Patel]
Atul Patel
[Photo of Richard O. Hawkins]
Richard O. Hawkins
From the commencement of investment operations on October 24, 1995 through May
31, 1996, Class A shares of the Fund provided a total return of 6.71%, while
Class B shares provided a total return of 6.37%. These returns assume the
reinvestment of distributions but exclude the effects of any sales charges, and
they compare to an 11.76% return for the Lipper International Funds Index, and a
7.94% return for a blend (70% and 30%, respectively) of the unmanaged MSCI
Europe, Australia, Far East (EAFE) and the J.P. Morgan Global Government Bond
indices. The EAFE Index is an unmanaged index of international stocks, while the
Morgan Index is an unmanaged index of bonds issued from 13 non-U.S. countries
with remaining maturities of at least one year.
We currently prefer international equities to international bonds as we
believe the synchronized pickup in economic growth among the "G7" major
industrialized nations (Canada, France, Germany, Italy, Japan, the United
Kingdom, and the United States) provides a more favorable environment for
equities.
Japan remains one of our favored areas within the equity portfolio. Our
positive stance in Japan is based on a significant earnings recovery and the
return of domestic investors to the equity market. We expect interest rates to
remain low, which could provide support for equities and allow financial
institutions to rebuild their balance sheets. Within the Japanese portfolio, we
are underweighted in banks and automobiles and overweighted in the electrical
and electronics exporting sector, with holdings in Canon, Ricoh, and Kyocera,
among others. We are also overweighted in the Far East which we believe offers
excellent long-term growth prospects and, in the shorter term, could continue to
benefit from U.S. mutual fund flows.
The Fund is underweighted in the United Kingdom and the rest of Europe. In
our opinion, the equity market in the United Kingdom is unlikely to make much
progress as investors become increasingly concerned about the prospect of a
general election within the next 12 months. We remain overweighted in some
cyclical areas such as building materials and construction, which we believe
have been heavily oversold. We are underweighted in financial services,
chemicals, and pharmaceuticals.
Equity markets in the rest of Europe have rallied on the basis of falling
short-term interest rates so far this year. Although economic growth prospects
appear favorable, we believe that growth will be capped by the tight fiscal
requirements of the Maastricht criteria, leading to closer economic and monetary
ties among European economies. We are overweighted in cyclicals such as Bayer
and BASF, and in auto companies such as Volvo and Volkswagen.
The fixed-income portion of the Fund reflects our ongoing concerns about
further increases in long-term interest rates. With growth in the United States
straining the availability of capacity and labor, we believe the bond market
will likely continue to discount the possibility of higher official interest
rates. Despite lower growth and inflation risks in Europe, interest rates there
will, in our opinion, likely be pulled higher by U.S. rates. In Japan, the
current interest rate levels already reflect expectations of rate increases
which we believe may not occur for some time, so the bond market there may
better resist the general rise in rates elsewhere.
Our bond holdings have been designed to limit interest rate sensitivity and
to focus on overperformance by countries such as Canada, Spain, and Sweden,
where inflation prospects appear to be improving and official rates may be
falling. A portion of our European currency exposure is hedged back into the
U.S. dollar, reflecting stronger U.S. growth and higher interest rate levels.
Respectfully,
/s/ Tony Thomson /s/ Atul Patel /s/ Richard O. Hawkins
Tony Thomson Atul Patel Richard O. Hawkins
Portfolio Manager Portfolio Manager Portfolio Manager
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.
<PAGE>
INVESTMENT STRATEGIES - continued
MFS/F&C INTERNATIONAL GROWTH FUND
[Photo of Ian K. Wright]
Ian K. Wright
[Photo of June Scott]
June Scott
From commencement of operations on October 24, 1995 through May 31, 1996, Class
A shares of the Fund provided a total return of 11.43%, while Class B shares
provided a total return of 11.07%. These returns assume the reinvestment of
distributions but exclude the effects of any sales charges. They compare to an
11.76% return for the Lipper International Funds Index and an 11.32% return for
the unmanaged EAFE Index.
The Fund is invested in three asset classes on an international basis.
Blue-chip stocks currently comprise 30% of the portfolio, small-capitalization
stocks 49%, and emerging market stocks make up the remaining 21%.
In Japan, we expect interest rates to remain low, which could provide
support for equities. In addition, we expect to see significant recovery in
earnings. The low interest rate environment and the recovery in the Japanese
economy, together with continuing deregulation and restructuring, are expected
to benefit the small- capitalization asset class.
The United Kingdom market appears unlikely to make much progress for the
rest of the year as investors become increasingly concerned about the political
situation there. Small companies have strongly outperformed the large caps since
the beginning of the year, and we believe this trend will continue for the
remainder of the year, although we expect the degree of outperformance to be
somewhat lower.
We remain cautious on the outlook for continental Europe, where a
low-growth, low-inflation environment looks likely for the rest of the year.
Consumer confidence is low, with most countries experiencing high levels of
unemployment, job insecurity, and fiscal tightening as governments attempt to
reform inefficient state sectors and bring budget deficits in line with the
Maastricht criteria. In this economic environment, we believe that small,
flexible companies in niche businesses which are able to exploit opportunities
that do exist could be able to outperform larger companies.
In the blue-chip portion of the Fund, Japan remains our most favored area,
with a weighting of 47% versus 41% for the EAFE Index. Within this segment, the
Fund is underweighted in banks and autos, and overweighted in the electrical and
electronics sector, with holdings in companies such as Canon and Kyocera. The
Fund is underweighted in the United Kingdom, but remains overweighted in such
U.K. cyclicals as building materials and construction, which, in our opinion,
have been heavily oversold. The tight fiscal policies required to meet the
Maastricht criteria are likely to cap growth in Europe and, taking account of
this, the Fund is underweighted in the region.
In the small-cap section, the Fund's largest position is in Japan.
Continuing deregulation in the consumer finance industry has benefited stocks
such as Aeon Credit, which has also been able to piggy-back on the expansion of
its parent company, Jusco, into the growing economies of Asia. Ryohin Keikaku
has been one of the major successes in the Fund. This company was founded on a
"no frills" concept known as "muji," meaning unbranded. The concept has been
such a success that Muji is now a brand in itself. The Fund is overweighted in
small U.K. companies, where our bullish view on building merchants and materials
has yet to pay off. However, there are now tentative signs of consumer
confidence returning, which we believe could benefit this sector. The majority
of the U.K. small-cap companies in the Fund have a relatively high overseas
exposure, which could provide downside protection following any shakeout
resulting from political concerns leading up to the general election. Stocks
that have performed particularly well over the past several months include
British Borneo and Independent Insurance. British Borneo has benefited from a
joint venture agreement with Shell in the Gulf of Mexico and from a number of
other discoveries. Independent Insurance is a niche insurance underwriter. As a
result of its size, the company is able to be more selective in the business it
takes on and can move quickly to take advantage of opportunities. In the
Netherlands, we believe that Ahrend, a company which assembles high-quality
office furniture, is well placed to outperform. This company has simply been
overlooked by the investment community and, we believe, is extremely cheap. In
our opinion, small companies in Germany could benefit from the weakening German
mark and from German monetary easing. Tarkett, a German flooring company
dependent on the refurbishment cycle, appears well placed to benefit from these
developments.
Emerging markets have shown better performance in 1996 after a generally
poor performance in 1994 and 1995. The Fund has recently purchased a small
position in Pakistan, where we expect to see an economic recovery in the next 12
months and where valuations are among the cheapest in Asia.
Our largest position in Latin America is in Brazil. Interest rates have
been easing steadily and reforms are continuing, while the stock market there is
still below the level it was when Fernando Henrique Cardoso was elected
president. We are also positive on the smaller Latin American markets of
Colombia and Peru. In Colombia, political worries have overshadowed what we
believe to be an improving inflation environment and very attractive valuations.
In Peru, an agreement has recently been signed with the International Monetary
Fund, which we expect to help the economy in the medium term.
In other emerging markets, we find Poland and Hungary attractive. The
Polish economy is growing strongly, led by exporters. In Hungary, reforms are
beginning to take effect, and companies there have announced good results
providing what we regard as interesting investment opportunities.
Respectfully,
/s/ Atul Patel /s/ June Scott /s/ Ian K. Wright
Atul Patel June Scott Ian K. Wright
Portfolio Manager Portfolio Manager Portfolio Manager
PORTFOLIO MANAGER PROFILES
IAN K. WRIGHT IS A DIRECTOR OF FOREIGN & COLONIAL MANAGEMENT LTD. MR. WRIGHT
JOINED FOREIGN & COLONIAL IN 1981 FROM STOCKBROKERS BUCKMASTER & MOORE, WHERE HE
WAS MANAGER OF PENSION FUNDS AND CHARITIES. MR. WRIGHT HEADS UP FOREIGN &
COLONIAL'S JAPANESE EQUITY INVESTMENT TEAM AND IS THE MANAGER OF THE FOREIGN &
COLONIAL PACIFIC INVESTMENT TRUST. HE IS A GRADUATE OF THE UNIVERSITY OF
SOUTHAMPTON AND IS AN ASSOCIATE OF THE INSTITUTE OF ACTUARIES.
JUNE SCOTT IS A GLOBAL FUNDS MANAGER OF FOREIGN & COLONIAL MANAGEMENT LTD.
A GRADUATE OF LONDON GUILDHALL UNIVERSITY, MS. SCOTT JOINED FOREIGN & COLONIAL
IN 1995, AFTER COMPLETING HER MBA AT THE LONDON BUSINESS SCHOOL. BEFORE
COMPLETING HER MBA, MS. SCOTT WORKED AS A QUANTITATIVE PORTFOLIO ANALYST IN THE
EQUITY RESEARCH GROUP AT J.P. MORGAN INVESTMENT MANAGEMENT IN LONDON.
<PAGE>
OBJECTIVES AND POLICIES
MFS/F&C Emerging Markets Equity Fund
The Fund seeks capital appreciation by investing, under normal market
conditions, at least 65% of its total assets in securities of companies whose
principal activities are located in emerging market countries. The Fund also has
the ability to invest up to 35% (noninclusive) 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 the United
States. It seeks to achieve its objective by investing in a combination of
foreign blue-chip and growth stocks and foreign fixed-income instruments. In
addition, up to 10% of the Fund's 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 foreign growth
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 MAY 31, 1996
MFS/F&C EMERGING MARKETS EQUITY FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
South Africa .......................... 7.0%
India ................................. 10.3%
Malaysia .............................. 11.0%
Mexico ................................ 11.8%
Brazil ................................ 13.8%
Other ................................. 46.1%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Telecommunications 15.43%
Banks 14.64%
Electric Utilities 11.82%
Food and Beverages 9.31%
Oil and Gas 7.51%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Telecomunicacoes Brasileiras S.A., ADR 4.8%
Brazilian telecommunications company
Gruma S.A., "B" 3.0%
Mexican food company
Banco Industrial Colombiano, ADR 2.6%
Colombian bank
Usinas Siderurgicas de Minas Gerais S.A., ADR 2.6%
Brazilian iron and steel manufacturer
Siam City Cement Co. Ltd., Foreign Registered 2.3%
Thai building materials manufacturer
Empresas ICA Sociedad Controladora S.A., ADR 2.3%
Mexican construction company
Companhia Energetica S.A., ADR 2.1%
Brazilian electric utility
Bank of Ayudhya Ltd. 2.0%
Thai bank
Malayan Banking Berhad 2.0%
Malaysian bank
Tenaga Nasional Berhad 1.9%
Malaysian electric utility
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 98.9%
Cash 1.1%
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS - May 31, 1996
MFS/F&C EMERGING MARKETS EQUITY FUND
Stocks - 98.9%
<CAPTION>
- -------------------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina - 5.5%
Banco de Galicia y Buenos Aires S.A., ADR (Banks) 11,100 $ 262,238
Buenos Aires Embotelladora S.A., ADR (Beverages) 12,700 203,200
Molinos Rio de la Plata S.A. (Food) 2,212 25,227
Perez Companc S.A. (Oil and Gas) 71,080 453,672
Telefonica de Argentina, ADR
(Utilities - Telephone) 22,150 645,119
YPF Sociedad Anonima, ADR (Oil and Gas) 27,700 609,400
-----------
$ 2,198,856
- -------------------------------------------------------------------------------------------
Brazil - 13.8%
Centrais Electricas Brasile, ADR
(Utilities - Electric) 50,050 $ 581,581
Cia Acos Especia Itab, ADR (Iron/Steel)* 61,970 464,775
Companhia Energetica S.A., ADR
(Utilities - Electric) 32,100 826,575
Lojas Americanas S.A., ADR (Retail)* 33,830 659,685
Telecomunicacoes Brasileiras S.A., ADR (Telecommunications) 29,650 1,912,425
Usinas Siderurgicas de Minas Gerais S.A., ADR, Preferred
(Iron/Steel) 96,600 1,043,280
-----------
$ 5,488,321
- -------------------------------------------------------------------------------------------
China - 0.4%
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 10,000 $ 163,750
- -------------------------------------------------------------------------------------------
Colombia - 4.0%
Banco Industrial Colombiano, ADR (Finance) 55,450 $ 1,046,619
Cementos Diamante S.A., ADR (Construction)# 30,900 540,750
-----------
$ 1,587,369
- -------------------------------------------------------------------------------------------
Hong Kong - 4.9%
Henderson China Holding Ltd. (Real Estate)* 145,000 $ 345,827
Hong Kong Electric Holdings Ltd.
(Utilities - Electric) 79,500 254,867
Qingling Motors Co., "H" (Automotive) 494,000 174,016
Shanghai Petrochemical Co. Ltd. (Chemicals) 550,000 163,525
Wharf Holdings Ltd. (Real Estate) 177,000 682,987
Yizheng Chemical Fibre Co. Ltd. (Textiles) 686,000 166,716
Zhenhai Refining and Chemical Co. Ltd., "H" (Oil and Gas) 515,000 153,119
-----------
$ 1,941,057
- -------------------------------------------------------------------------------------------
Hungary - 1.2%
Magyar Olaj es Gas (Oil and Gas) 17,700 $ 206,205
Pannonplast Muanuagipari (Chemicals)* 9,600 266,326
-----------
$ 472,531
- -------------------------------------------------------------------------------------------
India - 10.3%
Bajaj Auto Ltd. (Automotive) 15,500 $ 426,462
Hindalco Industries Ltd., ADR
(Manufacturing)*# 14,000 609,000
Hindustan Lever Ltd.
(Consumer Goods and Services) 18,500 416,530
Hindustan Petroleum Corp. Ltd.
(Oil and Gas)* 37,000 405,071
ITC Ltd., GDR (Tobacco)* 46,100 386,088
Industrial Development Bank of India (Banks) 120,000 404,494
Mahanagar Telephone Nigam Ltd. (Telecommunications) 78,000 489,326
State Bank of India (Banks)* 52,000 420,974
Tata Engineering and Locomotive Co. Ltd. (Automotive) 30,000 540,000
-----------
$ 4,097,945
- -------------------------------------------------------------------------------------------
Indonesia - 0.7%
PT Indofood Sukses Makmur (Food)* 13,500 $ 61,219
PT Indosat (Telecommunications) 49,000 168,621
PT Inti Indorayon Utama
(Forest and Paper Products) 54,000 48,628
-----------
$ 278,468
- -------------------------------------------------------------------------------------------
Malaysia - 11.0%
Malayan Banking Berhad (Finance) 82,600 $ 784,460
Nylex (Malaysia) Berhad (Chemicals) 60,000 238,028
Perusahaan Otomobl (Automobiles) 66,000 341,174
Petronas Gas Berhad (Oil and Gas)# 150,000 655,179
Resorts World Berhad (Entertainment) 63,000 363,534
Sime Darby Berhad (Holding Company) 267,000 716,850
Telekom Malaysia Berhad (Telecommunications) 59,000 539,050
Tenaga Nasional Berhad (Utilities - Electric) 180,000 764,576
-----------
$ 4,402,851
- -------------------------------------------------------------------------------------------
Mexico - 11.8%
Cemex S.A., "B" (Construction) 115,000 $ 429,255
Empresas ICA Sociedad Controladora S.A., ADR (Engineering/
Construction)* 62,400 897,000
Fomento Economico Mexicano S.A., "B" (Brewery) 204,376 604,508
Gruma S.A., "B" (Food)* 240,680 1,199,995
Grupo Carso, "A1" (Conglomerate)* 80,201 590,079
Grupo Embotelladoras de Mexico S.A. (Beverages)* 377,000 635,022
Tubos de Acero de Mexico S.A. (Iron/Steel)* 38,678 351,287
-----------
$ 4,707,146
- -------------------------------------------------------------------------------------------
Pakistan - 2.5%
Hub Power Co. Ltd., GDR
(Utilities - Electric)* 19,600 $ 494,900
Pakistan Telecommunications Corp., GDR (Utilities -
Telephone)* 4,450 498,400
-----------
$ 993,300
- -------------------------------------------------------------------------------------------
Peru - 3.6%
CPT Telefonica del Peru S.A., "B"
(Utilities - Telephone) 287,100 $ 568,256
Compania de Minas Buenaventura S.A. (Mining) 66,640 579,202
Credicorp Ltd. (Holding Co.)* 15,120 279,720
-----------
$ 1,427,178
- -------------------------------------------------------------------------------------------
Philippines - 1.5%
Ayala Land, Inc., "B" (Real Estate) 88,600 $ 152,467
Manila Electric Co., "B"
(Utilities - Electric) 15,700 160,602
Philippine Long Distance Telephone Co., ADR (Utilities -
Telephone) 2,200 127,036
Pilipino Telegraph & Telephone Corp. (Telecommunications) 99,500 159,809
-----------
$ 599,914
- -------------------------------------------------------------------------------------------
Poland - 4.1%
Bank Slaski S.A. w Katowicach (Banks) 3,800 $ 278,619
Bydgoska Fabryka Kabli S.A.
(Electrical Equipment)* 9,275 228,414
Elektrim Spolka Akcyjna S.A.
(Electrical Equipment) 63,500 426,493
Mostostal Zabrze S.A. (Holding Co.)* 88,900 388,108
Stomil Olsztyn S.A. (Tire and Rubber)* 26,500 311,474
-----------
$ 1,633,108
- -------------------------------------------------------------------------------------------
Portugal - 1.3%
Cimentos de Portugal S.A.
(Building Materials) 13,500 $ 248,972
Portugal Telecom S.A. (Telecommunications)* 11,000 266,767
-----------
$ 515,739
- -------------------------------------------------------------------------------------------
Russia - 3.3%
Lukoil Oil Co., ADR (Oil and Gas) 18,100 $ 579,200
Mosenergo, ADR (Utilities - Electric)*# 34,000 748,000
-----------
$ 1,327,200
- -------------------------------------------------------------------------------------------
South Africa - 7.0%
Anglo American Corp. of South Africa Ltd. (Mining) 7,500 $ 486,766
Nedcor Ltd. (Financial Services) 36,894 509,468
Sasol Ltd. (Oils) 69,861 696,198
South African Breweries Ltd. (Brewery) 19,123 584,253
South African Iron & Steel Industries
(Iron/Steel) 683,267 526,800
-----------
$ 2,803,485
- -------------------------------------------------------------------------------------------
South Korea - 3.1%
Korea Electric Power Corp., ADR
(Utilities - Electric) 24,400 $ 631,350
Korea International Trust (Finance)*+ 11 627,000
-----------
$ 1,258,350
- -------------------------------------------------------------------------------------------
Taiwan - 1.2%
Taipei Fund (Financial Services)* 60 $ 462,000
- -------------------------------------------------------------------------------------------
Thailand - 6.6%
Bank of Ayudhya Ltd. (Banks) 135,300 $ 813,513
Bank of Ayudhya Ltd., Rights (Banks)* 33,825 116,407
Siam City Cement Co. Ltd., Foreign Registered (Building
Materials) 70,000 924,842
TelecomAsia Corp. Ltd., Foreign Registered (Utilities -
Telephone)* 348,000 764,003
-----------
$ 2,618,765
- -------------------------------------------------------------------------------------------
Turkey - 1.1%
Netas Telekomunik (Telecommunications) 819,000 $ 164,384
Trakya Cam Sanayil (Manufacturing) 2,288,000 288,661
-----------
$ 453,045
- -------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $37,971,454) $39,430,378
- -------------------------------------------------------------------------------------------
Short-Term Obligations - 5.5%
- -------------------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
due 6/17/96 $ 450 $ 448,956
Federal National Mortgage Assn.,
due 6/04/96 1,280 1,279,445
General Electric Co., due 6/03/96 480 479,856
- -------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 2,208,257
- -------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $40,179,711) $41,638,635
Other Assets, Less Liabilities - (4.4)% (1,756,971
- -------------------------------------------------------------------------------------------
Net Assets - 100.0% $39,881,664
- -------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
<PAGE>
PORTFOLIO CONCENTRATION AS OF MAY 31, 1996
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
Netherlands ........................... 4.2%
France ................................ 4.5%
Germany ............................... 7.9%
United Kingdom ........................ 12.0%
Japan ................................. 34.8%
Other ................................. 36.6%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Commercial and Other Banks 9.61%
Financial Institutions/Services 5.66%
Utilities 5.17%
Chemicals 5.16%
Retail Trade 5.05%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Industrial Bank of Japan 1.4%
Leading Japanese long-term credit bank
Fujisawa Pharmaceutical 1.4%
Japanese pharmaceutical firm
Hitachi Zosen Corp. 1.4%
Major Japanese machinery and engineering company
DDI Corp. 1.4%
Japanese telecommunications company
Ito Yokado Co. 1.3%
Japan's largest department store chain
Canon, Inc. 1.3%
Japanese office equipment and imaging company
NKK Corp. 1.3%
Leading Japanese steel company
Nippon Yusen Kabushiki Kaish 1.3%
Japanese shipping company
Mitsubishi Heavy Industries Ltd. 1.3%
Largest Japanese heavy machinery manufacturer
Mitsubishi Estate Co. Ltd. 1.3%
Japanese real estate company
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 69.8%
Bonds 19.8%
Cash 10.4%
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS - May 31, 1996
MFS/F&C INTERNATIONAL GROWTH AND INCOME FUND
Stocks - 69.8%
<CAPTION>
- -------------------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Australia - 1.7%
Broken Hill Proprietary (Mining) 9,900 $ 149,295
Mayne Nickless Ltd. (Commercial Services) 26,700 157,010
Westpac Bank Corp. (Finance) 25,800 120,427
-----------
$ 426,732
- -------------------------------------------------------------------------------------------
Austria - 0.4%
OMV AG (Oil and Gas) 1,100 $ 113,698
- -------------------------------------------------------------------------------------------
Belgium - 0.7%
Generale de Banque (Finance) 250 $ 87,460
Solvay et Cie (Chemicals) 140 83,978
-----------
$ 171,438
- -------------------------------------------------------------------------------------------
France - 4.5%
Accor (Lodging) 1,720 $ 248,840
Compagnie de St. Gobain (Building Materials) 1,400 179,435
Credit Local de France (Finance) 2,010 165,304
Eaux (Cie Generale) (Utilities - Water) 1,150 123,497
Lafarge-Coppee, Bearer Shares
(Building Materials) 3,260 215,497
Legrand, Preference Shares
(Electrical Equipment) 800 96,320
TOTAL S.A., "B" (Oils) 1,660 120,467
-----------
$ 1,149,360
- -------------------------------------------------------------------------------------------
Germany - 4.4%
BASF AG (Chemicals) 400 $ 111,432
Bayer AG (Chemicals) 650 217,806
Deutsche Bank AG (Finance) 1,250 58,845
Mannesmann AG (Diversified Machinery) 550 191,272
Preussag AG (Metals/Hardware) 600 153,548
Siemens AG (Electrical Equipment) 2,100 118,080
VEBA AG (Oil and Gas) 2,800 146,899
Volkswagen AG (Automobiles) 380 134,423
-----------
$ 1,132,305
- -------------------------------------------------------------------------------------------
Hong Kong - 3.7%
Cheung Kong Holdings Ltd. (Real Estate) 21,000 $ 155,414
HSBC Holdings PLC (Finance) 6,800 102,847
Hong Kong Electric Holdings Ltd.
(Utilities - Electric) 47,000 150,676
New World Development Co. (Real Estate) 32,000 151,814
Swire Pacific Air Ltd., "A"
(Transportation - Air) 22,000 195,520
Wharf Holdings Ltd. (Real Estate) 51,000 196,793
-----------
$ 953,064
- -------------------------------------------------------------------------------------------
Italy - 0.7%
Fiat S.p.A. (Automobiles) 14,000 $ 49,545
Italgas (Utilities - Gas) 20,200 73,127
Telecom Italia S.p.A. (Telecommunications) 22,150 44,444
-----------
$ 167,116
- -------------------------------------------------------------------------------------------
Japan - 31.2%
Asahi Chemical Industry Co. Ltd. (Chemicals) 40,000 $ 290,505
Canon, Inc. (Consumer Goods) 17,000 333,858
DDI Corp. (Telecommunications) 40 346,827
Dai-Ichi Kangyo Bank Ltd. (Banks) 16,000 289,023
Fujisawa Pharmaceutical (Pharmaceuticals) 33,000 351,552
Hitachi (Electronics) 16,000 148,217
Hitachi Zosen Corp. (Manufacturing) 63,000 349,579
Honshu Paper Co. Ltd.
(Forest and Paper Products) 43,000 304,724
Industrial Bank of Japan (Finance) 14,000 360,537
Isetan (Retail) 22,000 299,583
Ito-Yokado Co. Ltd. (Retail) 6,000 340,713
Kajima Corp. (Engineering/Construction) 26,000 272,163
Kyocera Corp. (Electronics) 4,000 274,201
Marubeni Corp. (Distribution/Wholesale) 49,000 267,355
Matsushita Electric Industrial Co. (Electrical Equipment) 18,000 310,144
Mitsubishi Estate Co. Ltd. (Real Estate) 23,000 321,723
Mitsubishi Heavy Industries Ltd.
(Aerospace/Defense) 38,000 327,022
Mitsubishi Trust & Banking (Finance) 16,000 266,790
NKK Corp. (Steel)* 114,000 333,710
Nippon Yusen Kabushiki Kaish (Transportation - Marine) 56,000 328,893
Nomura Securities Co. Ltd. (Finance) 14,000 264,567
Omron Corp. (Electronics) 15,000 304,308
Pioneer Electronic Corp. (Electronics) 14,000 311,255
Ricoh Co. Ltd. (Office/Business Equipment) 30,000 302,918
Sakura Bank Ltd. (Finance) 20,000 218,620
Tokyo Broadcasting System (Broadcasting) 9,000 148,402
Toyo Trust & Banking (Banks) 33,000 314,868
-----------
$ 7,982,057
- -------------------------------------------------------------------------------------------
Malaysia - 1.4%
Genting Berhad (Entertainment) 11,000 $ 93,448
Malayan Banking Berhad (Finance) 9,000 85,474
Petronas Gas Berhad (Oil and Gas)# 18,000 78,622
Sime Darby Berhad (Holding Company) 36,000 96,654
-----------
$ 354,198
- -------------------------------------------------------------------------------------------
Netherlands - 4.2%
ABN Amro Holding N.V. (Finance) 4,300 $ 237,907
Akzo Nobel (Chemicals) 1,800 218,525
KNP BT (Koninklijke) N.V. (Forest and Paper Products) 5,550 138,864
Philips Electronics N.V. (Manufacturing) 5,080 180,811
Vendex International N.V. (Retail) 3,700 118,871
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit
(Publishing) 11,300 185,833
-----------
$ 1,080,811
- -------------------------------------------------------------------------------------------
Singapore - 1.6%
City Developments Ltd. (Real Estate) 22,000 $ 168,846
Development Bank of Singapore Ltd. (Banks) 8,000 94,940
Keppel Corp. Ltd. (Transportation - Marine) 9,000 75,469
Overseas-Chinese Banking Corp. Ltd. (Finance) 6,000 76,748
-----------
$ 416,003
- -------------------------------------------------------------------------------------------
Spain - 1.3%
Repsol S.A. (Oils) 5,050 $ 173,161
Telefonica de Espana (Utilities - Telephone) 8,850 159,316
-----------
$ 332,477
- -------------------------------------------------------------------------------------------
Sweden - 1.1%
Ericsson LM, "B" (Telecommunications) 9,320 $ 209,087
Swedish Match AB (Tobacco)* 3,200 10,685
Volvo AB, "B" (Automotive) 3,200 67,973
-----------
$ 287,745
- -------------------------------------------------------------------------------------------
Switzerland - 2.4%
Nestle AG, Registered Shares
(Food and Beverage Products) 130 $ 146,993
Roche Holdings AG (Pharmaceuticals) 30 230,954
Sandoz AG (Pharmaceuticals) 30 31,227
Winterthur (Insurance) 350 206,856
-----------
$ 616,030
- -------------------------------------------------------------------------------------------
United Kingdom - 10.5%
Allied Domecq PLC
(Food and Beverage Products) 16,650 $ 125,764
BAT Industries PLC (Tobacco) 14,750 118,962
BTR PLC (Holding Company) 22,940 99,980
Bass PLC (Brewery) 8,200 103,590
British Gas PLC (Utilities - Gas) 32,850 97,060
British Petroleum Co. PLC (Oil and Gas) 11,200 96,410
British Telecommunications PLC (Telecommunications) 19,750 108,898
Caradon PLC (Holding Company) 29,330 105,766
Carlton Communications PLC (Broadcasting) 22,500 168,730
Dalgety PLC (Food Products) 12,050 69,806
General Accident PLC (Insurance) 8,700 89,801
General Electric Co. PLC (Electronics) 16,300 94,046
Glaxo Wellcome PLC (Pharmaceuticals) 6,700 87,342
Granada Group PLC (Leisure) 10,960 139,902
Inchcape PLC (Commercial Services) 33,770 159,227
Johnson Matthey PLC (Metals) 10,700 109,947
Kingfisher PLC (Retail) 12,000 113,347
Land Securities PLC (Real Estate) 9,350 92,957
London Electricity PLC (Utilities - Electric) 7,900 88,711
NFC PLC (Transportation) 36,800 87,328
National Westminster (Finance) 9,000 87,104
Peninsular & Oriental Steam Navigation Co. (Transportation -
Marine) 15,020 122,071
Sainsbury (J.) PLC (Retail) 24,050 147,901
Shell Transport & Trading Co. PLC
(Oil and Gas) 3,590 51,171
Wimpey (George) PLC (Construction) 53,600 117,218
-----------
$ 2,683,039
- -------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $16,775,135) $17,866,073
- -------------------------------------------------------------------------------------------
Bonds - 19.8%
- -------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------------------
Australia - 1.0%
Government of Australia, 7s, 2000 AUD 320 $ 242,689
- -------------------------------------------------------------------------------------------
Belgium - 1.4%
Kingdom of Belgium, 8.75s, 2002 BEF 10,000 $ 365,495
- -------------------------------------------------------------------------------------------
Canada - 0.6%
Government of Canada, 9.5s, 2010 CAD 200 $ 164,599
- -------------------------------------------------------------------------------------------
Denmark - 1.8%
Kingdom of Denmark, 8s, 2001 DKK 2,535 $ 459,889
- -------------------------------------------------------------------------------------------
Germany - 3.5%
German Unity Fund, 8.5s, 2001 DEM 1,000 $ 741,787
Treuhandanstalt Obligationen, 6.375s, 1999 224 154,534
-----------
$ 896,321
- -------------------------------------------------------------------------------------------
Italy - 2.8%
Republic of Italy, 8.5s, 1999 ITL 340,000 $ 220,448
Republic of Italy, 9.5s, 1999 500,000 331,686
Republic of Italy, 8.5s, 2004 265,000 164,696
-----------
$ 716,830
- -------------------------------------------------------------------------------------------
Japan - 3.6%
Export-Import Bank of Japan,
4.375s, 2003 JPY 30,000 $ 300,000
World Bank, 4.5s, 2000 31,000 315,600
World Bank, 5.25s, 2002 30,000 316,813
-----------
$ 932,413
- -------------------------------------------------------------------------------------------
Spain - 1.9%
Government of Spain, 8.3s, 1998 ESP 32,000 $ 251,272
Government of Spain, 10.1s, 2001 14,000 115,637
Government of Spain, 10s, 2005 13,000 105,817
-----------
$ 472,726
- -------------------------------------------------------------------------------------------
Sweden - 1.7%
Government of Sweden, 10.25s, 2000 SEK 2,600 $ 424,813
- -----------------------------------------------------------------------------------------------
United Kingdom - 1.5%
United Kingdom Gilts, 9s, 2000 GBP 125 $ 203,811
United Kingdom Gilts, 7s, 2001 125 188,241
-----------
$ 392,052
- -------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $5,231,708) $ 5,067,827
- -------------------------------------------------------------------------------------------
Short-Term Obligation - 9.5%
- -------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
due 6/03/96, at Amortized Cost $ 2,435 $ 2,434,283
- -------------------------------------------------------------------------------------------
Call Options Purchased - 0.1%
- -------------------------------------------------------------------------------------------
Principal Amount
of Contracts
Description/Expiration Month/Strike Price (000 Omitted) Value
- -------------------------------------------------------------------------------------------
Australian Dollars
July/0.80 AUD 261 $ 1,811
Canadian Dollars
October/1.332 CAD 443 834
Deutsche Marks
June/1.53 DEM 768 6,016
Spanish Pesetas/Deutsche Marks
June/83.97 ESP 27,906 363
August/83.65 33,878 542
- -------------------------------------------------------------------------------------------
Total Call Options Purchased (Premiums Paid, $8,004) $ 9,566
- -------------------------------------------------------------------------------------------
Put Options Purchased - 0.1%
- -------------------------------------------------------------------------------------------
Deutsche Marks
July/1.55 DEM 1,557 $ 2,636
August/2.3316 1,443 13,565
Italian Lire
April/1155.85 ITL 3,209,037 3,209
Japanese Yen
June/107.56 JPY 37,754 2,718
Swiss Francs/Deutsche Marks
July/0.805 CHF 274 3,913
- -------------------------------------------------------------------------------------------
Total Put Options Purchased (Premiums Paid, $42,520) $ 26,041
- -------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $24,491,650) $25,403,790
- -------------------------------------------------------------------------------------------
Call Options Written - (0.1)%
- -------------------------------------------------------------------------------------------
Deutsche Marks
July/1.492 DEM 1,499 $ (2,896)
Deutsche Marks/British Pounds
August/2.239 1,386 (216)
Italian Lire/Deutsche Marks
April/1015 ITL 2,817,989 (14,090)
- -------------------------------------------------------------------------------------------
Total Call Options Written (Premiums Received, $31,676) $ (17,202)
- -------------------------------------------------------------------------------------------
Put Options Written
- -------------------------------------------------------------------------------------------
Canadian Dollars
June/1.385 CAD 996 $ (519)
October/1.3858 461 (1,734)
Japanese Yen
June/109.5 JPY 122,808 (1,719)
Spanish Pesetas/Deutsche Marks
June/86.35 ESP 28,697 (29)
August/86 34,830 (767)
- -------------------------------------------------------------------------------------------
Total Put Options Written (Premiums Received, $12,693) $ (4,768)
- -------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.8% $ 209,053
- -------------------------------------------------------------------------------------------
Net Assets - 100.0% $25,590,873
- -------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
<PAGE>
PORTFOLIO CONCENTRATION AS OF MAY 31, 1996
MFS/F&C INTERNATIONAL GROWTH FUND
COUNTRY WEIGHTINGS (% OF NET ASSETS)
Netherlands ........................... 3.6%
Germany ............................... 3.9%
France ................................ 4.5%
United Kingdom ........................ 14.2%
Japan ................................. 32.5%
Other ................................. 41.3%
TOP 5 INDUSTRY WEIGHTINGS (% OF NET ASSETS)
Engineering 7.98%
Banks, Retail 7.63%
Electronics and Electricals 6.76%
Telecommunications 6.46%
Other Services/Businesses 6.14%
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Telecomunicacoes Brasileiras S.A., ADR 1.2%
Brazilian telecommunications company
Memtec Ltd. 0.8%
Australian manufacturer of filtration products
Taipei Fund 0.8%
Closed-end Taiwan country fund
Wharf Holdings Ltd. 0.7%
Hong Kong real estate company
CPT Telefonica del Peru S.A., "B" 0.7%
Peruvian telecommunications company
Inchcape Berhad 0.7%
Singaporeon distributor of motors and agricultural equipment
Ryohin Keikaku Corp. Ltd. 0.7%
Japanese retailer
Korea International Trust 0.7%
Closed-end South Korean country fund
Associated International Hotels 0.7%
Hong Kong hotel operator
Lindt & Spruengli AG 0.7%
Swiss chocolate manufacturer
PORTFOLIO STRUCTURE (% OF NET ASSETS)
Stocks 93.8%
Cash 6.2%
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS - May 31, 1996
MFS/F&C INTERNATIONAL GROWTH FUND
Stocks - 93.8%
<CAPTION>
- -------------------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina - 1.4%
Banco de Galicia y Buenos Aires S.A., ADR (Banks) 1,500 $ 35,438
Banco Frances del Rio de la Plata S.A., ADR (Banks) 3,800 106,875
Buenos Aires Embotelladora S.A., ADR (Beverages) 5,200 83,200
Molinos Rio de la Plata S.A. (Food) 4,170 47,557
Perez Companc S.A. (Oil and Gas) 38,866 248,064
Telefonica de Argentina, ADR
(Utilities - Telephone) 12,100 352,413
YPF Sociedad Anonima, ADR (Oil and Gas) 15,100 332,200
-----------
$ 1,205,747
- -------------------------------------------------------------------------------------------
Australia - 2.2%
Broken Hill Proprietary (Mining) 15,500 $ 233,745
Futuris Corp. Ltd. (Machines) 453,847 557,671
Mayne Nickless Ltd. (Commercial Services) 26,700 157,010
Memtec Ltd. (Manufacturing) 23,362 717,661
Westpac Bank Corp. (Finance) 43,400 202,579
-----------
$ 1,868,666
- -------------------------------------------------------------------------------------------
Austria - 0.2%
OMV AG (Oil and Gas) 1,495 $ 154,526
- -------------------------------------------------------------------------------------------
Belgium - 0.2%
Colruyt S.A. (Stores) 115 $ 38,395
Generale de Banque (Finance) 250 87,460
Solvay et Cie (Chemicals) 100 59,984
-----------
$ 185,839
- -------------------------------------------------------------------------------------------
Brazil - 3.0%
Centrais Electricas Brasile, ADR
(Utilities - Electric) 30,980 $ 359,988
Cia Acos Especia Itab, ADR (Iron/Steel) 25,268 189,510
Companhia Energetica S.A., ADR
(Utilities - Electric) 9,250 238,187
Lojas Americanas S.A., ADR (Retail)* 17,900 349,050
Telecomunicacoes Brasileiras S.A., ADR (Telecommunications) 15,400 993,300
Usinas Siderurgicas de Minas Gerais S.A.,
ADR (Iron/Steel) 41,000 442,800
-----------
$ 2,572,835
- -------------------------------------------------------------------------------------------
Colombia - 0.6%
Banco Industrial Colombiano, ADR (Finance) 26,800 $ 505,850
- -------------------------------------------------------------------------------------------
Finland - 0.2%
OY Tamro AB (Pharmaceuticals)# 34,660 $ 191,435
- -------------------------------------------------------------------------------------------
France - 4.5%
Accor (Lodging) 2,200 $ 318,283
Compagnie de St. Gobain
(Building Materials) 1,700 217,885
Credit Local de France (Finance) 1,700 139,810
Eaux (Cie Generale) (Utilities - Water) 1,950 209,409
Filipacchi Medias (Publishing) 800 153,180
Fromageries Bel S.A. (Food) 200 196,524
Guilbert S.A. (Distributing) 2,895 433,449
IMETAL (Building Materials) 1,000 155,549
Lafarge-Coppee, Bearer Shares
(Building Materials) 3,400 224,752
Lapeyre S.A., Bearer Shares
(Building Materials) 6,790 410,077
Legrand, Preference Shares
(Electrical Equipment) 860 103,544
Primagaz Cie (Oil and Gas) 3,800 406,603
SEB S.A. (Household Goods) 2,800 485,562
Strafor-Facom S.A. (Office Equipment) 2,200 154,442
TOTAL S.A., "B" (Oils) 2,550 185,054
-----------
$ 3,794,123
- -------------------------------------------------------------------------------------------
Germany - 3.9%
BASF AG (Chemicals) 400 $ 111,432
Bayer AG (Chemicals) 950 318,331
Berentzen Gruppe AG (Beverages) 9,450 409,790
Buderus AG (Manufacturing) 903 364,878
Durr Beteil AG (Hand/Machine Tools) 800 290,145
Fresenius AG (Medical Supplies) 1,200 210,118
Gehe AG (Pharmaceuticals) 300 193,561
Jungheinrich AG (Machines) 500 80,815
Mannesmann AG (Diversified Machinery) 500 173,883
Preussag AG (Metals/Hardware) 600 153,548
Siemens AG (Electrical Equipment) 3,000 168,686
Tarkett AG (Homebuilders)# 14,000 326,544
VEBA AG (Oil and Gas) 4,000 209,855
Volkswagen AG (Automobiles) 500 176,873
Wuerttembergische Metallwarenfabrik AG (Household Products) 620 118,949
-----------
$ 3,307,408
- -------------------------------------------------------------------------------------------
Hong Kong - 3.4%
Associated International Hotels (Lodging) 747,000 $ 569,728
Chen Hsong Holdings (Machines) 456,000 244,629
Cheung Kong Holdings Ltd. (Real Estate) 38,000 281,225
Dah Sing Financial Group (Banks) 165,200 474,087
HSBC Holdings PLC (Finance) 14,200 214,768
Hong Kong Electric Holdings Ltd.
(Utilities - Electric) 63,000 201,970
New World Development Co. (Real Estate) 39,000 185,023
Swire Pacific Air Ltd., "A"
(Transportation - Air) 13,000 115,534
Wharf Holdings Ltd. (Real Estate) 164,000 632,824
-----------
$ 2,919,788
- -------------------------------------------------------------------------------------------
Hungary - 0.3%
Magyar Olaj es Gas (Oil and Gas) 8,900 $ 103,685
Pannonplast Muanuagipari (Chemicals)* 5,750 159,518
-----------
$ 263,203
- -------------------------------------------------------------------------------------------
India - 0.7%
ITC Ltd., GDR (Tobacco)* 11,000 $ 92,125
Reliance Industries, GDR
(Consumer Goods and Services)*+ 36,770 542,357
-----------
$ 634,482
- -------------------------------------------------------------------------------------------
Indonesia - 0.2%
PT Indofood Sukses Makmur (Food)* 8,500 $ 38,545
PT Indosat (Telecommunications) 29,000 99,796
PT Inti Indorayon Utama
(Forest and Paper Products) 32,000 28,816
-----------
$ 167,157
- -------------------------------------------------------------------------------------------
Italy - 0.9%
Fiat S.p.A. (Automobiles) 25,000 $ 88,474
Industria Macchine Automatiche (Machines) 19,700 149,285
Industrie Natuzzi S.p.A., ADR (Furniture) 6,910 361,048
Italgas (Utilities - Gas) 32,600 118,016
Telecom Italia S.p.A. (Telecommunications) 30,500 61,198
-----------
$ 778,021
- -------------------------------------------------------------------------------------------
Japan - 32.5%
Aeon Credit Service Co. Ltd.
(Financial Services) 9,000 $ 487,726
Ariake Japan Co. Ltd. (Food) 13,200 464,660
Asahi Chemical Industry Co. Ltd. (Chemicals) 57,000 413,969
Canon, Inc. (Consumer Goods) 24,000 471,329
Chofu Seisakusho Co. (Machines) 17,000 434,646
DDI Corp. (Telecommunications) 58 502,899
DMS, Inc. (Commercial Services) 13,000 276,980
Dai-Ichi Kangyo Bank Ltd. (Banks) 23,000 415,470
Daimei Telecom Engineer Corp. (Telecommunications) 46,000 481,519
Daimon Co. Ltd. (Food Retail) 7,000 385,178
Daiwa Industries Co. Ltd. (Distributor) 41,000 440,574
Diamond Computer Service Co.
(Computers - Software) 23,000 409,078
Exedy Corp. (Automotive Parts) 23,700 406,160
Fujisawa Pharmaceuticals (Pharmaceuticals) 47,000 500,695
Fukuda Denshi (Electronics) 16,000 438,722
Hitachi Zosen Tomioka (Automotive)* 82,000 455,007
Homac Corp. (Retail) 19,300 429,088
Honshu Paper Co. Ltd.
(Forest and Paper Products) 69,000 488,976
Industrial Bank of Japan (Finance) 17,000 437,795
Isetan (Retail) 23,000 313,201
Itariyard Co. Ltd. (Textiles) 11,000 477,906
Ito-Yokado Co. Ltd. (Retail) 8,000 454,284
Japan Transcity Corp. (Storage) 66,000 434,090
Kajima Corp. (Engineering/Construction) 43,000 450,116
Kasumi Convenience Networks (Retail) 23,400 427,031
Kato Denki (Retail) 19,800 390,681
Kyocera Corp. (Electronics) 7,000 479,852
Marubeni Corp. (Distribution/Wholesale) 79,000 431,042
Maruko Co. Ltd. (Textiles) 6,100 519,870
Matsuda Sangyo Co. Ltd. (Food) 16,000 560,259
Matsushita Electric Industrial Co.
(Electrical Equipment) 19,000 327,374
Mitsubishi Estate Co. Ltd. (Real Estate) 34,000 475,591
Mitsubishi Heavy Industries Ltd.
(Aerospace/Defense) 50,000 430,292
Mitsubishi Trust & Banking (Finance) 19,000 316,813
Miura (Machines) 24,000 429,088
NAC Co. Ltd. (Commercial Services)* 17,600 456,508
NKK Corp. (Steel)* 148,000 433,238
Nippon Yusen Kabushiki Kaish (Transportation - Marine) 76,000 446,355
Nissha Printing (Manufacturing) 35,000 525,243
Nomura Securities Co. Ltd. (Finance) 22,000 415,748
Oi Electric Co. (Electronics) 19,000 401,297
Omron Corp. (Electronics) 20,000 405,743
Pioneer Electronic Corp. (Electronics) 21,000 466,883
Ricoh Co. Ltd. (Office/Business Equipment) 38,000 383,696
Ryohin Keikaku Co. Ltd. (Retail) 6,500 572,024
Sakura Bank Ltd. (Finance) 27,000 295,137
Sanshin Electronics Co. Ltd. (Electronics) 25,000 396,017
Sato Corp. (Machines) 17,600 430,421
Sawai Pharmaceutical Co. Ltd. (Pharmaceuticals) 16,000 440,204
Sawako Corp. (Engineering/Construction) 14,000 426,679
Seiyo Food Systems (Restaurants) 34,000 368,504
Sodick (Electrical Equipment)* 24,000 280,130
Sundrug Co. Ltd. (Retail) 12,000 475,776
TKC (Computer Software and Services) 16,000 481,704
Taihei Dengyo (Engineering/Construction) 27,500 420,333
Tochigi Fuji Industrial (Automotive Parts) 51,000 420,472
Tokyo Broadcasting System (Broadcasting) 18,000 296,804
Tokyu Store Chain (Retail) 53,000 476,239
Topre Corp. (Automotive Parts) 52,000 443,168
Toyo Trust & Banking (Banks) 53,000 505,697
Tsukishima Kikai (Machines) 20,000 424,270
Tsutsunaka Plastic Industry (Chemicals) 43,000 442,149
Yaoko (Retail) 25,000 460,862
Yoshinoya D&C Co. Ltd. (Retail) 18 250,116
-----------
$27,499,378
- -------------------------------------------------------------------------------------------
Malaysia - 3.0%
Genting Berhad (Entertainment) 13,000 $ 110,439
Malayan Banking Berhad (Finance) 48,000 455,861
Nylex (Malaysia) Berhad (Chemicals) 102,000 404,648
Perusahaan Otomobl (Automobiles) 39,000 201,603
Petronas Gas Berhad (Oil and Gas)# 27,000 117,932
Resorts World Berhad (Entertainment) 27,000 155,800
Sime Darby Berhad (Holding Company) 170,500 457,764
Telekom Malaysia Berhad (Telecommunications) 30,000 274,093
Tenaga Nasional Berhad (Utilities - Electric) 82,000 348,307
-----------
$ 2,526,447
- -------------------------------------------------------------------------------------------
Mexico - 2.4%
Cemex S.A., "B" (Construction) 54,000 $ 201,563
Empresas ICA Sociedad Controladora S.A., ADR (Engineering/
Construction)* 24,000 345,000
Fomento Economico Mexicano S.A., "B" (Brewery) 86,950 257,183
Gruma S.A., "B" (Food)* 72,222 360,088
Grupo Carso, "A1" (Conglomerate)* 52,800 388,476
Grupo Embotelladoras de Mexico S.A. (Beverages) 181,000 304,878
Tubos de Acero de Mexico S.A. (Iron/Steel)* 17,340 157,488
-----------
$ 2,014,676
- -------------------------------------------------------------------------------------------
Netherlands - 3.6%
ABN Amro Holding N.V. (Finance) 6,400 $ 354,094
Ahold (Koninklijke) N.V. (Retail - Grocery) 1,500 80,700
Ahrend Groep N.V. (Furniture) 9,200 410,666
Akzo Nobel (Chemicals) 2,000 242,805
Grolsch N.V. (Brewery) 10,530 448,388
Hagemeyer N.V. (Distributing) 6,210 428,565
KNP BT (Koninklijke) N.V.
(Forest and Paper Products) 9,300 232,691
Philips Electronics N.V. (Manufacturing) 6,700 238,471
Sphinx Kon Gustavsberg N.V.
(Building Materials) 16,100 276,119
Vendex International N.V. (Retail) 3,700 118,871
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit
(Publishing) 11,500 189,123
-----------
$ 3,020,493
- -------------------------------------------------------------------------------------------
New Zealand - 0.8%
Creditcorp Holdings Ltd. (Financial Services)* 19,440 $ 359,640
Trust Bank New Zealand Ltd. (Banks) 220,182 331,702
-----------
$ 691,342
- -------------------------------------------------------------------------------------------
Pakistan - 1.2%
Hub Power Co. Ltd., GDR
(Utilities - Electric)* 20,000 $ 505,000
Pakistan Telecommunications Corp., GDR (Utilities -
Telephone)* 4,800 537,600
-----------
$ 1,042,600
- -------------------------------------------------------------------------------------------
Peru - 1.2%
CPT Telefonica del Peru S.A., "B"
(Utilities - Telephone) 318,080 $ 629,574
Compania de Minas Buenaventura S.A. (Mining) 41,260 358,612
-----------
$ 988,186
- -------------------------------------------------------------------------------------------
Philippines - 0.4%
Ayala Land, Inc., "B" (Real Estate) 45,000 $ 77,438
Manila Electric Co., "B"
(Utilities - Electric) 10,000 102,294
Philippine Long Distance Telephone Co., ADR (Utilities -
Telephone) 1,300 75,067
Pilipino Telegraph & Telephone Corp. (Telecommunications) 50,700 81,430
-----------
$ 336,229
- -------------------------------------------------------------------------------------------
Poland - 0.8%
Elektrim Spolka Akcyjna S.A.
(Electrical Equipment) 56,500 $ 379,478
Stomil Olsztyn S.A. (Tire and Rubber)* 22,500 264,459
-----------
$ 643,937
- -------------------------------------------------------------------------------------------
Singapore - 1.3%
City Developments Ltd. (Real Estate) 14,000 $ 107,447
Development Bank of Singapore Ltd. (Banks) 12,000 142,410
Inchcape Berhad (Automotive) 179,000 608,030
Keppel Corp. Ltd. (Transportation - Marine) 12,000 100,625
Overseas-Chinese Banking Corp. Ltd. (Finance) 14,000 179,079
-----------
$ 1,137,591
- -------------------------------------------------------------------------------------------
South Africa - 1.3%
Nedcor Ltd. (Financial Services) 17,576 $ 242,707
Sasol Ltd. (Oils) 32,975 328,612
South African Breweries Ltd. (Brewery) 9,235 282,151
South African Iron & Steel Industries
(Iron/Steel) 329,597 254,120
-----------
$ 1,107,590
- -------------------------------------------------------------------------------------------
South Korea - 1.1%
Korea Electric Power Corp., ADR
(Utilities - Electric) 8,000 $ 207,000
Korea Fund, Inc. (Other - Finance)* 7,000 154,000
Korea International Trust (Finance)*+ 10 570,000
-----------
$ 931,000
- -------------------------------------------------------------------------------------------
Spain - 1.0%
BCO Intercont (Banks) 1,500 $ 154,652
Europistas Concesionaria Espanola S.A. (Engineering/
Construction) 8,600 66,216
Hidroel Canabrico (Utilities - Electric) 5,000 161,705
Repsol S.A. (Oils) 8,000 274,314
Telefonica de Espana (Utilities - Telephone) 9,500 171,018
-----------
$ 827,905
- -------------------------------------------------------------------------------------------
Sweden - 2.2%
Ericsson LM, "B" (Telecommunications) 6,700 $ 150,309
Munksjo AB (Forest and Paper Products) 59,700 449,407
Noble Biocare AB (Medical Supplies) 23,500 425,617
PLM AB (Packaging and Containers) 11,400 175,032
Securitas AB, "B" (Commercial Services) 7,990 506,186
Swedish Match AB (Tobacco)* 6,300 21,036
Volvo AB, "B" (Automotive) 6,300 133,823
-----------
$ 1,861,410
- -------------------------------------------------------------------------------------------
Switzerland - 2.4%
Fotolabo S.A. (Leisure) 1,000 $ 421,010
Lindt & Spruengli AG (Food) 30 565,357
Nestle AG, Registered Shares
(Food and Beverage Products) 200 226,143
Roche Holdings AG (Pharmaceuticals) 32 246,351
Sandoz AG (Pharmaceuticals) 200 208,180
Sika Finanz AG (Building Materials) 800 202,727
Winterthur (Insurance) 330 195,036
-----------
$ 2,064,804
- -------------------------------------------------------------------------------------------
Taiwan - 0.8%
Taipei Fund (Financial Services)* 90 $ 693,000
- -------------------------------------------------------------------------------------------
Thailand - 1.4%
Bank of Ayudhya Ltd. (Banks) 64,100 $ 385,411
Bank of Ayudhya Ltd., Rights (Banks)* 16,025 55,149
Siam City Cement Co. Ltd., Foreign Registered (Building
Materials) 29,000 383,149
TelecomAsia Corp. Ltd., Foreign Registered (Utilities -
Telephone)* 158,500 347,973
-----------
$ 1,171,682
- -------------------------------------------------------------------------------------------
Turkey - 0.5%
Netas Telekomunik (Telecommunications) 695,400 $ 139,576
Trakya Cam Sanayil (Manufacturing) 1,913,000 241,349
-----------
$ 380,925
- -------------------------------------------------------------------------------------------
United Kingdom - 14.2%
Allied Domecq PLC
(Food and Beverage Products) 24,120 $ 182,187
Anglian Group PLC (Building Materials) 152,896 398,398
Asda Property Holdings PLC (Real Estate) 119,200 270,848
BAT Industries PLC (Tobacco) 22,250 179,451
BTR PLC (Holding Company) 30,860 134,497
Bass PLC (Brewery) 8,700 109,906
Blick PLC (Electrical) 34,400 291,849
British Gas PLC (Utilities - Gas) 41,400 122,323
British Petroleum PLC (Oil and Gas) 11,900 102,436
British Telecommunications PLC (Telecommunications) 32,200 177,545
British-Borneo Petroleum Syndicate PLC
(Oil and Gas) 32,100 296,233
Bullough PLC (Manufacturing) 275,900 457,876
Caradon PLC (Holding Company) 49,450 178,320
Carlton Communications PLC (Broadcasting) 39,700 297,714
City Centre Restaurants PLC (Restaurants) 153,100 276,639
Close Brothers Group PLC (Banks) 45,800 268,871
Courtaulds Textiles PLC (Textiles) 20,900 122,046
Dalgety PLC (Food Products) 31,830 184,391
David Brown Group PLC
(Engineering/Construction) 63,900 225,968
Devro International PLC (Food) 71,900 260,950
Fairey Group PLC (Manufacturing) 21,100 224,992
General Accident PLC (Insurance) 9,250 95,478
General Electric Co. PLC (Electronics) 21,750 125,491
Graham Group PLC (Distributing) 103,696 257,332
Granada Group PLC (Leisure) 5,200 66,377
Hazlewood Foods PLC (Food) 280,800 435,521
Hunting PLC (Holding Company) 67,800 189,284
Inchcape PLC (Commercial Services) 54,150 255,320
Independent Insurance Group PLC (Insurance) 34,600 267,250
Johnson Matthey PLC (Metals) 10,900 112,002
Kingfisher PLC (Retail) 15,950 150,657
Laird Group PLC (Automotive Parts) 28,500 205,988
Land Securities PLC (Real Estate) 9,950 98,922
Marley PLC (Building Materials) 118,400 246,994
Meggitt Holdings PLC (Engineering) 148,800 228,481
Midland Independent Newspapers PLC (Publishing) 51,200 116,734
NFC PLC (Transportation) 66,500 157,807
National Westminster (Finance) 12,000 116,139
Nelson Hurst PLC (Insurance) 75,200 232,104
OGC International PLC (Oil and Gas) 56,800 218,480
Peninsular & Oriental Steam Navigation Co.
(Transportation - Marine) 16,500 134,100
RJB Mining PLC (Mining) 29,800 268,999
Roxboro Group PLC (Manufacturing) 60,500 269,308
SIG PLC (Building Materials) 82,940 295,872
Sainsbury (J.) PLC (Retail) 22,600 138,984
Scapa Group PLC (Building Materials) 70,000 247,540
Serco Group PLC (Commercial Services) 31,500 259,428
Seton Healthcare Group PLC
(Medical Supplies) 32,800 251,820
Shell Transport & Trading Co. PLC
(Oil and Gas) 7,600 108,328
T & S Stores PLC (Retail) 78,500 264,205
Triplex Lloyd PLC (Hardware) 121,600 311,193
Vardon PLC (Entertainment) 79,500 149,199
Wagon Industrial Holdings PLC (Manufacturing) 44,000 257,962
Walker Greenbank PLC (Manufacturing) 247,300 383,562
Wimpey (George) PLC (Construction) 146,800 321,039
-----------
$12,001,340
- -------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $74,009,641) $79,489,615
- -------------------------------------------------------------------------------------------
Short-Term Obligations - 11.7%
- -------------------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 6/07/96 $ 3,670 $ 3,666,807
Federal Home Loan Mortgage Corp.,
due 6/03/96 2,540 2,539,265
Federal National Mortgage Assn., due 6/12/96 3,675 3,669,161
- -------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 9,875,233
- -------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $83,884,874) $89,364,848
Other Assets, Less Liabilities - (5.5)% (4,618,064)
- -------------------------------------------------------------------------------------------
Net Assets - 100.0% $84,746,784
- -------------------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
</TABLE>
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.
AUD = Australian Dollars FIM = Finnish Markkaa
BEF = Belgian Francs FRF = French Francs
CAD = Canadian Dollars GBP = British Pounds
CHF = Swiss Francs IEP = Irish Punts
DEM = Deutsche Marks ITL = Italian Lire
DKK = Danish Kroner JPY = Japanese Yen
ESP = Spanish Pesetas SEK = Swedish Kronor
<PAGE>
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
- ------------------------------------------------------------------------------
Emerging International
Markets Growth International
May 31, 1996 Equity and Income Growth
- ------------------------------------------------------------------------------
Assets:
Investments, at value
(identified cost, $40,179,711,
$24,491,650, and $83,884,874,
respectively) $41,638,635 $25,403,790 $89,364,848
Cash 10,234 3,118 9,375
Foreign currency, at value
(identified cost $4,393,
$49,652, and $57,550) 4,302 49,998 58,163
Net receivable for forward
foreign currency exchange
contracts sold -- 19,406 --
Net receivable for forward
foreign currency exchange
contracts -- 2,215 --
Receivable for Fund shares sold 113,808 163,196 1,170,474
Receivable for investments sold -- 2,755 --
Interest and dividends
receivable 120,951 230,550 261,326
Deferred organization expenses 22,883 23,488 23,769
----------- ----------- -----------
Total assets $41,910,813 $25,898,516 $90,887,955
----------- ----------- -----------
Liabilities:
Payable for Fund shares
reacquired $ 59,009 $ 7,291 $ 173,147
Payable for investments
purchased 1,925,111 86,024 5,807,267
Written options outstanding, at
value (premiums received,
$44,369) -- 21,970 --
Net payable for forward foreign
currency exchange contracts
purchased -- 144,702 --
Payable to affiliates -
Management fee 1,365 671 2,218
Shareholder servicing agent
fee 203 129 423
Distribution fee 16,304 10,557 34,393
Accrued expenses and other
liabilities 27,157 36,299 123,723
----------- ----------- -----------
Total liabilities $ 2,029,149 $ 307,643 $ 6,141,171
----------- ----------- -----------
Net assets $39,881,664 $25,590,873 $84,746,784
=========== =========== ===========
Net assets consist of:
Paid-in capital $37,921,871 $24,632,031 $78,970,863
Unrealized appreciation on
investments and translation of
assets and liabilities in
foreign currencies 1,456,082 810,229 5,452,080
Accumulated undistributed net
realized gain on investments
and foreign currency
transactions 526,811 24,924 544,069
Accumulated undistributed
(distributions in excess of)
net investment income (23,100) 123,689 (220,228)
----------- ----------- -----------
Total $39,881,664 $25,590,873 $84,746,784
=========== =========== ===========
Shares of beneficial interest
outstanding 2,417,917 1,603,495 5,079,531
=========== =========== ===========
Class A shares:
Net asset value and redemption
price per share
(net assets of $19,860,577,
$11,949,595, and
$41,483,016 / 1,202,479,
747,922, and 2,482,504
shares of beneficial interest
outstanding, respectively) $16.52 $15.98 $16.71
====== ====== ======
Offering price per share (100/
95.25 of net asset value per
share) $17.34 $16.78 $17.54
====== ====== ======
Class B shares:
Net asset value and offering
price per share
(net assets of $20,021,087,
$13,641,278, and
$43,263,768 / 1,215,438,
855,573, and 2,597,027
shares of beneficial interest
outstanding, respectively) $16.47 $15.94 $16.66
====== ====== ======
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
<TABLE>
<CAPTION>
Statements of Operations
- ---------------------------------------------------------------------------------------
Emerging International
Markets Growth International
Period Ended May 31, 1996* Equity and Income Growth
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Income -
Interest $ 98,540 $ 225,928 $ 242,105
Dividends 343,802 174,811 652,224
Foreign taxes withheld (25,682) (22,627) (78,963)
----------- ----------- ----------
Total investment income $ 416,660 $ 378,112 $ 815,366
----------- ----------- ----------
Expenses -
Management fee $ 182,020 $ 103,167 $ 313,570
Trustees' compensation 1,993 1,993 1,993
Shareholder servicing agent fee (Class A) 11,417 7,887 25,673
Shareholder servicing agent fee (Class B) 15,291 11,711 33,100
Distribution and service fee (Class A) 38,057 26,289 85,577
Distribution and service fee (Class B) 69,502 53,233 150,456
Custodian fee 34,141 10,811 47,516
Registration fees 46,834 38,762 65,772
Printing 17,183 7,771 23,278
Postage 3,373 1,572 5,363
Auditing fees 23,600 25,100 36,600
Amortization of organization expenses 3,118 3,118 3,118
Legal fees 4,571 4,571 4,571
Miscellaneous 12,631 4,186 23,049
----------- ----------- ----------
Total expenses $ 463,731 $ 300,171 $ 819,636
Fees paid indirectly (14) (3,124) --
Reduction of expenses by investment
adviser (60,059) -- --
----------- ----------- ----------
Net expenses $ 403,658 $ 297,047 $ 819,636
----------- ----------- ----------
Net investment income (loss) $ 13,002 $ 81,065 $ (4,270)
----------- ----------- ----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) (identified
cost basis) -
Investment transactions $ 526,811 $ 18,766 $ 544,069
Written option transactions -- (2,926) --
Foreign currency transactions (23,880) 71,233 (209,305)
----------- ----------- ----------
Net realized gain on investments and
foreign currency transactions $ 502,931 $ 87,073 $ 334,764
----------- ----------- ----------
Change in unrealized appreciation
(depreciation) -
Investments $ 1,458,832 $ 912,486 $5,480,588
Written options -- 22,399 --
Translation of assets and
liabilities in foreign currencies (2,750) (124,656) (28,508)
----------- ----------- ----------
Net unrealized gain on investments
and foreign currency translation $1,456,082 $ 810,229 $5,452,080
----------- ----------- ----------
Net realized and unrealized gain on
investments and foreign currency $1,959,013 $ 897,302 $5,786,844
----------- ----------- ----------
Increase in net assets from
operations $1,972,015 $ 978,367 $5,782,574
========== =========== ==========
<FN>
* For the period from the commencement of investment operations, October 24, 1995 to May 31, 1996.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------
Emerging International
Markets Growth International
Period Ended May 31, 1996* Equity and Income Growth
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ 13,002 $ 81,065 $ (4,270)
Net realized gain on investments
and foreign currency
transactions 502,931 87,073 334,764
Net unrealized gain on
investments and foreign
currency translation 1,456,082 810,229 5,452,080
----------- ----------- -----------
Increase in net assets from
operations $ 1,972,015 $ 978,367 $ 5,782,574
----------- ----------- -----------
Distributions declared to
shareholders -
From net investment income
(Class A) $ (8,868) $ (12,226) $ (6,653)
From net investment income
(Class B) -- (7,299) --
In excess of net investment
income (Class B) (3,354) -- --
----------- ----------- -----------
Total distributions declared
to shareholders $ (12,222) $ (19,525) $ (6,653)
----------- ----------- -----------
Fund share (principal)
transactions -
Net proceeds from sale of shares $46,419,714 $27,711,754 $84,291,229
Net asset value of shares issued
to shareholders in
reinvestment of distributions 12,183 15,767 5,219
Cost of shares reacquired (8,510,026) (3,095,490) (5,325,585)
----------- ----------- -----------
Increase in net assets from
Fund share transactions $37,921,871 $24,632,031 $78,970,863
----------- ----------- -----------
Total increase in net assets $39,881,664 $25,590,873 $84,746,784
Net assets:
At beginning of period -- -- --
----------- ----------- -----------
At end of period (including
accumulated undistributed
(distributions in excess of)
net investment
income of $(23,100), $123,689
and $(220,228), respectively) $39,881,664 $25,590,873 $84,746,784
=========== =========== ===========
* For the period from the commencement of investment operations, October 24,
1995 to May 31, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity International Growth and Income International Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Period Ended May 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) $ 0.04 $(0.02) $ 0.11 $ 0.05 $ 0.03 $ (0.03)
Net realized and unrealized
gain on investments and
foreign currency
transactions 1.50 1.50 0.90 0.90 1.69 1.69
------ ------ ------ ------ ------ ------
Total from investment
operations $ 1.54 $ 1.48 $ 1.01 $ 0.95 $ 1.72 $ 1.66
------ ------ ------ ------ ------ ------
Less distributions declared
to shareholders -
From net investment income $(0.02) $ -- $(0.03) $(0.01) $(0.01) $ --
In excess of net
investment income -- (0.01) -- -- -- --
Total distributions
declared to
shareholders $(0.02) $(0.01) $(0.03) $(0.01) $(0.01) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of
period $16.52 $16.47 $15.98 $15.94 $16.71 $16.66
====== ====== ====== ====== ====== ======
Total return(++) 10.24%(+)(+) 9.85%(+)(+) 6.71%(+)(+) 6.37%(+)(+) 11.43%(+)(+) 11.07%(+)(+)
Ratios (to average daily net
assets)/Supplemental
data(S):
Expenses## 2.48%(+) 3.06%(+) 2.52%(+) 3.11%(+) 2.24%(+) 2.85%(+)
Net investment income
(loss) 0.35%(+) (0.19)%(+) 1.04%(+) 0.49%(+) 0.24%(+) (0.31)%(+)
Portfolio turnover 22% 22% 29% 29% 11% 11%
Average commission rate $0.0136 $0.0136 $0.0291 $0.0291 $0.0107 $0.0107
Net assets at end of
period (000 omitted) $19,861 $20,021 $11,950 $13,641 $41,483 $43,264
<FN>
* For the period from the commencement of investment operations, October 24, 1995 to May 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.
(S) The Adviser voluntarily agreed to maintain the expenses of the Emerging Markets Equity Fund at not more than 2.50% and 3.07%
of average daily net assets for Class A and Class B shares, respectively. To the extent actual expenses were over/under
these limitations, the net investment income (loss) per share and the ratios would have been:
Net investment income
(loss) $ 0.02 $ (0.08) -- -- -- --
Ratios (to average net assets):
Expenses 2.73%(+) 3.30%(+) -- -- -- --
Net investment
income (loss) 0.10%(+) (0.44)%(+) -- -- -- --
</TABLE>
See notes to financial statements
<PAGE>
(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 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-end management investment company. The Funds commenced investment
operations on October 24, 1995.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are 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. Futures
contracts, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the-counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The 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.
Written Options - The Funds may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Funds. The Funds, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bear the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as part of an income producing strategy reflecting the view of the
Funds' management on the direction of interest rates.
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 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 the Funds'
portfolio of securities to different currencies to take advantage of anticipated
changes. The forward foreign currency exchange contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded 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' policies are 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 tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains. During the period ended May 31, 1996, the following amounts were
reclassified due to differences between book and tax accounting for currency
transactions. These changes had no effect on the net assets or net asset value
per share.
<TABLE>
<CAPTION>
Emerging International
Markets Growth and International
Equity Income Growth
---------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease):
Accumulated undistributed net realized gain on
investments and foreign currency
transactions ............................... $23,880 $(62,149) $209,305
Accumulated undistributed (distributions in
excess of) net investment income ........... (23,880) 62,149 (209,305)
</TABLE>
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 sub-advisers and the adviser, MFS, has engaged Foreign &
Colonial Management Ltd., an England and Wales Company, to assist in the
performance of its services.
Under a temporary expense reimbursement agreement with MFS, MFS has voluntarily
agreed to pay all of the Emerging Markets Equity Fund's operating expenses,
exclusive of management, distribution and service fees. The Emerging Markets
Equity Fund in turn will pay MFS an expense reimbursement fee not greater than
.60% of average daily net assets for Class A and 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 May 31, 1996, the aggregate unreimbursed expenses owed to MFS by the
Emerging Markets Equity Fund amounted to $57,434.
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
$29,368, $17,609, and $66,057 for the Emerging Markets Equity Fund,
International Growth and Income Fund, and International Growth Fund,
respectively, for the period ended May 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 $3,215, $71 and $780
for the Emerging Markets Equity Fund, International Growth and Income Fund and
International Growth Fund, respectively, for the period ended May 31, 1996. Fees
incurred under each Class A distribution plan during the period ended May 31,
1996 were 0.50% of 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 $74, $0 and $6 for the
Emerging Markets Equity Fund, International Growth and Income Fund and
International Growth Fund, respectively, for the period ended May 31, 1996. Fees
incurred under each Class B distribution plan during the period ended May 31,
1996 were 1.00% of the Fund's average daily net assets attributable to Class B
shares on an annualized basis.
Purchases over $1 million into Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within twelve months following such 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 May 31, 1996 for Class A
shares. Contingent deferred sales charges for Class B shares imposed during the
period ended May 31, 1996 were $4,930, $7,513 and $9,530 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 $42,307,042
and $4,862,399, $26,479,981 and $4,493,461, and $78,486,835 and $5,021,263 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 $40,179,711 $24,491,650 $83,884,874
=========== =========== ===========
Gross unrealized appreciation $ 3,561,477 $ 1,397,170 $ 7,558,732
Gross unrealized depreciation (2,102,553) (485,030) (2,078,758)
----------- ----------- -----------
Net unrealized appreciation $ 1,458,924 $ 912,140 $ 5,479,974
=========== =========== ===========
</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 May 31, 1996* Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares in public offering 1,490,414 $23,464,680 793,963 $12,142,184 2,712,981 $42,075,064
Shares issued to
shareholders in
reinvestment of
distributions 514 7,966 658 10,210 367 5,219
Shares reacquired (288,449) (4,694,661) (46,699) (723,607) (230,844) (3,729,818)
--------- ----------- ------- ----------- --------- -----------
Net increase 1,202,479 $18,777,985 747,922 $11,428,787 2,482,504 $38,350,465
========= =========== ======= =========== ========= ===========
<CAPTION>
International Growth
Emerging Markets Equity and Income International Growth
Class B Shares -------------------------------- -------------------------------- --------------------------------
Period Ended May 31, 1996* Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares in public offering 1,451,675 $22,955,034 1,009,636 $15,569,570 2,695,977 $42,216,165
Shares issued to
shareholders in reinvestment
of distributions 268 4,217 358 5,557 -- --
Shares reacquired (236,505) (3,815,365) (154,421) (2,371,883) (98,950) (1,595,767)
--------- ----------- ------- ----------- --------- -----------
Net increase 1,215,438 $19,143,886 855,573 $13,203,244 2,597,027 $40,620,398
========= =========== ======= =========== ========= ===========
<FN>
* For the period from the commencement of investment operations, October 24, 1995 to May 31, 1996.
</TABLE>
(6) Line of Credit
The Funds entered into agreements which enable 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 commitment fees allocated to the Funds for the period ended May 31,
1996 were $147, $98, and $313 for the Emerging Markets Equity Fund,
International Growth and Income Fund and International Growth Fund,
respectively.
(7) Financial Instruments
The Funds trade 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 written options and forward foreign currency exchange
contracts. The notional or contractual amounts of these instruments represent
the investment the Funds have in particular classes of financial instruments and
do 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.
<PAGE>
Written Option Transactions
International Growth and Income Fund
1996 Calls 1996 Puts
---------------------------- -----------------------------
Principal Amounts Principal Amounts
of Contracts of Contracts
(000 Omitted) Premiums (000 Omitted) Premiums
- -----------------------------------------------------------------------------
OUTSTANDING, BEGINNING OF PERIOD -
Options written -
Australian Dollars 144 $ 780 -- --
Canadian Dollars -- -- 1,457 3,828
Deutsche Marks 1,499 6,983 -- --
Deutsche Marks/
British Pounds 1,386 4,209 -- --
Italian Lire/
Deutsche Marks 2,817,989 20,484 -- --
Japanese Yen 129,952 1,632 122,808 7,290
New Zealand Dollars -- -- 753 1,120
Spanish Pesetas/
Deutsche Marks -- -- 63,527 1,575
Options terminated in
closing transactions -
Australian Dollars (144) (780) -- --
Japanese Yen (129,952) (1,632) -- --
New Zealand Dollars -- -- (753) (1,120)
--------- ------- ------- -------
OUTSTANDING,
END OF PERIOD 2,820,874 $31,676 187,792 $12,693
========= ======= ======= =======
OPTIONS OUTSTANDING AT END OF PERIOD CONSIST OF:
Canadian Dollars -- -- 1,457 $ 3,828
Deutsche Marks 1,499 6,983 -- --
Deutsche Marks/
British Pounds 1,386 4,209 -- --
Italian Lire/
Deutsche Marks 2,817,989 20,484 -- --
Japanese Yen -- -- 122,808 7,290
Spanish Pesetas/
Deutsche Marks -- -- 63,527 1,575
--------- ------- ------- -------
OUTSTANDING,
END OF PERIOD 2,820,874 $31,676 187,792 $12,693
========= ======= ======= =======
At May 31, 1996, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
<PAGE>
Forward Foreign Currency Exchange Contracts
International Growth and Income Fund
<TABLE>
<CAPTION>
Net Unrealized
Contracts to Contracts Appreciation
Settlement Date Deliver/Receive In Exchange for at Value (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 8/22/96 BEF 11,969,832 $ 382,056 $ 384,315 $ (2,259)
8/30/96 - 11/01/96 CAD 231,117 170,099 169,183 916
8/14/96 CHF 475,618 384,572 383,609 963
6/12/96 - 4/28/97 DEM 9,014,573 5,981,720 5,985,257 (3,537)
9/09/96 DKK 2,760,147 467,347 471,726 (4,379)
8/13/96 ESP 30,961,076 241,780 240,320 1,460
8/02/96 FIM 1,208,026 250,218 258,362 (8,144)
8/09/96 GBP 213,772 327,413 331,213 (3,800)
7/24/96 - 8/06/96 ITL 1,027,790,652 656,394 663,313 (6,919)
6/07/96 - 7/25/96 JPY 230,974,652 2,203,024 2,153,213 49,811
8/02/96 SEK 2,003,625 293,572 298,278 (4,706)
----------- ----------- ---------
$11,358,195 $11,338,789 $ 19,406
=========== =========== =========
Purchases 8/20/96 AUD 222,714 $ 176,190 $ 176,916 $ 726
6/12/96 - 8/29/96 DEM 9,432,364 6,312,280 6,208,295 (103,985)
8/02/96 FIM 428,459 88,722 91,635 2,913
9/09/96 FRF 3,517,361 679,815 685,942 6,127
9/23/96 IEP 161,794 252,959 257,077 4,118
4/28/97 ITL 1,403,139,851 880,190 886,784 6,594
6/07/96 - 8/29/96 JPY 306,201,699 2,916,061 2,854,866 (61,195)
----------- ----------- ---------
$11,306,217 $11,161,515 $(144,702)
=========== =========== =========
</TABLE>
Forward foreign currency purchases and sales under master netting arrangements
and closed forward foreign currency exchange contracts excluded above amounted
to a net receivable of $2,215 at May 31, 1996.
At May 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 May 31, 1996, the
Funds owned the following restricted securities (constituting 8.0%, 0.3% and
2.1% of net assets, for the Emerging Markets Equity Fund, International Growth
and Income Fund, and 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 or, if not available, in good faith by or at the
direction of the Trustees. Certain of these securities may be offered and sold
to "qualified institutional buyers" under Rule 144A of the 1933 Act.
<TABLE>
<CAPTION>
Emerging Markets Equity Fund
Date of Share
Description Acquisition Amount Cost Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cementos Diamante S.A., ADR 5/10/96 30,900 $600,129 $ 540,750
Hindalco Industries Ltd., ADR 3/29/96 14,000 525,000 609,000
Korea International Trust 11/08/95 11 661,556 627,000
Mosenergo, ADR 5/13/96 34,000 460,137 748,000
Petronas Gas Berhad 2/09/96 150,000 572,634 655,179
----------
$3,179,929
==========
<CAPTION>
International Growth and Income Fund
Date of Share
Description Acquisition Amount Cost Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Petronas Gas Berhad 2/09/96 18,000 $ 71,084 $ 78,622
==========
<CAPTION>
International Growth Fund
Date of Share
Description Acquisition Amount Cost Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Korea International Trust 11/08/95 10 $586,626 $ 570,000
Oy Tamro AB 5/15/96 34,660 185,714 191,435
Petronas Gas Berhad 2/09/96 27,000 111,221 117,932
Reliance Industries, GDR 2/16/96 36,770 530,810 542,357
Tarkett AG 5/30/96 14,000 317,115 326,544
----------
$1,748,268
==========
</TABLE>
<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 May 31, 1996, and 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 May 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 May
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 May 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 May 31, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
July 3, 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. For more complete information regarding MFS
Regatta Gold and, MFS/Sun Life Series Trust, including charges and expenses,
call your financial adviser for the prospectuses, which should be read carefully
before investing or sending any money.
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MFS/FOREIGN & COLONIAL INTERNATIONAL FUNDS
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TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), AUDITORS
Massachusetts Financial Services Company; Ernst & Young LLP
Director, Cambridge Bancorp; Director,
Cambridge Trust Company INVESTOR INFORMATION
Peter G. Harwood - Private Investor For MFS stock and bond market outlooks, call toll free:
J. Atwood Ives - Chairman and Chief Executive Officer, 1-800-637-4458 anytime from a touch-tone telephone.
Eastern Enterprises For information on MFS mutual funds, call your
Lawrence T. Perera - Partner, Hemenway & Barnes financial adviser or, for an information kit, call toll
William J. Poorvu - Adjunct Professor, Harvard University free:
Graduate School of Business Administration 1-800-637-2929 any business day from 9 a.m. to 5 p.m.
Charles W. Schmidt - Private Investor Eastern time (or leave a message anytime).
Arnold D. Scott* - Senior Executive Vice President,
Director and Secretary, Massachusetts Financial Services INVESTOR SERVICE
Company MFS Service Center, Inc.
Jeffrey L. Shames* - President and Director, P.O. Box 2281
Massachusetts Financial Services Company Boston, MA 02107-9906
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management For general information, call toll free: 1-800-225-2606
Corp. (investment advisers) any business day from 8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll
INVESTMENT ADVISER free: 1-800-637-6576 any business day from 9 a.m. to 5 p.m.
Massachusetts Financial Services Company Eastern time. (To use this service, your phone must be
500 Boylston Street equipped with a Telecommunications Device for the
Boston, MA 02116-3741 Deaf.) For share prices, account balances and exchanges,
call toll free: 1-800-MFS-TALK (1-800-637-8255) anytime from
DISTRIBUTOR a touch-tone telephone.
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741 TOP-RATED SERVICE
[DALBAR Seal]
PORTFOLIO MANAGERS FOR THE SECOND YEAR IN A ROW, MFS EARNED A #1 RANKING IN DALBAR,
Arnab K. Banerji INC.'S BROKER/DEALER SURVEY, MAIN OFFICE OPERATIONS SERVICE QUALITY
Richard O. Hawkins* CATEGORY. THE FIRM ACHIEVED A 3.49 OVERALL SCORE -- ON A SCALE OF 1
Atul Patel TO 4 -- IN THE 1995 SURVEY. A TOTAL OF 71 FIRMS RESPONDED, OFFERING
June Scott INPUT ON THE QUALITY OF SERVICE THEY RECEIVE FROM 36 MUTUAL FUND
Tony Thomson COMPANIES NATIONWIDE. THE SURVEY CONTAINED QUESTIONS ABOUT SERVICE
Ian Wright QUALITY IN 17 CATEGORIES, INCLUDING "KNOWLEDGE OF PHONE SERVICE
CONTACTS," "ACCURACY OF TRANSACTION PROCESSING," AND "OVERALL EASE OF
TREASURER DOING BUSINESS WITH THE FIRM."
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
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MFS(R) FOREIGN & COLONIAL INTERNATIONAL [DALBAR SEAL] BULK RATE
INCOME FUND U.S. POSTAGE
P A I D
500 Boylston Street PERMIT #55638
Boston, MA 02116 BOSTON, MA
[MFS logo]
85
86
87
285
286
MFC-2 7/96/xxM 287
