<PAGE>
[LOGO] M F S(SM) Semiannual Report
INVESTMENT MANAGEMENT November 30, 1997
MFS(R) INTERNATIONAL GROWTH FUND
(formerly MFS(R)/Foreign & Colonial International Growth Fund)
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Portfolio Manager's Overview .............................................. 2
Portfolio Manager's Profile ............................................... 4
Fund Facts ................................................................ 5
Performance Summary ....................................................... 5
Portfolio Concentration ................................................... 7
Portfolio of Investments .................................................. 8
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 22
Trustees and Officers ..................................................... 29
HIGHLIGHTS
o FOR THE SIX MONTHS ENDED NOVEMBER 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF -4.85%, CLASS B SHARES
-5.05%, CLASS C SHARES -5.07%, AND CLASS I SHARES -4.60%. (SEE PERFORMANCE
SUMMARY FOR MORE INFORMATION.)
o WHILE FINANCIAL SERVICES IS THE FUND'S LARGEST WEIGHTING, IT IS BELOW THE
WEIGHTING OF THE FUND'S BENCHMARK DUE TO OUR LACK OF EXPOSURE TO JAPANESE
FINANCIAL SERVICES COMPANIES.
o IN THE UTILITIES AND COMMUNICATIONS SECTOR, OUR BIAS HAS BEEN TOWARD
CELLULAR AND SMALLER-MARKET PHONE COMPANIES AND AWAY FROM THE TRADITIONAL
WIRE-LINE PHONE COMPANIES AND ESTABLISHED ELECTRIC UTILITIES.
o ALTHOUGH EMERGING MARKETS HAVE SEEN EXTREME VOLATILITY, PRIMARILY BECAUSE
OF TURMOIL IN ASIA, THE PORTION OF THE FUND DEDICATED TO EMERGING MARKETS
HAS PERFORMED WELL DUE TO OVERWEIGHTINGS IN LATIN AMERICA AND EASTERN
EUROPE AND AN UNDERWEIGHTING IN SOUTHEAST ASIA.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still
uncomfortably high. The rapid pace of growth seen in the first quarter slowed
to an annual rate of 3.3% in the second quarter and 3.5% in the third. We
believe economic momentum will carry well into the first quarter of 1998, as
the money supply is increasing at a rapid rate. Because economic growth
continues to be impressive, markets are likely to continue to focus on the
Federal Reserve Board's willingness to raise interest rates.
The extreme volatility seen in the U.S. equity market in October was, we
believe, the consequence of overvaluations that had been evident for some
months. As a result, the stock market has been vulnerable to some type of
correction and has been impacted in the near term by chaotic market conditions
in the Pacific Rim. In the face of all this, however, the equity market
continues to exhibit surprising strength, much of it the result of continued
gains in corporate earnings, a trend that could be an important indicator of
the market's future direction. Certainly the situation throughout Asia bears
close scrutiny because it appears to be clearly deflationary and raises the
prospect of trade wars developing throughout the area. We are not convinced
that U.S. markets have escaped totally from October's volatility. Thus, while
the near-term outlook for profits is generally favorable, we believe equity
valuations have risen to a point where a cautious investment approach seems
warranted, with a need for particular attention to be paid to the effect of
Pacific Rim volatility on the earnings of U.S. companies.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
December 15, 1997
<PAGE>
PORTFOLIO MANAGER'S OVERVIEW
[Photo of David R. Mannheim]
David R. Mannheim
Dear Shareholders:
For the six months ended November 30, 1997, Class A shares of the Fund provided
a total return of -4.85%, Class B shares -5.05%, Class C shares -5.07%, and
Class I shares -4.60%. These returns, which assume the reinvestment of
distributions but exclude the effects of any sales charges, compare to a -4.14%
return for the Morgan Stanley Capital International (MSCI) Europe, Australia,
Far East (EAFE) Index, an unmanaged index of common stocks which measures the
performance of 19 developed-country-global stock markets.
Since early September, the Fund has been managed in two parts. Roughly 80% of
the Fund is invested in developed international markets and is managed by MFS,
while approximately 20% is invested in emerging markets and is managed by the
emerging markets team of Foreign & Colonial Management, Ltd. As of November
30, 1997, 78% of the Fund's assets were invested in developed markets, 19% in
emerging markets, and 3% in cash.
Developed Markets
In the developed markets, a bottom-up approach to stock selection is used, as
opposed to top-down country allocations. Therefore, the Fund's developed-
market country weightings are simply a byproduct of where the companies we
believe offer the most attractive returns are headquartered. Emphasis is
placed on high-quality companies that are industry leaders and that we believe
will generate above-average earnings growth regardless of the state of the
global economy.
At the end of November, 64% of developed-market assets were invested in
Europe, 28% in Asia/Pacific, and 8% in the Americas. This compares to the MSCI
EAFE Index which, as of October 31, 1997, allocated 64% to Europe, 36% to
Asia/Pacific, and 0% to the Americas. Our three largest individual country
exposures were the United Kingdom, with 21% of assets; Japan, with 20%; and
the Netherlands, with 7%.
The Fund's three largest industry sector weightings are financial services,
with 15.5% of assets; utilities and communications, with 13.3%; and
technology, with 7.7%. While financial services is the largest weighting, it
is below the 24% weighting in the MSCI EAFE Index due to our lack of exposure
to Japanese financial services companies. Of the Fund's 15.5% weighting, banks
account for 9%, insurance companies for 5%, and other financial services
companies for 1.5%. Within utilities and communications, our bias has been
toward cellular and smaller-market phone companies and away from the
traditional wire-line phone companies and established electric utilities. The
Fund's technology weighting is almost exclusively within Japan, representing
over 40% of our holdings in that country and including names such as Sony,
Canon, and TDK.
In general, the Fund has little exposure to cyclical industries like commodity
papers, chemicals, and metals. We believe companies that can be characterized
as steady earners currently offer the most attractive growth prospects
relative to their valuation levels. Several of the Fund's larger holdings that
would fall into this category include British Aerospace, an aerospace and
defense contractor; Henkel, a German consumer products company; Akzo Nobel, a
Dutch chemical company; and QBE Insurance, an Australian insurance company.
Emerging Markets
After a strong start this year in the emerging markets, the past six months
have seen extreme volatility, primarily due to the turmoil in Southeast Asia.
The portion of the Fund dedicated to emerging markets has performed well
relative to the MSCI Emerging Markets Free Index due to overweightings in
Latin America and Eastern Europe and an underweighting in Southeast Asia.
Foreign & Colonial continues to be positive on the Latin American region,
which represents 46% of its holdings. The largest individual country exposure
remains Brazil, at 16%. While recent interest-rate hikes and currency fears
have led to a market decline, Foreign & Colonial's managers believe the
accelerated reforms taking place in Brazil and low valuation levels produce an
attractive medium-term outlook. The overall weighting in the Asia/Pacific
region (16%) has been cut almost in half, with exposure to only Hong Kong/
China and India. Incrementally, that money has been shifted into Eastern
Europe, Africa, and the Middle East, which among them now represent 38% of the
Fund's emerging market holdings. Favored markets there are Hungary, Portugal,
and Egypt.
Outlook
Our overall outlook for 1998 is one of moderation. We expect global inflation
to remain low. The currency crisis in Southeast Asia should slow growth in
that region and result in excess capacity for the next two to three years,
which could have a spillover effect on the rest of the world. This means that
inflation and interest rates should stay low, supporting current valuation
levels. While earnings growth is likely to slow in most major markets,
including the United States, growth could actually accelerate in a number of
continental European countries. Given lower valuation levels in Europe, this
anticipated growth acceleration has provided us with incrementally better
opportunities there. In Japan, while valuation levels have come down (the
market is now 20% cheaper than the United States based upon cash flow and on a
par with Europe), the problem remains a lack of growth.
In the emerging markets, it is difficult to predict an end to recent
volatility. However, with valuations back to levels last seen in 1994, there
are a number of individual markets that we believe should do well in 1998. We
feel the long-term case for emerging markets remains intact.
Respectfully,
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
DAVID R. MANNHEIM JOINED MFS IN 1988 AS A RESEARCH SPECIALIST AND WAS
NAMED INVESTMENT OFFICER IN 1990, ASSISTANT VICE PRESIDENT --
INVESTMENTS IN 1991, VICE PRESIDENT -- INVESTMENTS IN 1992, AND SENIOR
VICE PRESIDENT IN 1997. A GRADUATE OF AMHERST COLLEGE AND THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT, HE HAS
MANAGED MFS(R) INTERNATIONAL GROWTH FUND SINCE SEPTEMBER 1997.
<PAGE>
FUND FACTS
NOTE: THE FUND CHANGED ITS NAME FROM MFS(R)/FOREIGN & COLONIAL
INTERNATIONAL GROWTH FUND TO MFS INTERNATIONAL GROWTH FUND AS OF
SEPTEMBER 8, 1997.
OBJECTIVE: THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL
APPRECIATION.
COMMENCEMENT OF INVESTMENT OPERATIONS: OCTOBER 24, 1995
CLASS INCEPTION: CLASS A OCTOBER 24, 1995
CLASS B OCTOBER 24, 1995
CLASS C JULY 1, 1996
CLASS I JANUARY 2, 1997
SIZE: $115.4 MILLION NET ASSETS AS OF NOVEMBER 30, 1997
PERFORMANCE SUMMARY
Because mutual funds like MFS International Growth Fund are designed for
investors with long-term goals, we have provided cumulative results as well as
the average annual total returns for Class A, Class B, Class C, and Class I
shares for the applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF NOVEMBER 30, 1997
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return -4.85% +0.55% +8.30%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +0.55% +3.86%
- -------------------------------------------------------------------------------
SEC Results -- -4.26% +1.47%
- -------------------------------------------------------------------------------
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return -5.05% +0.09% +7.09%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +0.09% +3.31%
- -------------------------------------------------------------------------------
SEC Results -- -3.89% +1.93%
- -------------------------------------------------------------------------------
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return -5.07% +0.14% +7.35%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +0.14% +3.43%
- -------------------------------------------------------------------------------
SEC Results -- -0.85% +3.43%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return -4.60% +0.98% +8.76%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +0.98% +4.07%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
October 24, 1995, through November 30, 1997.
All results are historical and assume the reinvestment of dividends and
capital gains. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results.
Class A share SEC results include the maximum 4.75% sales charge. Class B
share SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%.
Class C shares have no initial sales charge but, along with Class B shares,
have higher annual fees and expenses than Class A shares. Class C share
purchases are subject to a 1% CDSC if redeemed within 12 months of purchase.
Class I shares have no sales charge or Rule 12b-1 fees and are only available
to certain institutional investors.
Class C share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class B shares for periods prior to the
inception of Class C shares. Operating expenses attributable to Class C shares
are not significantly different than those of Class B shares. The Class B
share performance included within the Class C share SEC performance has been
adjusted to reflect the CDSC generally applicable to Class C shares rather
than the CDSC generally applicable to Class B shares.
Class I share results include the performance and the operating expenses
(e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
inception of Class I shares. Because operating expenses attributable to Class
A shares are greater than those of Class I shares, Class I share performance
generally would have been higher than Class A share performance. The Class A
share performance included within the Class I share performance has been
adjusted to reflect the fact that Class I shares have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details.
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1997
TOP 10 HOLDINGS (BEGINNING WITH LARGEST POSITION IN PORTFOLIO)
CANADIAN NATIONAL RAILWAY CO. POWERGEN PLC
Canadian railway/transportation British electric utility
company
UNION DES ASSURANCES FEDERALES S.A.
BRITISH AEROSPACE PLC French insurance provider
British defense and aircraft company
SONY CORP.
ASDA GROUP PLC Japanese electronics and entertainment
British food retailer company
HENKEL KGAA CIBA SPECIALTY AG
German consumer products company Swiss chemical manufacturer
AKZO NOBEL N.V. BRITISH PETROLEUM PLC
Diversified Dutch chemical company British oil exploration and production
company
LARGEST SECTORS
Other Sectors 40.3%
Financial Services 15.5%
Miscellaneous 15.2%
(Conglomerates, special products/services)
Utilities and Communications 13.3%
Energy 8.0%
Technology 7.7%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - November 30, 1997
<TABLE>
<CAPTION>
Stocks - 97.5%
- ------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina - 0.9%
Banco de Galicia y Buenos Aires S.A. de C.V., ADR
(Banks and Credit Cos.) 5,137 $ 120,719
Banco Rio De La Plata S.A., ADR (Banks and Credit
Cos.)* 2,500 31,406
Perez Companc S.A. (Oils) 20,159 143,993
Siderar S.A.I.C., ADR (Steel)## 1,740 57,855
Telecom S.A., ADR (Telecommunications) 5,700 174,919
Telefonica de Argentina, ADR (Utilities - Telephone) 3,850 127,291
Transportadora de Gas del Sur S.A., ADR (Pipelines) 6,400 68,400
YPF Sociedad Anonima, ADR (Oils) 8,050 270,178
------------
$ 994,761
- ------------------------------------------------------------------------------------------------------
Australia - 1.6%
QBE Insurance Group Ltd. (Insurance) 422,500 $ 1,866,120
- ------------------------------------------------------------------------------------------------------
Austria - 0.3%
Austria Tabak AG (Consumer Goods and Services)* 8,900 $ 401,709
- ------------------------------------------------------------------------------------------------------
Brazil - 2.9%
Aracruz Celulose S.A. (Paper Products)* 42,000 $ 59,827
Centrais Eletricas Brasile, ADR (Utilities - Electric) 26,665 622,628
Companhia Energetica de Sao Paulo, Preferred
(Utilities - Electric) 1,590,000 103,926
Companhia Energetica S.A., ADR (Utilities - Electric) 4,650 227,850
Companhia Paranaense de Energia - COPEL, Preferred "B"
(Electrical)* 13,900 206,771
Itausa Investimentos Itau S.A. (Conglomerate) 200,000 129,823
Petroleo Brasileiro S.A., Preferred (Oils) 2,910,000 637,514
Telecomunicacoes Brasileiras S.A., ADR
(Telecommunications) 12,900 1,346,437
------------
$ 3,334,776
- ------------------------------------------------------------------------------------------------------
Canada - 3.1%
Canadian National Railway Co. (Railroads) 58,000 $ 2,997,875
Legacy Hotel Real Estate Investment Trust (Real Estate)*## 68,500 476,486
Super Sol Ltd. (Supermarkets) 32,500 91,774
------------
$ 3,566,135
- ------------------------------------------------------------------------------------------------------
Chile - 2.1%
Banco Santander Chile, ADR, "A" (Banks and Credit Cos.) 12,460 $ 193,130
Chilectra S.A., ADR (Utilities - Electric) 52,000 1,300,832
Chilgener S.A. (Utilities - Electric) 4,410 110,250
Compania de Telecom de Chile, ADR (Utilities - Telephone) 12,327 333,600
Distribucion Y Servicio D & S S.A., ADR (Supermarkets)* 4,995 87,100
Enersis S.A., ADR (Utilities - Electric) 8,216 245,453
Laboratorio Chile S.A., ADR (Medical and Health
Technology Services) 4,513 96,465
Santa Isabel S.A., ADR (Stores)##+ 1,106 20,254
------------
$ 2,387,084
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China - 0.3%
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 10,200 $ 224,400
Qingling Motors Co., "H" (Automotive)* 154,000 82,182
------------
$ 306,582
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Colombia - 0.5%
Banco Ganadero S.A., ADR, "B" (Banks and Credit Cos.) 3,550 $ 135,344
Banco Industrial Colombiano, ADR (Banks and Credit Cos.) 13,650 197,925
Cementos Diamante S.A., ADR, "B" (Construction)## 15,009 202,621
------------
$ 535,890
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Egypt - 1.1%
Ahram Beverage Co. (Beverages)*## 5,845 $ 170,966
Commercial International Bank, GDR (Banks and
Credit Cos.)## 12,611 252,220
Egyptian International Pharmaceutical Industries Co.
(Pharmaceuticals)* 1,800 122,715
Madinet Nasar City (Housing Development)* 2,050 138,554
North Cairo Mills (Food Products)* 3,140 106,112
Suez Cement Co., GDR (Building Materials)## 12,898 256,026
Torah for Cement (Construction) 10,500 265,663
------------
$ 1,312,256
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Finland - 1.8%
Huhtamaki Oy Group (Conglomerate) 21,500 $ 919,682
TT Tieto Oy (Computer Software - Systems) 11,300 1,197,820
------------
$ 2,117,502
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France - 4.5%
Elf Aquitaine S.A. (Oils) 7,230 $ 838,917
TOTAL SA, "B" (Oils) 8,900 934,700
TV Francaise (Broadcasting) 14,400 1,270,839
Union des Assurances Federales S.A. (Insurance) 18,000 2,173,965
------------
$ 5,218,421
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Germany - 5.1%
adidas AG (Apparel and Textiles) 9,300 $ 1,310,119
Henkel Kgaa (Chemicals) 42,000 2,580,952
Pfleiderer AG (Construction)* 14,700 258,333
Volkswagen AG (Automotive) 1,100 623,583
Wella AG (Cosmetics)* 1,600 1,151,928
------------
$ 5,924,915
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Greece
Attica Enterprises S.A., GDR (Transportation) 4,425 $ 47,592
- ------------------------------------------------------------------------------------------------------
Hong Kong - 2.4%
Beijing Enterprise (Consumer Goods and Services)* 20,000 $ 52,653
Cheung Kong Holdings Ltd. (Real Estate) 43,000 303,177
China Resources Enterprises (Real Estate Investment Trust) 34,000 73,236
Citic Pacific Ltd. (Conglomerate) 19,000 75,707
Hong Kong & China Gas Ltd. (Gas) 36,000 64,737
HSBC Holdings PLC (Finance)* 5,935 143,196
Hysan Development Co. (Real Estate) 28,000 56,146
Li & Fung Ltd. (Wholesale) 52,000 69,963
New World Development Co. (Real Estate) 52,000 192,735
Peregrine Investment Holdings (Finance) 315,000 309,711
Swire Pacific Air Ltd., "A" (Transportation) 27,500 137,681
Wharf Holdings Ltd. (Real Estate) 170,000 346,387
Wing Hang Bank Ltd. (Banks and Credit Cos.) 358,000 933,232
------------
$ 2,758,561
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Hungary - 1.6%
BorsodChem Rt. (Chemicals)* 1,950 $ 54,262
Graboplast Rt. (Apparel and Textiles) 2,884 143,079
Magyar Tavkozlesi Rt. (Telecommunications)* 36,650 742,163
Magyar Olaj-es Gazipari Rt. (Oils)## 8,900 184,675
Pannonplast Rt. (Chemicals)* 2,390 98,859
Richter Gedeon Rt. (Pharmaceuticals)* 6,400 604,863
------------
$ 1,827,901
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India - 1.5%
Bajaj Auto Ltd. (Automotive) 375 $ 5,932
EIH Ltd. (Restaurants and Lodging) 18,000 189,000
Hindustan Lever Ltd. (Consumer Goods and Services) 7,850 283,620
Hindustan Petroleum Corp. Ltd. (Oil and Gas) 15,200 187,335
Industrial Development Bank of India Ltd. (Banks and
Credit Cos.) 71,400 155,782
Mahanagar Telephone Nigam Ltd. (Telecommunications) 41,000 243,870
State Bank Of India (Banks and Credit Cos.) 39,550 226,000
Tata Engineering and Locomotive Co. Ltd. (Automotive) 800 6,525
Tata Steel Co. (Steel) 44,000 148,571
Videsh Sanchar Nigam Ltd., GDR (Telecommunications)*## 18,655 242,515
------------
$ 1,689,150
- ------------------------------------------------------------------------------------------------------
Indonesia - 1.1%
Gulf Indonesia Resources Ltd. (Oil Services)* 8,700 $ 196,294
PT Indosat (Telecommunications) 228,000 519,037
PT Indosat, ADR (Telecommunications) 24,200 541,475
------------
$ 1,256,806
- ------------------------------------------------------------------------------------------------------
Ireland - 1.4%
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.)* 972,000 $ 1,604,112
- ------------------------------------------------------------------------------------------------------
Israel - 0.3%
ECI Telecom Ltd. (Telecommunications) 1,645 $ 44,723
ICL Israel Chemical (Chemicals) 90,000 119,249
Tadiran Telecommunications Ltd. (Telecommunications)* 2,501 51,583
Teva Pharmaceutical Industries Ltd., ADR
(Pharmaceuticals) 3,800 188,100
------------
$ 403,655
- ------------------------------------------------------------------------------------------------------
Italy - 1.6%
ERG S.p.A. (Oils)* 173,000 $ 656,335
Instituto Nazionale delle Assicurazioni (Insurance) 232,200 404,516
Telecom Italia Mobile S.p.A. (Telecommunications) 203,180 822,574
------------
$ 1,883,425
- ------------------------------------------------------------------------------------------------------
Japan - 15.4%
Canon, Inc. (Office Equipment) 74,000 $ 1,785,927
DDI Corp. (Telecommunications) 166 507,287
Eisai Co. Ltd. (Pharmaceuticals)* 73,000 1,063,940
Fuji Photo Film Co. (Photographic Products) 30,000 1,078,985
Kinki Coca-Cola Bottling Co. (Beverages) 33,000 354,255
Kirin Beverage Corp. (Beverages)* 59,000 892,258
Nippon Broadcasting (Broadcasting) 15,000 752,233
Nitto Denko Corp. (Industrial Goods and Services) 74,000 1,351,042
NTT Data Communications Systems Co. (Telecommunications) 10 485,817
Osaka Sanso Kogyo Ltd. (Chemicals) 180,000 267,983
Rohm Co. (Electronics) 11,000 1,086,037
Sankyo Co. Ltd. (Pharmaceuticals) 40,000 1,275,662
Sony Corp. (Electronics) 25,000 2,135,245
Takeda Chemical Industries (Pharmaceuticals)* 58,000 1,695,189
TDK Corp. (Electronics) 13,000 1,059,395
Tokyo Broadcasting System, Inc. (Broadcasting)* 72,000 1,094,499
Ushio, Inc. (Electronics) 95,000 930,497
------------
$ 17,816,251
- ------------------------------------------------------------------------------------------------------
Malaysia - 1.4%
New Straits Times Press Berhad (Printing and Publishing) 62,000 $ 68,722
Petronas Gas Berhad (Oil and Gas)*## 178,000 439,851
Tanjong PLC (Entertainment) 713,000 1,069,347
------------
$ 1,577,920
- ------------------------------------------------------------------------------------------------------
Mexico - 2.9%
Apasco S.A. (Building Materials) 18,000 $ 106,573
Cemex S.A. (Construction) 59,000 255,427
Cifra S.A. de C.V., "A" (Retail) 66,600 129,951
Cifra S.A. de C.V., "B" (Retail) 10,633 22,822
Corporacion GEO, S.A. de C.V., "B" (Real Estate)* 10,000 60,975
Desc S.A. de C.V., "B" (Conglomerate) 20,000 189,512
Fomento Economico Mexicano S.A., "B" (Beverages) 14,950 123,429
Gruma S.A. (Food Products)* 27,666 112,857
Grupo Carso, "A1" (Conglomerate) 53,800 355,605
Grupo Financiero Banamex, "B" (Finance) 55,000 120,732
Grupo Modelo S.A. de C.V. (Brewery) 14,400 120,293
Grupo Television S.A. de C.V., GDR (Entertainment)* 6,800 251,600
Hylsamex S.A. de C.V., "B" (Steel)* 26,000 168,049
Organiz Soriana, "B" (Real Estate)* 43,000 159,415
Sanluis Corporacion S.A. de C.V. (Conglomerate) 17,600 133,073
Telefonos de Mexico S.A. (Utilities - Telephone) 246,000 618,000
TV Azteca, S.A. de C.V., ADR (Broadcasting)* 18,000 372,375
------------
$ 3,300,688
- ------------------------------------------------------------------------------------------------------
Morocco - 0.5%
Banque Marocaine de Commerce (Banks and Credit Cos.)## 5,300 $ 100,700
Brasserica du Maroc (Consumer Goods and Services)* 530 114,038
Credit Eqdom (Financial Institutions)* 750 89,304
Omnium Nord Africain S.A. (Conglomerate)* 1,500 133,173
Societe Nationale d'Investissement (Conglomerate)* 1,350 118,446
------------
$ 555,661
- ------------------------------------------------------------------------------------------------------
Netherlands - 6.2%
Akzo Nobel N.V. (Chemicals) 14,000 $ 2,462,715
Benckiser (Consumer Goods and Services)* 14,200 498,722
IHC Caland N.V. (Transportation) 12,700 676,728
Koninklijke Ten Cate (Conglomerate) 34,800 1,076,884
Royal Dutch Petroleum Co. (Oils) 27,400 1,426,940
Vendex International N.V. (Retail) 19,000 992,352
------------
$ 7,134,341
- ------------------------------------------------------------------------------------------------------
Peru - 1.6%
Alicorp S.A. (Consumer Goods and Services)* 116,000 $ 88,706
Compania de Minas Buenaventura S.A. (Mining) 22,057 136,234
CPT Telefonica del Peru S.A., "B" (Utilities - Telephone) 200,580 417,383
Credicorp Ltd. Holdings Co. (Conglomerate) 11,828 215,861
Luz del Sur S.A. (Utilities - Electric)* 153,600 189,177
Telefonica del Peru S.A., ADR (Telecommunications) 36,500 766,500
------------
$ 1,813,861
- ------------------------------------------------------------------------------------------------------
Poland - 0.7%
Agros Holdings S.A. (Consumer Goods and Services) 6,100 $ 108,713
Bank Handlowy Warszawie S.A., GDR (Banks and
Credit Cos.)*## 10,330 113,630
Bank Handlowy Warszawie S.A. (Banks and Credit Cos.)*+ 3,570 41,911
Bank Slaski S.A. w Katowicach (Banks and Credit Cos.) 1,510 76,888
Bydgoska Fabryka Kabli S.A. (Electrical Equipment)* 12,426 100,181
Elektrim Spolka Akcyjna S.A. (Electrical Equipment) 30,140 289,890
Exbud S.A. (Construction) 7,400 62,801
KGHM Polska Miedz S.A., GDR (Metals and Minerals)*## 8,700 69,600
------------
$ 863,614
- ------------------------------------------------------------------------------------------------------
Portugal - 4.5%
Banco Espirito Santo e Comercial de Lisboa S.A.
(Banks and Credit Cos.) 42,900 $ 1,207,240
Banco Totta E Acores (Banks and Credit Cos.) 71,400 1,347,693
Cimentos de Portugal S.A. (Building Materials) 7,726 195,756
Mota e Companhia S.A. (Construction)* 4,700 74,337
Portugal Telecom S.A. (Utilities - Telephone) 16,700 769,500
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais, S.A. (Finance) 3,400 127,125
Telecel - Comunicacaoes Pessoais S.A. (Telecommunications)* 16,600 1,520,568
------------
$ 5,242,219
- ------------------------------------------------------------------------------------------------------
Russia - 0.9%
Lukoil Oil Co., ADR (Oils)* 9,650 $ 773,206
Rostelecom (Telecommunications)*## 8 210,000
------------
$ 983,206
- ------------------------------------------------------------------------------------------------------
Singapore - 1.4%
Hong Leong Finance Ltd. (Finance)+ 320,000 $ 446,511
Mandarin Oriental International Ltd. (Restaurants and
Lodgings) 688,000 481,600
Overseas Union Bank (Finance)* 164,000 644,249
------------
$ 1,572,360
- ------------------------------------------------------------------------------------------------------
South Africa - 1.0%
Dimension Data Holdings Ltd. (Financial Institutions)* 31,210 $ 134,858
JD Group Ltd. (Stores)* 8,600 59,103
Liberty Life Association of Africa Ltd. (Insurance) 9,350 236,636
Nedcor Ltd. (Banks and Credit Cos.)* 8,939 202,323
Real Africa Holdings Ltd. (Conglomerate)* 25,400 52,263
Sasol Ltd. (Oils)* 14,200 143,023
South African Breweries Ltd. (Brewery)* 11,050 270,566
------------
$ 1,098,772
- ------------------------------------------------------------------------------------------------------
Spain - 2.1%
Acerinox S.A. (Iron and Steel) 7,200 $ 1,124,925
Repsol S.A. (Oils) 31,000 1,340,776
------------
$ 2,465,701
- ------------------------------------------------------------------------------------------------------
Sweden - 4.3%
Astra AB (Pharmaceuticals) 110,000 $ 1,838,083
Skandia Forsakrings AB (Insurance) 29,000 1,528,886
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 63,000 1,603,562
------------
$ 4,970,531
- ------------------------------------------------------------------------------------------------------
Switzerland - 3.1%
Ciba Specialty AG (Chemicals)* 18,900 $ 2,011,273
Novartis AG (Pharmaceuticals) 980 1,565,526
------------
$ 3,576,799
- ------------------------------------------------------------------------------------------------------
United Kingdom - 16.5%
ASDA Group PLC (Supermarkets) 1,039,000 $ 2,795,108
Avis Europe PLC (Auto Rental)## 367,000 951,764
British Aerospace PLC (Aerospace and Defense) 106,000 2,884,626
British Petroleum PLC (Oils) 139,025 1,896,357
Carlton Communicatons PLC (Broadcasting) 221,640 1,692,652
Corporate Services Group PLC (Business Services) 257,000 895,872
Grand Metropolitan PLC (Food and Beverage Products) 120,000 1,089,212
Kwik-Fit Holdings PLC (Automotive Repair Centers) 238,000 1,310,590
Lloyds TSB Group PLC (Banks and Credit Cos.) 134,000 1,523,179
PowerGen PLC (Utilities - Electric) 191,000 2,458,969
Tomkins PLC (Conglomerate) 309,700 1,569,820
------------
$ 19,068,149
- ------------------------------------------------------------------------------------------------------
Venezuela - 0.9%
Compania Anonima Nacional Telefonos de Venezuela, ADR
(Telecommunications) 26,800 $ 1,058,600
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $111,452,055) $112,536,026
- ------------------------------------------------------------------------------------------------------
Short-Term Obligation - 1.7%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------------------------------
General Electric Capital Corp., due 12/01/97, at
Amortized Cost $1,945 $ 1,945,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $113,397,055) $114,481,026
Other Assets, Less Liabilities - 0.8% 967,139
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $115,448,165
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------
NOVEMBER 30, 1997
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $113,397,055) $114,481,026
Foreign currency, at value (identified cost, $132,795) 130,157
Net receivable for forward foreign currency exchange
contracts sold 2,022,588
Receivable for Fund shares sold 153,995
Receivable for investments sold 753,598
Interest and dividends receivable 234,956
Deferred organization expenses 16,514
------------
Total assets $117,792,834
------------
Liabilities:
Cash overdraft $ 375,696
Payable for Fund shares reacquired 113,481
Payable for investments purchased 443,727
Net payable for forward foreign currency exchange
contracts purchased 1,214,134
Payable to affiliates -
Management fee 12,266
Shareholder servicing agent fee 1,636
Distribution fee 64,164
Accrued expenses and other liabilities 119,565
------------
Total liabilities $ 2,344,669
------------
Net assets $115,448,165
============
Net assets consist of:
Paid-in capital $113,294,058
Unrealized appreciation on investments of assets and
liabilities in foreign currencies 1,884,671
Accumulated undistributed net realized gain on
investments and foreign currency transactions 1,421,655
Accumulated net investment loss (1,152,219)
------------
Total $115,448,165
============
Shares of beneficial interest outstanding 7,203,345
=========
Class A shares:
Net asset value per share
(net assets of $54,076,151 / 3,361,101 shares of
beneficial interest outstanding) $16.09
======
Offering price per share (100 / 95.25) of net asset value
per share $16.89
======
Class B shares:
Net asset value and offering price per share
(net assets of $58,397,366 / 3,655,451 shares of
beneficial interest outstanding) $15.98
======
Class C shares:
Net asset value and offering price per share
(net assets of $2,890,337 / 181,578 shares of
beneficial interest outstanding) $15.92
======
Class I shares:
Net asset value, offering price, and redemption price per
share (net assets of $84,311 / 5,215 shares of beneficial
interest outstanding) $16.17
------
On sales of $100,000 or more, the offering price of Class A
shares is reduced. A contingent deferred sales charge may be
imposed on redemptions of Class A, Class B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
SIX MONTHS ENDED NOVEMBER 30, 1997
- -------------------------------------------------------------------------------
Net Investment income:
Income -
Interest $ 216,207
Dividends 1,034,834
Foreign taxes withheld (117,280)
------------
Total investment income $ 1,133,761
------------
Expenses -
Management fee $ 621,528
Trustees' compensation 12,613
Shareholder servicing agent fee 82,870
Distribution and service fee (Class A) 146,519
Distribution and service fee (Class B) 328,660
Distribution and service fee (Class C) 15,577
Administration expense 9,562
Custodian fee 61,387
Printing 51,436
Auditing fees 29,405
Postage 13,621
Legal fees 266
Amortization of organization expenses 3,041
Miscellaneous 88,630
------------
Total expenses $ 1,465,115
Fees paid indirectly (6,655)
------------
Net expenses $ 1,458,460
------------
Net investment loss $ (324,699)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 5,285,898
Foreign currency transactions 916,046
------------
Net realized gain on investments and foreign currency
transactions $ 6,201,944
------------
Change in unrealized appreciation -
Investments $(11,500,049)
Translation of assets and liabilities in foreign currencies (290,488)
------------
Net unrealized loss on investments and foreign currency
translation $(11,790,537)
------------
Net realized and unrealized loss on investments and
foreign currency $ (5,588,593)
------------
Decrease in net assets from operations $ (5,913,292)
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MAY 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (324,699) $ (169,937)
Net realized gain (loss) on investments and foreign
currency transactions 6,201,944 (4,938,715)
Net unrealized gain (loss) on investments and foreign
currency translation (11,790,537) 8,223,128
------------ ------------
Increase (decrease) in net assets from operations $ (5,913,292) $ 3,114,476
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A)
$ -- $ (469,661)
From net realized gain on investments and foreign
currency transactions (Class B) -- (305,586)
From net realized gain on investments and foreign
currency transactions (Class C) -- (14,849)
------------ ------------
Total distributions declared to shareholders $ -- $ (790,096)
------------ ------------
Fund share (principal) transactions -
Net increase in net assets from Fund share transactions $ (888,444) $ 35,178,737
------------ ------------
Total increase (decrease) in net assets $ (6,801,736) $ 37,503,117
Net assets:
At beginning of period 122,249,901 84,746,784
------------ ------------
At end of period (including accumulated net investment
loss of $1,152,219 and $367,494, respectively) $115,448,165 $122,249,901
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, 1997 -------------------------------
(UNAUDITED) 1997 1996*
- ----------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.90 $16.71 $15.00
------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $ 0.02 $ 0.03
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.80) 0.32 1.69
------ ------ ------
Total from investment operations $(0.81) $ 0.34 $ 1.72
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.01)
From net realized gain on investments and foreign currency
transactions -- (0.15) --
------ ------ ------
Total distributions declared to shareholders $ -- $(0.15) $(0.01)
------ ------ ------
Net asset value - end of period $16.09 $16.90 $16.71
====== ====== ======
Total return(+) (4.85)%++ 2.13% 11.43%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.03%+ 1.99% 2.24%+
Net investment income (loss) (0.24)%+ 0.13% 0.24%+
Portfolio turnover 185% 53% 11%
Average commission rate $0.0089 $0.0069 $0.0107
Net assets at end of period (000 omitted) $54,076 $56,810 $41,483
* For the period from the commencement of investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are 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.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, 1997 -------------------------------
(UNAUDITED) 1997 1996*
- ----------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.82 $16.66 $15.00
------ ------ ------
Income from investment operations# -
Net investment loss $(0.08) $(0.07) $(0.03)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (0.76) 0.31 1.69
------ ------ ------
Total from investment operations $(0.84) $ 0.24 $ 1.66
------ ------ ------
Less distributions declared to shareholders from net
realized gain on investments and foreign currency transactions $ -- $(0.08) $ --
------ ------ ------
Net asset value - end of period $15.98 $16.82 $16.66
====== ====== ======
Total return (5.05)%++ 1.56% 11.07%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.53%+ 2.53% 2.85%+
Net investment loss (0.74)%+ (0.42)% (0.31)%+
Portfolio turnover 185% 53% 11%
Average commission rate $0.0089 $0.0069 $0.0107
Net assets at end of period (000 omitted) $58,397 $62,958 $43,264
* For the period from the commencement of investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 PERIOD ENDED
(UNAUDITED) MAY 31, 1997**
- ----------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.76 $16.83
------ ------
Income from investment operations# -
Net investment loss $(0.09) $(0.04)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.75) 0.15
------ ------
Total from investment operations $(0.84) $ 0.11
------ ------
Less distributions declared to shareholders from net realized gain
on investments and foreign currency transactions $ -- $(0.18)
------ ------
Net asset value - end of period $15.92 $16.76
====== ======
Total return (5.07)%++ 0.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.53%+ 2.50%+
Net investment loss (0.83)%+ (0.27)%+
Portfolio turnover 185% 53%
Average commission rate $0.0089 $0.0069
Net assets, end of period (000 omitted) $ 2,890 $ 2,397
** For the period from the inception of Class C shares, July 1, 1996, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 PERIOD ENDED
(UNAUDITED) MAY 31, 1997***
- -----------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.94 $15.90
------ ------
Income from investment operations# -
Net investment income $ 0.01 $ 0.11
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.79) 0.93
------ ------
Total from investment operations $(0.78) $ 1.04
------ ------
Net asset value - end of period $16.16 $16.94
====== ======
Total return (4.60)%++ 6.54%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.53%+ 1.52%+
Net investment income 0.24%+ 1.40%+
Portfolio turnover 185% 53%
Average commission rate $0.0089 $0.0069
Net assets, end of period (000 omitted) $ 84 $ 84
*** For the period from the inception of Class I shares, January 2, 1997, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS International Growth Fund (the Fund) is 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.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investments in foreign securities are vulnerable to the effects of changes in
the relative values of the local currency and the U.S. dollar and to the
effects of changes in each country's legal, political, and economic
environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Non-U.S. dollar
denominated short-term obligations are valued at amortized cost as calculated
in the foreign currency and translated into U.S. dollars at the closing daily
exchange rate. Securities for which there are no such quotations or valuations
are valued at fair value as determined in good faith by or at the direction of
the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that result from fluctuations in foreign currency
exchange rates is not separately disclosed.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its 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 Fund
operations.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Fund will enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, the Fund may enter into contracts to deliver
or receive foreign currency it will receive from or require for its normal
investment activities. The Fund may also use contracts in a manner intended to
protect foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on foreign currency transactions.
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 is amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividends received in cash are recorded on the ex-dividend date. Dividend and
interest payments received in additional securities are recorded on the ex-
dividend or ex-interest date in an amount equal to the value of the security
on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement which measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of
net investment income and net realized gain reported on these financial
statements may differ from that reported on the Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV. Distributions to shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as 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.
Capital gains taxes have been provided on unrealized and realized gains from
securities transactions in countries where such a capital gains tax is
applicable. Realized and unrealized gain is reported net of any capital gains
tax in the Statement of Operations.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares. The classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the 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 - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate
of .975% of average daily net assets.
Administrator - Effective March 1, 1997, the Fund has an administrative
services agreement with MFS to provide the Fund with certain financial, legal,
and other administrative services. As a partial reimbursement for the cost of
providing these services, the Fund pays MFS an administrative fee at the
following annual percentages of the Fund's average daily net assets, provided
that the administrative fee is not assessed on Fund assets that exceed $3
billion:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $3,527
for the six months ended November 30, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$101,528 for the six months ended November 30, 1997, as its portion of the
sales charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.50%
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 $14,113 for the six months ended November 30, 1997. Fees incurred
under the distribution plan during the six months ended November 30, 1997,
were 0.50% of average daily net assets attributable to Class A shares on an
annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be additional consideration for
services rendered by the dealer with respect to Class B and Class C shares. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $9,696 and $136 for Class B and Class C shares, respectively,
for the six months ended November 30, 1997. Fees incurred under the distribution
plans during the six months ended November 30, 1997, were 1.00% and 1.00% of
average daily net assets attributable to Class B and Class C shares on an
annualized basis, respectively.
Purchases over $1 million of Class A shares and certain purchases by retirement
plans are subject to a contingent deferred sales charge in the event of a
shareholder redemption within 12 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. A contingent
deferred sales charge is imposed on shareholder redemptions of Class C shares in
the event of a shareholder redemption within twelve months of purchase. MFD
receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the six months ended November 30, 1997, were $1,262,
$94,835, and $55,476 for Class A, Class B, and Class C shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the Fund's average daily net assets at an effective annual
rate of 0.13%. Prior to January 1, 1997, the fee was calculated as a
percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15%, up to 0.22% and up to 0.15% attributable
to Class A, Class B, and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$217,084,947 and $218,815,183, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $113,397,055
------------
Gross unrealized appreciation $ 8,791,297
Gross unrealized depreciation (7,707,326)
------------
Net unrealized appreciation $ 1,083,971
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED NOVEMBER 30, 1997 YEAR ENDED MAY 31, 1997
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,437,393 $ 24,630,724 3,428,135 $ 55,431,605
Shares issued to shareholders in -- --
reinvestment of distributions
36,196 576,007
Shares Transferred to Class I -- --
(1,308) (20,795)
Shares reacquired (1,437,446) (24,736,999) (2,584,373) (41,727,368)
--------- ------------ --------- ------------
Net increase (53) $ (106,275) 878,650 $ 14,259,449
========= ============ ========= ============
<CAPTION>
Class B Shares
SIX MONTHS ENDED NOVEMBER 30, 1997 YEAR ENDED MAY 31, 1997
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,057,694 $ 35,401,445 4,424,042 $ 71,166,884
Shares issued to shareholders in -- --
reinvestment of distributions
15,231 240,644
Shares reacquired (2,144,238) (36,869,974) (3,294,305) (52,883,159)
--------- ------------ --------- ------------
Net increase (decrease) (86,544) $ (1,468,529) 1,144,968 $ 18,524,369
========= ============ ========= ============
<CAPTION>
Class C Shares
SIX MONTHS ENDED NOVEMBER 30, 1997 YEAR ENDED MAY 31, 1997
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 110,178 $ 1,869,099 174,418 $ 2,818,920
Shares issued to shareholders in
reinvestment of distributions -- -- 852 13,410
Shares reacquired (71,594) (1,186,950) (32,276) (516,669)
--------- ------------ --------- ------------
Net increase 38,584 $ 682,149 142,994 $ 2,315,661
========= ============ ========= ============
<CAPTION>
Class I Shares
SIX MONTHS ENDED NOVEMBER 30, 1997 PERIOD ENDED MAY 31, 1997*
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 305 $ 5,404 3,673 $ 58,463
Shares transferred from Class A -- -- 1,308 20,795
Shares reacquired (71) (1,193) -- --
--------- ------------ --------- ------------
Net increase 234 $ 4,211 4,981 $ 79,258
========= ============ ========= ============
*For the period from the inception of Class I shares, January 2, 1997 through May 31, 1997.
</TABLE>
(7) Line of Credit
The Fund and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the six months ended November 30, 1997, was $372.
(8) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments are forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
the Fund has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 3/16/98 FRF 36,200,000 6,294,229 6,170,290 $ 123,939
3/16/98 JPY 1,580,000,000 14,486,509 12,587,860 1,898,649
---------- ---------- -----------
20,780,738 18,758,150 $ 2,022,588
========== ========== ===========
Purchases
3/16/98 FRF 36,200,000 5,919,095 6,170,290 $ 251,195
3/16/98 JPY 1,580,000,000 14,053,189 12,587,860 (1,465,329)
---------- ---------- -----------
19,972,284 18,758,150 $(1,214,134)
========== ========== ===========
</TABLE>
At November 30, 1997, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.
Abbreviations have been used throughout the report to indicate amounts shown
in currencies other than the U.S. Dollar. A list of abbreviations is shown
below.
FRF = French Francs JPY = Japanese Yen
(9) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At November 30,
1997, the Fund owned the following restricted securities (constituting 0.4% of
net assets) which may not be publicly sold without registration under the
Securities Act of 1933. The Fund does not have the right to demand that such
securities be registered. The value of these securities is determined by
valuations supplied by a pricing service or brokers or, if not available, in
good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
DATE OF SHARE/PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank Handlowy Warszawie S.A. 7/3/97 3,570 $ 44,724 $ 41,911
Hong Leong Finance Ltd. 9/11/97 320,000 419,625 446,511
Santa Isabel S.A. 10/2/97 1,106 $23,534 20,254
--------
$508,676
========
</TABLE>
--------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) International Growth Fund
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and State Street Bank and Trust Company
President; Chairman and Director,
Massachusetts Financial Services INVESTOR INFORMATION
Company For MFS stock and bond market outlooks,
call toll free: 1-800-637-4458 anytime
Richard B. Bailey* - Private from a touch-tone telephone.
Investor; Former Chairman and
Director (until 1991), Massachusetts For information on MFS mutual funds,
Financial Services Company call your financial adviser or, for an
information kit, call toll free:
Peter G. Harwood - Private Investor 1-800-637-2929 any business day from 9
a.m. to 5 p.m. Eastern time (or leave a
J. Atwood Ives - Chairman and Chief message anytime).
Executive Officer, Eastern
Enterprises INVESTOR SERVICE
MFS Service Center, Inc.
Lawrence T. Perera - Partner, P.O. Box 2281
Hemenway & Barnes Boston, MA 02107-9906
William J. Poorvu - Adjunct For general information, call toll free:
Professor, Harvard University 1-800-225-2606 any business day from 8
Graduate School of Business a.m. to 8 p.m. Eastern time.
Administration
For service to speech- or
Charles W. Schmidt - Private Investor hearing-impaired, call toll free:
1-800-637-6576 any business day from 9
Arnold D. Scott* - Senior Executive a.m. to 5 p.m. Eastern time. (To use
Vice President, Director and this service, your phone must be
Secretary, Massachusetts Financial equipped with a Telecommunications
Services Company Device for the Deaf.)
Jeffrey L. Shames* - President and For share prices, account balances, and
Director, Massachusetts Financial exchanges, call toll free:
Services Company 1-800-MFS-TALK (1-800-637-8255) anytime
from a touch-tone telephone.
Elaine R. Smith - Independent
Consultant WORLD WIDE WEB
www.mfs.com
David B. Stone - Chairman, North
American Management Corp.
(investment advisers) [Dalbar Logo] For the fourth year
in a row, MFS earned
INVESTMENT ADVISER a #1 ranking in the DALBAR, Inc.
Massachusetts Financial Services Broker/Dealer Survey, Main Office
Company Operations Service Quality Category. The
500 Boylston Street firm achieved a 3.42 overall score on a
Boston, MA 02116-3741 scale of 1 to 4 in the 1997 survey. A
total of 111 firms responded, offering
DISTRIBUTOR input on the quality of service they
MFS Fund Distributors, Inc. received from 29 mutual fund companies
500 Boylston Street nationwide. The survey contained
Boston, MA 02116-3741 questions about service quality in 11
categories, including "knowledge of
PORTFOLIO MANAGER operations contact," "keeping you
David R. Mannheim* informed," and "ease of doing business"
with the firm.
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
<PAGE>
-------------
MFS(R) INTERNATIONAL BULK RATE
GROWTH FUND U.S. POSTAGE
PAID
MFS
-------------
500 Boylston Street
Boston, MA 02116-3741
[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[DALBAR
LOGO]
TOP-RATED SERVICE
(c)1998 MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116-3741
MIF-3 1/98 25M 86/286/386/886
