<PAGE>
[LOGO] M F S(SM) Semiannual Report
INVESTMENT MANAGEMENT November 30, 1997
MFS(R) INTERNATIONAL GROWTH AND INCOME FUND
(formerly MFS(R)/Foreign & Colonial International Growth and Income Fund)
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Portfolio Manager's Overview .............................................. 2
Portfolio Manager's Profile ............................................... 3
Fund Facts ................................................................ 4
Performance Summary ....................................................... 4
Portfolio Concentration ................................................... 6
Portfolio of Investments .................................................. 7
Financial Statements ...................................................... 11
Notes to Financial Statements ............................................. 18
Trustees and Officers ..................................................... 25
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 0.86%, CLASS B SHARES 0.68%,
CLASS C SHARES 0.62%, AND CLASS I SHARES 0.86%. (SEE PERFORMANCE SUMMARY
FOR MORE INFORMATION.)
o SIGNIFICANT CHANGES HAVE OCCURRED IN THE PORTFOLIO IN THE PAST SIX MONTHS.
THE FUND IS NOW ALMOST ENTIRELY INVESTED IN EQUITIES, AND IT IS MORE
CONCENTRATED, WITH THE TOP FIVE SECTORS NOW ACCOUNTING FOR ABOUT 59% OF
ASSETS, NEARLY DOUBLE THE LEVEL OF SIX MONTHS AGO.
o ANOTHER IMPORTANT CHANGE WAS THE REDUCTION OF OUR JAPANESE AND OTHER FAR
EAST HOLDINGS, A MOVE THAT, FORTUNATELY, TOOK PLACE BEFORE THE RECENT WAVE
OF SELLING.
o HOLDINGS IN EUROPE HAVE BEEN INCREASED, WITH THE UNITED KINGDOM THE SINGLE
LARGEST MARKET AT 25% OF THE PORTFOLIO, WHILE EMERGING MARKETS REPRESENT
JUST 3% OF THE PORTFOLIO.
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 Frederick J. Simmons]
Frederick J. Simmons
Dear Shareholders:
For the six months ended November 30, 1997, Class A shares of the Fund
provided a total return of 0.86%, Class B shares 0.68%, Class C shares 0.62%,
and Class I shares 0.86%. These returns assume the reinvestment of
distributions but exclude the effects of any sales charges, and they compare
to a -2.15% return for the Lipper International Funds Index and a -2.21%
return for a blend (70% and 30%, respectively) of the Morgan Stanley Capital
International (MSCI) Europe, Australia, Far East (EAFE) Index and the J.P.
Morgan Global Government Bond Index (the Morgan Index). The EAFE Index is an
unmanaged total return index which measures the performance of 20 developed-
country global stock markets, excluding U.S., U.K. and South African mines,
while the Morgan Index is an unmanaged index of bonds issued by 13 countries,
excluding the United States, with remaining maturities of at least one year.
Significant changes have occurred in the portfolio in the past six months.
First of all, the Fund is now almost entirely invested in equities. Second,
the Fund is much more concentrated, with the top five sectors now accounting
for about 59% of assets, nearly double the level of six months ago. Utilities
and communications, along with consumer staples, constitute the largest
sectors, each with 13.2% of assets, followed by financial services at 11.8%,
energy at 11%, and retailing at 9.5%. The top 10 holdings now account for
26% of assets, versus 13% six months ago. These tend to be large companies
with steady growth.
Another important change has been the reduction of our Japanese and other Far
East holdings, a move that, fortunately, took place before the recent wave of
selling. Holdings in Europe, meanwhile, have been increased, with the United
Kingdom the single largest market, at approximately 25% of the portfolio.
Emerging markets represent just 3% of the portfolio. The Fund has less
emphasis on cyclical stocks and more on steady growth stocks, a position that
we believe should be beneficial in the uncertain period ahead.
The Fund is run on a bottom-up basis; that is, we approach each stock as
a potential purchase candidate, as opposed to a top-down approach that
develops an overview of broad economies and markets, then follows through with
stock selection. In fact, both approaches use a little of each method,
but the difference in emphasis is important, and we believe in the long-term
benefits of our approach. We do not expect such a major transformation of the
portfolio to be repeated anytime soon.
Respectfully,
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
FREDERICK J. SIMMONS JOINED MFS IN 1971 AS AN INVESTMENT OFFICER IN THE
RESEARCH DEPARTMENT AND WAS NAMED ASSISTANT VICE PRESIDENT --
INVESTMENTS IN 1974, VICE PRESIDENT -- INVESTMENTS IN 1975, AND SENIOR
VICE PRESIDENT IN 1983. MR. SIMMONS GRADUATED WITH HONORS FROM TUFTS
UNIVERSITY AND THE AMOS TUCK SCHOOL OF BUSINESS ADMINISTRATION OF
DARTMOUTH COLLEGE. HE IS A CHARTERED FINANCIAL ANALYST, A MEMBER OF THE
BOSTON SECURITY ANALYSTS SOCIETY, INC., AND PAST PRESIDENT OF THE
ELECTRONIC ANALYSTS OF BOSTON. MR. SIMMONS BECAME THE MANAGER OF MFS(R)
INTERNATIONAL GROWTH AND INCOME FUND IN 1997.
<PAGE>
FUND FACTS
NOTE: THE FUND CHANGED ITS NAME FROM MFS(R)/FOREIGN & COLONIAL INTERNATIONAL
GROWTH AND INCOME FUND TO MFS INTERNATIONAL GROWTH AND INCOME FUND AS OF
SEPTEMBER 8, 1997.
OBJECTIVE: THE FUND SEEKS CAPITAL APPRECIATION AND CURRENT
INCOME BY INVESTING PRIMARILY IN EQUITY SECURITIES
OF ISSUERS WHOSE PRINCIPAL ACTIVITIES ARE OUTSIDE
THE UNITED STATES.
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: $28.8 MILLION NET ASSETS AS OF NOVEMBER 30, 1997
PERFORMANCE SUMMARY
Because mutual funds like MFS International Growth and Income 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 +0.86% +2.17% +10.72%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +2.17% + 4.96%
- --------------------------------------------------------------------------------
SEC Results -- -2.69% + 2.55%
- --------------------------------------------------------------------------------
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- --------------------------------------------------------------------------------
Cumulative Total Return +0.68% +1.68% + 9.59%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +1.68% + 4.45%
- --------------------------------------------------------------------------------
SEC Results -- +2.32% + 3.08%
- --------------------------------------------------------------------------------
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- --------------------------------------------------------------------------------
Cumulative Total Return +0.62% +1.64% + 9.81%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +1.64% + 4.55%
- --------------------------------------------------------------------------------
SEC Results -- +0.65% + 4.55%
- --------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- --------------------------------------------------------------------------------
Cumulative Total Return +0.86% +2.17% +10.72%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +2.17% + 4.96%
- --------------------------------------------------------------------------------
*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 THE LARGEST POSITION IN THE PORTFOLIO)
BRITISH AEROSPACE PLC QBE INSURANCE GROUP LTD.
British defense and aircraft Australian commercial insurance
company company
TOMKINS PLC NOVARTIS AG
British industrial conglomerate Swiss pharmaceutical company
CANADIAN NATIONAL RAILWAY CO. POWERGEN PLC
Canadian railway/transportation company British electric utility
ASDA GROUP PLC IBERDROLA
British food retailer Spanish electric utility
BRITISH PETROLEUM PLC CANON, INC.
British oil exploration and production Japanese office equipment and
company imaging company
LARGEST EQUITY SECTORS
Other Sectors 36.1%
Utilities and Communications 13.2%
Consumer Staples 13.2%
Financial Services 11.8%
Energy 11.0%
Retailing 9.5%
Miscellaneous
(Conglomerates, special products/services) 5.2%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - November 30, 1997
<TABLE>
Stocks - 97.7%
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Stocks
Australia - 6.4%
Australia & New Zealand Banking Group (Banks and
Credit Companies)* 56,000 $ 384,178
Fosters Brewing Group (Beverages) 244,200 452,196
QBE Insurance Group Ltd. (Insurance) 165,625 731,541
Seven Network Ltd. (Entertainment) 76,400 279,292
-----------
$ 1,847,207
- ------------------------------------------------------------------------------------------------------
Austria - 0.4%
Austria Tabak AG (Tobacco)* 2,700 $ 121,867
- ------------------------------------------------------------------------------------------------------
Brazil - 0.9%
Companhia Cervejaria Brahma, ADR (Beverages) 8,600 $ 114,488
Unibanco Uniao De Barncos Bras (Bank and Credit Companies)* 5,300 152,375
-----------
$ 266,863
- ------------------------------------------------------------------------------------------------------
Canada - 4.7%
Canadian National Railway Co. (Railroads) 15,000 $ 775,312
Legacy Hotel Real Estate Investment Trust (Real Estate)* 24,300 169,031
Westcoast Energy Inc. (Utilities - Gas) 18,100 406,119
-----------
$ 1,350,462
- ------------------------------------------------------------------------------------------------------
Chile - 0.4%
Enersis S.A., ADR (Utilities - Electric) 4,200 $ 125,475
- ------------------------------------------------------------------------------------------------------
Finland - 0.6%
Huhtamaki Oy Group (Conglomerate) 4,200 $ 179,659
- ------------------------------------------------------------------------------------------------------
France - 10.4%
Elf Aquitaine S.A. (Oils) 3,900 $ 452,528
Chargeurs S.A. (Apparels and Textiles) 4,100 243,007
Pin Printemps Redo (Retail) 1,200 613,873
Sanofi (Medical and Health Products) 3,200 320,352
Total S.A., ADR (Oils) 9,600 504,600
TV Francaise (Broadcasting) 5,300 467,739
Union des Assurances Federales S.A. (Insurance) 3,200 386,483
-----------
$ 2,988,582
- ------------------------------------------------------------------------------------------------------
Germany - 6.6%
adidas AG (Apparel and Textiles) 4,100 $ 577,579
Henkel Kgaa (Chemicals) 9,200 565,351
Prosieben Media AG (Entertainment)* 4,100 196,633
Volkswagen AG (Automotive) 460 260,771
Wella AG (Cosmetics) 400 287,982
-----------
$ 1,888,316
- ------------------------------------------------------------------------------------------------------
Greece - 0.8%
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 11,000 $ 216,731
- ------------------------------------------------------------------------------------------------------
Hong Kong - 1.3%
Hong Kong Electric Holdings Ltd. (Utilities - Electric) 62,000 $ 209,747
Wharf Holdings Ltd. (Real Estate) 29,000 59,089
Wing Hang Bank Ltd. (Banks and Credit Cos.) 44,000 114,699
-----------
$ 383,535
- ------------------------------------------------------------------------------------------------------
Italy - 4.0%
Eni S.P.A, ADR (Oils) 4,100 $ 238,056
Instituto Nazionale delle Assicurazioni (Insurance) 156,400 272,465
Telecom Italia S.p.A. (Telecommunications)* 84,100 331,474
Telecom Italia S.p.A., Saving Shares (Telecommunications) 144,300 315,693
-----------
$ 1,157,688
- ------------------------------------------------------------------------------------------------------
Japan - 12.6%
Canon, Inc. (Office Equipment) 26,000 $ 627,488
Eisai Co. Ltd. (Pharmaceuticals) 9,000 131,171
Fuji Photo Film Co. (Photographic Products) 3,000 107,898
Kirin Beverage Corp. (Beverages) 27,000 408,322
Nippon Broadcasting (Broadcasting) 5,000 250,744
Osaka Sanso Kogyo Ltd. (Chemicals) 30,000 44,664
Rohm Co. (Electronics) 4,000 394,922
Sony Corp. (Electronics) 7,000 597,869
Takeda Chemical Industries (Pharmaceuticals) 21,000 613,775
Terumo Corp. (Medical Equipment) 12,000 188,058
Tokyo Broadcasting System, Inc. (Broadcasting) 7,000 106,410
Ushio, Inc. (Electronics) 16,000 156,715
-----------
$ 3,628,036
- ------------------------------------------------------------------------------------------------------
Mexico - 0.5%
TV Azteca, SA de C.V., ADR (Broadcasting)* 6,400 $ 132,400
- ------------------------------------------------------------------------------------------------------
Netherlands - 9.3%
Akzo Nobel N.V. (Chemicals) 2,500 $ 439,771
Benckiser (Consumer Goods and Services)* 3,700 129,949
Hunter Douglas N.V., ADR (Consumer Goods and Services)* 7,300 290,545
IHC Caland N.V. (Marine Equipment)* 7,700 410,300
Koninklijke Ahold N.V., ADR (Food/Retail) 12,900 341,850
Philips Electronics N.V. (Electronics) 3,880 256,337
Royal Dutch Petroleum Co., ADR (Oils) 10,900 574,294
Wolters Kluwer N.V. (Publishing)* 1,800 238,291
-----------
$ 2,681,337
- ------------------------------------------------------------------------------------------------------
Peru - 0.6%
Telefonica del Peru S.A., ADR (Telecommunications) 8,100 $ 170,100
- ------------------------------------------------------------------------------------------------------
Portugal - 1.1%
Telecel - Comunicacaoes Pessoais S.A.
(Telecommunications)* 3,400 $ 311,442
- ------------------------------------------------------------------------------------------------------
Singapore - 0.7%
Singapore Press Holdings Ltd. (Publishing) 14,000 $ 191,829
- ------------------------------------------------------------------------------------------------------
Stocks - continued
South Korea - 0.2%
Korea Electric Power Corp. (Utilities - Electric) 5,200 $ 58,692
- ------------------------------------------------------------------------------------------------------
Spain - 4.7%
Acerinox S.A. (Iron and Steel) 1,700 $ 265,607
Iberdrola S.A. (Utilities - Electric) 49,200 628,486
Repsol S.A. (Oils) 10,700 462,784
-----------
$ 1,356,877
- ------------------------------------------------------------------------------------------------------
Sweden - 4.7%
Astra AB (Pharmaceuticals) 26,900 $ 449,495
Skandia Forsakrings AB (Insurance) 10,200 537,746
Telefonaktiebolaget LM Ericsson (Telecommunications) 9,100 367,981
-----------
$ 1,355,222
- ------------------------------------------------------------------------------------------------------
Switzerland - 3.4%
Ciba Specialty AG (Chemicals)* 2,670 $ 284,132
Novartis AG (Pharmaceuticals) 440 702,889
-----------
$ 987,021
- ------------------------------------------------------------------------------------------------------
United Kingdom - 23.4%
ASDA Group PLC (Supermarkets) 279,700 $ 752,446
Avis Europe PLC (Auto Rental)## 114,000 295,643
Bank Of Scotland (Banks and Credit Cos.)* 33,300 282,068
Booker PLC (Food - Wholesale)* 34,500 181,847
British Aerospace PLC (Aerospace and Defense)* 32,100 873,552
British Petroleum PLC, ADR (Oils) 9,000 747,000
Carlton Communicatons PLC (Electronic Media) 17,420 133,036
Compass Group PLC (Food - Catering) 48,700 579,817
Grand Metropolitan PLC (Food and Beverage Products) 39,800 361,255
Kwik-Fit Holdings PLC (Automotive Repair Centers) 86,800 477,980
Lloyds TSB Group PLC (Banks and Credit Cos.)* 24,820 282,129
PowerGen PLC (Utilities - Electric)* 54,500 701,643
Tomkins PLC (Diversified Operations) 163,300 827,742
Williams Holdings (Diversified Operations) 47,600 258,110
-----------
$ 6,754,268
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $27,468,801) $28,153,609
- ------------------------------------------------------------------------------------------------------
Warrants
- ------------------------------------------------------------------------------------------------------
Eaux (Cie General) (Utilities - Water)*
Expiration date 5/2/01 (Identified Cost, $0) 1,150 $ 703
- ------------------------------------------------------------------------------------------------------
Short-Term Obligations - 1.5%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 12/01/97, at Amortized Cost $ 440 $ 440,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $27,908,801) $28,594,312
Other Assets, Less Liabilities - 0.8% 239,275
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $28,833,587
- ------------------------------------------------------------------------------------------------------
* Non-income-producing security.
## SEC Rule 144A restriction.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------
NOVEMBER 30, 1997
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $27,908,801) $28,594,312
Foreign currency, at value (identified cost, $18,428) 18,484
Cash 4,427
Net receivable for forward foreign currency exchange
contracts closed or under master netting arrangements 173,108
Net receivable for forward foreign currency exchange
contracts to sell 28,164
Receivable for Fund shares sold 17,381
Receivable for investments sold 51,145
Interest and dividends receivable 46,454
Deferred organization expenses 15,780
-----------
Total assets $28,949,255
-----------
Liabilities:
Payable for Fund shares reacquired $ 1,012
Net payable for forward foreign currency exchange
contracts to purchase 26,215
Payable to affiliates -
Management fee 3,068
Shareholder servicing agent fee 410
Distribution fee 15,241
Accrued expenses and other liabilities 69,722
-----------
Total liabilities $ 115,668
-----------
Net assets $28,833,587
===========
Net assets consist of:
Paid-in capital $27,062,191
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currency 860,391
Accumulated net realized gain on investments and foreign
currency transactions 1,382,073
Accumulated net investment loss (471,068)
-----------
Total $28,833,587
===========
Shares of beneficial interest outstanding 1,756,766
=========
Class A shares:
Net asset value and redemption price per share (net assets of
$12,622,858 / 766,840 shares of beneficial interest outstanding) $16.46
======
Offering price per share (100 / 95.25 of net asset value
per share) $17.28
======
Class B shares:
Net asset value and offering price per share (net assets of
$15,901,882 / 970,968 shares of beneficial interest outstanding) $16.38
======
Class C shares:
Net asset value and offering price per share (net assets of
$306,976 / 18,844 shares of beneficial interest outstanding) $16.29
======
Class I shares:
Net asset value and offering price per share (net assets of
$1,871 / 113.685 shares of beneficial interest outstanding) $16.46
======
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 $ 84,538
Dividends 233,833
Foreign taxes withheld (30,102)
-----------
Total investment income $ 288,269
-----------
Expenses -
Management fee $ 148,737
Trustees' compensation 3,370
Shareholder servicing agent fee 19,772
Distribution and service fee (Class A) 34,056
Distribution and service fee (Class B) 83,093
Distribution and service fee (Class C) 1,339
Administration expense 2,288
Registration fees 28,908
Printing 15,849
Auditing fees 13,105
Custodian fee 12,717
Postage 4,962
Amortization of organization expenses 2,605
Legal fees 1,019
Miscellaneous 21,262
-----------
Total expenses $ 393,082
Fees paid indirectly (1,239)
-----------
Net expenses $ 391,843
-----------
Net investment income (loss) $ (103,574)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 2,170,951
Written option transactions 2,242
Foreign currency transactions 391,707
-----------
Net realized gain on investments and foreign
currency transactions $ 2,564,900
-----------
Change in unrealized appreciation (depreciation) -
Investments $(1,975,510)
Written options 9,695
Translation of assets and liabilities in
foreign currencies (290,652)
-----------
Net unrealized loss on investments and
foreign currency translation $(2,256,467)
-----------
Net realized and unrealized gain
on investments and foreign currency $ 308,433
-----------
Increase in net assets from operations $ 204,859
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
- ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MAY 31, 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (103,574) $ 123,779
Net realized gain (loss) on investments and foreign
currency transactions 2,564,900 (1,677,592)
Net unrealized gain (loss) on investments and foreign
currency translations (2,256,467) 2,306,629
----------- -----------
Increase in net assets from operations $ 204,859 $ 752,816
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (68,626)
From net investment income (Class C) -- (575)
From net realized gain on investments and foreign --
currency transactions (Class A)
(35,996)
From net realized gain on investments and foreign --
currency transactions (Class B)
(39,731)
From net realized gain on investments and foreign --
currency transactions (Class C)
(193)
----------- -----------
Total distributions declared to shareholders $ -- $ (145,121)
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions $ (781,328) $ 3,211,488
----------- -----------
Total increase (decrease) in net assets $ (576,469) $ 3,819,183
Net assets:
At beginning of period 29,410,056 25,590,873
----------- -----------
At end of period (including accumulated net investment loss
of $471,068 and $367,494, respectively) $28,833,587 $29,410,056
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 YEAR ENDED PERIOD ENDED
(UNAUDITED) MAY 31, 1997 MAY 31, 1996***
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 16.32 $ 15.98 $ 15.00
------- ------- -------
Income from investment operations# -
Net investment income $ (0.03) $ 0.11 $ 0.11
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.17 0.35 0.90
------- ------- -------
Total from investment operations $ 0.14 $ 0.46 $ 1.01
------- ------- -------
Less distributions declared to shareholders -
From net investment income $ -- $ (0.08) $ (0.03)
From net realized gain on investments and foreign
currency tranactions -- (0.04) --
------- ------- -------
Total distributions declared to shareholders $ -- $ (0.12) $ (0.03)
------- ------- -------
Net asset value - end of period $ 16.46 $ 16.32 $ 15.98
======= ======= =======
Total return+ 0.86% 2.88% 6.71%**
Ratios (to average net assets)/Supplemental data:
Expenses## 2.31% 2.39% 2.52%*
Net investment income (0.39)% 0.72% 1.04%
Portfolio turnover 136% 89% 29%
Net assets at end of period (000 omitted) $12,623 $13,425 $11,950
Average Commission Rate $0.0319 $0.0197 $0.0291
* Annualized.
** Not annualized.
*** For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
# 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.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 1997 YEAR ENDED PERIOD ENDED
(UNAUDITED) MAY 31, 1997 MAY 31, 1996***
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 16.27 $ 15.94 $ 15.00
------- ------- -------
Income from investment operations# -
Net investment income $ (0.08) $ 0.03 $ 0.05
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.19 0.34 0.90
------- ------- -------
Total from investment operations $ 0.11 $ 0.37 $ 0.95
------- ------- -------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ (0.01)
From net realized gain on investments and foreign
currency tranactions -- (0.04) --
------- ------- -------
Total distributions declared to shareholders $ -- $ (0.04) $ (0.01)
------- ------- -------
Net asset value - end of period $ 16.38 $ 16.27 $ 15.94
======= ======= =======
Total return 0.68% 2.33% 6.37%**
Ratios (to average net assets)/Supplemental data:
Expenses## 2.81% 2.94% 3.11%*
Net investment income (0.91)% 0.18% 0.49%*
Portfolio turnover 136% 89% 29%
Net assets at end of period (000 omitted) $15,902 $15,749 $13,641
Average Commission Rate $0.0319 $0.0197 $0.0291
* Annualized.
** Not annualized.
*** For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
# 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>
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
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 $ 16.19 $ 16.02
------- -------
Income from investment operations# -
Net investment income $ (0.07) $ 0.12
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.17 0.21
------- -------
Total from investment operations $ 0.10 $ 0.33
------- -------
Less distributions declared to shareholders -
From net investment income $
-- $ (0.12)
From net realized gain on investments and foreign currency transactions -- (0.04)
------- -------
Total distributions declared to shareholders $
-- $ (0.16)
------- -------
Net asset value - end of period $ 16.29 $ 16.19
======= =======
Total return 0.62% 2.09%**
Ratios (to average net assets)/Supplemental data:
Expenses## 2.81% 2.64%*
Net investment income (0.99)% 0.80%*
Portfolio turnover 136% 89%
Net assets at end of period (000 omitted) $ 307 $ 235
Average Commission Rate $0.0319 $0.0197
* Annualized.
** Not annualized.
*** For the period from the inception of Class C shares, July 1, 1996, through May 31, 1997.
# 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>
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
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 $16.32 $15.71
------ ------
Income from investment operations# -
Net investment income $(0.01) $ 0.16
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.15 0.45
------ ------
Total from investment operations $ 0.14 $ 0.61
------ ------
Net asset value - end of period $16.46 $16.32
====== ======
Total return 0.86% 3.88%**
Ratios (to average net assets)/Supplemental data:
Expenses## 1.82%* 1.89%*
Net investment income (0.15)% 2.33%*
Portfolio turnover 136% 89%
Net assets at end of period (000 omitted) $ 2 $ --
Average Commission Rate $0.0319 $0.0197
* Annualized.
** Not annualized.
**** For the period from the inception of Class I shares, January 2, 1997, through May 31, 1997.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS International Growth and Income 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.
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. Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues, forward contracts, and
interest rate swaps, 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.
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.
Written Options - The Fund may also write call or put options in exchange for
a premium. The premium is initially recorded as a liability which is
subsequently adjusted to the current value of the options contract. When a
written option expires, the Fund realizes a gain equal to the amount of the
premium received. When a written call option is exercised or closed, the
premium received is offset against the proceeds to determine the realized gain
or loss. When a written put option is exercised, the premium reduces the cost
basis of the security purchased by the Fund. The Fund, as writer of an option,
may have no control over whether the underlying securities may be sold (call)
or purchased (put) and, as a result, bears the market risk of an unfavorable
change in the price of the securities underlying the written option. In
general, written call options may serve as a partial hedge against decreases
in value in the underlying securities to the extent of the premium received.
Written options may also be used as part of an income producing strategy
reflecting the view of the Fund's management on the direction of interest
rates.
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 nonhedging
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 nonhedging 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. Some government securities may be purchased on a "when-issued"
or "forward delivery" basis, which means that the securities will be delivered
to the Fund at a future date, usually beyond customary settlement time.
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 net 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.
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 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 annual rate of 0.975%
of average daily net assets up to $500 million in net assets after which the
rate is reduced to 0.925%.
Administrator - Effective March 1, 1997, the Fund has an administrative
services agreement with MFS to provide the Fund with certain financial, legal,
shareholder servicing, compliance, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Fund pays
MFS an administrative fee at the following annual percentages of the Fund's
average daily net assets, 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 $705
for the six months ended November 30, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$8,421 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 $59 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 $1,990 and
$1 for Class B and Class C shares, respectively, for the six months ended
November 30, 1997. Fees incurred under the distribution plan 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
12 months of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended November
30, 1997, were $59, $22,157, and $3 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
$39,080,462 and $38,763,809, 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 $27,908,801
-----------
Gross unrealized appreciation $ 1,950,884
Gross unrealized depreciation (1,265,373)
-----------
Net unrealized appreciation $ 685,511
===========
(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>
Class A Shares
<CAPTION>
SIX MONTHS ENDED NOVEMBER 30, 1997 YEAR ENDED MAY 31, 1997
---------------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 169,911 $ 1,952,523 365,309 $ 5,792,690
Shares issued to shareholders in
reinvestment of distributions 1 18 5,771 90,897
Shares reacquired (172,905) (2,882,726) (296,169) (4,680,979)
-------- ----------- -------- -----------
Net increase (decrease) (2,993) $ (930,185) 74,911 $ 1,202,608
======== =========== ======== ===========
<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 159,861 $ 2,696,443 462,559 $ 7,367,431
Shares issued to shareholders in
reinvestment of distributions -- -- 2,318 36,552
Shares reacquired (156,695) (2,621,494) (352,648) (5,601,722)
-------- ----------- -------- -----------
Net increase (decrease) 3,166 $ 74,949 112,229 $ 1,802,261
======== =========== ======== ===========
<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 9,353 $ 156,187 89,056 $ 1,379,569
Shares issued to shareholders in
reinvestment of distributions -- -- 39 605
Shares reacquired (5,054) (83,736) (74,550) (1,173,998)
-------- ----------- -------- -----------
Net increase (decrease) 4,299 $ 72,451 14,545 $ 206,176
======== =========== ======== ===========
<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 85 $ 1,457 29 $ 443
Shares issued to shareholders in
reinvestment of distributions -- -- -- --
Shares reacquired -- -- -- --
-------- ----------- -------- -----------
Net increase (decrease) 85 $ 1,457 29 $ 443
======== =========== ======== ===========
**** For the period from the inception of Class I shares, January 2, 1997, through May 31, 1997.
</TABLE>
(6) 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 $30.
(7) Financial Instruments
The Fund trades financial instruments with off-balance-sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include written options, forward foreign currency
exchange contracts, interest rate swap contracts, and futures contracts. The
notional or contractual amounts of these instruments represent the investment
the Fund has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 1/07/98 CAD 921,892 676,562 $648,751 $ 27,811
1/07/98 CHF 181,937 128,887 127,553 1,334
1/07/98 GBP 39,621 65,640 66,621 (981)
------- -------- --------
871,089 $842,925 $ 28,164
======= ======== ========
Purchases 1/07/98 CAD 433,166 317,524 $304,826 $(12,698)
1/07/98 DEM 542,734 319,594 306,077 (13,517)
------- -------- --------
637,118 $610,903 $(26,215)
======= ======== ========
</TABLE>
Forward foreign currency purchases and sales under master netting agreements
excluded above amounted to and a net receivable of $3,046 with Bankers Trust,
$26,127 with Deutsche Bank, and $210,283 with State Street Bank Luxembourg and
a net payable of $5,143 with First Boston, $44,298 with Merrill Lynch, $23,094
with Swiss Bank at November 30, 1997. Closed forward foreign currency exchange
contracts excluded above amount to a net receivable of $8 with Morgan Stanley
and $6,179 with Goldman Sachs at November 30, 1997.
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. Dollar. A list of abbreviations is shown
below:
CAD = Canadian Dollars GBP = British Pounds
CHF = Swiss Francs DEM = Deutsche Marks
--------------------------------------------
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 and Income Fund
TRUSTEES
A. Keith Brodkin* - Chairman and CUSTODIAN
President; Chairman and Director, State Street Bank and Trust Company
Massachusetts Financial Services
Company INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Richard B. Bailey* - Private call toll free: 1-800-637-4458 anytime
Investor; Former Chairman and from a touch-tone telephone.
Director (until 1991), Massachusetts
Financial Services Company For information on MFS mutual funds,
call your financial adviser or, for an
Peter G. Harwood - Private Investor information kit, call toll free:
1-800-637-2929 any business day from 9
J. Atwood Ives - Chairman and Chief a.m. to 5 p.m. Eastern time (or leave a
Executive Officer, Eastern message anytime).
Enterprises
INVESTOR SERVICE
Lawrence T. Perera - Partner, MFS Service Center, Inc.
Hemenway & Barnes P.O. Box 2281
Boston, MA 02107-9906
William J. Poorvu - Adjunct
Professor, Harvard University For general information, call toll free:
Graduate School of Business 1-800-225-2606 any business day from 8
Administration a.m. to 8 p.m. Eastern time.
Charles W. Schmidt - Private Investor For service to speech- or
hearing-impaired, call toll free:
Arnold D. Scott* - Senior Executive 1-800-637-6576 any business day from 9
Vice President, Director and a.m. to 5 p.m. Eastern time. (To use
Secretary, Massachusetts Financial this service, your phone must be
Services Company equipped with a Telecommunications
Device for the Deaf.)
Jeffrey L. Shames* - President and
Director, Massachusetts Financial For share prices, account balances, and
Services Company exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime
Elaine R. Smith - Independent from a touch-tone telephone.
Consultant
WORLD WIDE WEB
David B. Stone - Chairman, North www.mfs.com
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
Frederick J. Simmons* 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>
----------------
Bulk Rate
MFS(R) INTERNATIONAL GROWTH U.S. Postage
AND INCOME FUND Paid
MFS
----------------
500 Boylston Street
Boston, MA 02116-3741
[LOGO] MFS(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
MGI-3 1/98 10M 87/287/387/887
