<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R)/FOREIGN &
COLONIAL EMERGING
MARKETS EQUITY FUND
SEMIANNUAL REPORT O NOVEMBER 30, 1998
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
MFS(R) Prepares for the Year 2000 ......................................... 31
Trustees and Officers ..................................................... 33
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE MFS 75 YEARS
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE EXPERIENCE THE FUTURE(SM)
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
- ------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- ------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
In 1999, MFS celebrates its 75th anniversary. The nation's first mutual fund --
our Massachusetts Investors Trust (MIT) -- was introduced to the public on March
21, 1924. Since then, MFS Investment Management(R), the company that grew out of
that original fund, has helped guide shareholders through many economic and
investment cycles, primarily by focusing on the long-term opportunities created
by an expanding global economy. As of November 30, 1998, MFS manages over $90
billion, and the firm's 2,000 people serve 3.9 million investors and their
financial advisers worldwide. Meanwhile, MIT's assets have grown to over $10
billion, and 56 mutual funds are offered in the MFS Family of Funds(R).
One of the elements in the success of MIT did not exist before our founders
invented it in 1924. That is daily redemption. This innovation means that if you
want to sell your investment in any MFS mutual fund, you have the security of
knowing that you may do so immediately by exchanging into another MFS fund. Or,
if you need your money for other purposes, it can quickly be wired or mailed to
you. This daily redemption feature, through which new shares were created when
people invested in MIT and were redeemed when people sold, brought another
important change to the industry. Now, the price of a mutual fund's shares
wasn't determined by supply and demand, but by the value of the securities owned
by each portfolio.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike companies that rely on
Wall Street research reports, which can be used by many investors at the same
time, MIT's managers built its long-term track record by visiting companies,
talking to managers and competitors, and "kicking the tires" so they could
judge the quality and potential of each company's products and services for
themselves. Today, MFS has more than 100 full-time portfolio managers, stock
analysts, and credit analysts who track the equity and bond markets. That
number includes over 35 equity analysts who specialize in industries such as
aviation, media, technology, automobiles, and utilities.
While MIT introduced liquidity, that was not our only invention. We also
established the nation's first global bond fund, first high-yield municipal
bond fund, and first high-yield municipal closed-end bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. The MFS Service Center handles millions of transactions and
phone calls every year. Supporting the work of financial advisers, promptly
sending out statements and confirmations, and answering hundreds of investors'
questions every day are crucial elements in maintaining long-term relationships
with our fund shareholders. That link to our investors has also been enhanced by
our site on the World Wide Web: WWW.MFS.COM. Since 1996, this site has given
investors and the general public access to up-to- date information about MFS
products and services, as well as market outlooks and retirement information.
The site has rapidly become one of our primary vehicles for communicating with
our investors and educating the public about mutual funds in general and MFS in
particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead and
build on our 75 years of innovation and experience to help meet your
investment needs in the next century. We appreciate your confidence and
welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
December 15, 1998
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
For the six months ended November 30, 1998, Class A shares of the Fund provided
a total return of -22.67%, Class B shares -22.88%, Class C shares -22.73%, and
Class I shares -22.42%. These returns assume the reinvestment of distributions
but exclude the effects of any sales charges, and they compare to returns of
- -19.23% for the Lipper Emerging Markets Funds Index (the Lipper Index) and
- -16.42% for the Morgan Stanley Capital International (MSCI) Emerging Markets
Free (EMF) Index. The Lipper mutual fund indices are unmanaged indices of the
largest qualifying mutual funds within their respective investment objectives
adjusted for the reinvestment of capital gain distributions and income
dividends, while the MSCI EMF Index is a broad, unmanaged,
market-capitalization-weighted index of equities in emerging markets. It is not
possible to invest directly in an index.
Q. COULD YOU TALK ABOUT SOME OF THE FACTORS THAT HAVE AFFECTED THE FUND'S RECENT
PERFORMANCE?
A. Although the Fund benefited from its overweightings in Egypt, Morocco, and
Mauritius, as well as from its underweightings in Brazil and Malaysia, its
overweightings in Russia and Turkey hurt performance, as did its
underweightings in Greece and Taiwan.
Q. DO YOU SEE ANY SIGNS OF IMPROVEMENT IN THE ECONOMIC AND INVESTMENT
ENVIRONMENT IN EMERGING MARKETS?
A. Until recently emerging markets had enjoyed the fastest growth in the
world, driven by a combination of cheap labor, an application of new
technologies, and access to cheap capital. The first two factors are now in
greater abundance than ever, but access to capital has, for the past year,
been notably absent. However, it is now in the interest of the major world
economic powers to stabilize the global financial system. Thus, we believe
that further interest-rate cuts will be forthcoming from the G7, that is,
the group of seven major industrialized countries. It is worth remembering
that even a marginal change in sentiment can have a dramatic impact on
emerging market performance. For example, from the end of August to the end
of November, emerging markets, as represented by the MSCI EMF Index,
rallied by 26.7% in U.S. dollar terms.
Q. DO YOU SEE SIGNS THAT THE PROBLEMS IN ASIA ARE BEING RESOLVED?
A. In some places, yes. The Fund remains underweighted in Asia as a whole
with, for example, zero exposure in Malaysia and Indonesia, both of which
have rejected market demands for economic reform. In contrast, corporate
South Korea has finally started to restructure due to pressure from a new
government and an International Monetary Fund (IMF) rescue package. A debt
rescheduling agreement was signed in early 1998, and a number of the Korean
"Chaebol" conglomerates have started to reorganize. Thailand has also
reacted positively to IMF demands, and its macroeconomic picture has
gradually improved during 1998, with interest rates declining.
Q. IN SPITE OF THE PROBLEMS IN ASIA, ARE YOU FINDING INVESTMENT OPPORTUNITIES
THERE?
A. China continues to be one of the best economic stories in the region. Its
government has correctly concluded that economic recovery will be driven
domestically rather than by exports and is attempting to grow through
infrastructure spending. It is uncertain how soon the effects of this will
feed through to corporate China, but we believe companies like Huaneng
Power will be among the first to benefit. Elsewhere, although Singapore's
role as one of the main service centers in Asia could continue to hamper
growth, its corporate sector is strong, and no bankruptcies are expected.
We think valuations are still attractive, and there are encouraging signs
on the corporate governance front, with Singapore Press providing the
first-ever example of a share buyback in the country.
Q. HOW HAS LATIN AMERICA FARED THROUGH ALL THIS TURMOIL, AND WHAT PROSPECTS DO
YOU SEE FOR THAT REGION GOING FORWARD?
A. Worries over currency contagion and high interest rates have been felt by
virtually all of the countries in Latin America. In Brazil, although
currency speculation is difficult, the real (the Brazilian currency) has
come under repeated pressure mainly as a result of the country's soaring
fiscal deficit. In other countries, weak commodity prices have added to a
number of economic problems. The most notable example is Venezuela, where
oil revenues represent a large proportion of gross domestic product. Mexico
has also been adversely affected by low oil prices, while the Chilean
economy has been hit by a combination of high exposure to weakening copper
prices and decreased exports to Asia.
Q. SPECIFICALLY, DO YOU SEE BRAZIL'S AUSTERITY PACKAGE, COMBINED WITH IMF AID,
HELPING THAT COUNTRY?
A. Brazil's main problem continues to be its growing deficit. This has been
exacerbated by is high interest-rate policy, which the government has pursued
to take pressure off its currency. Since the Russian crisis, there has been a
growing realization by Western policymakers that dramatic fiscal reform,
together with substantial support from the G7, is needed to avoid a financial
crisis. President Cordoso has announced a new package aimed at reducing the
deficit by $28 billion (U.S. dollars) and producing a fiscal surplus of 2.6%
of gross domestic product in 1999. This fiscal program, if implemented,
combined with the $41.5 billion loan package arranged by the IMF, should help
to avert a full-blown crisis.
Q. MEANWHILE, ECONOMIC PROBLEMS SEEM TO HAVE DEEPENED IN RUSSIA. WHAT'S YOUR
OUTLOOK THERE?
A. Russia experienced a series of crises over the past year, with two changes
of prime minister and President Yeltsin looking increasingly marginalized.
Weak oil prices threw the country's fiscal viability into question, and the
intransigence of the Russian parliament jeopardized attempts at reform. By
summer, it became clear that the Russians would not be able to maintain
control in the debt markets without substantial assistance from the IMF and
the G7. Eventually, a package was agreed to, but it turned out to be too
little too late. The Russian government, realizing its predicament, reacted
by devaluing its currency and suspending interest payments on ruble-
denominated debt. The latest government is working on a plan to reschedule
the entire ruble-denominated sovereign debt. It is unclear how successful
this will be but, with the stock market at such depressed levels, the
potential for substantial gains exists. As a result, the Fund retains a
small exposure to the Russian market.
Q. WHAT ABOUT SOME OF THE OTHER EMERGING MARKETS, SUCH AS EGYPT, PORTUGAL,
GREECE, AND SOUTH AFRICA?
A. Despite improving fundamentals and market-friendly economic policies, both
Poland and Hungary saw their markets fall substantially in August as
countries with trade ties to Russia suffered in the wake of its default.
Greece was allowed into the European exchange rate mechanism in March 1998,
and its market continued to benefit from falling interest rates over the
second half of the year. Portugal, meanwhile, graduated from emerging to
developed market status over the period and was sold from the Fund. In
South Africa, the economy continued to be constrained by high real
(inflation adjusted) interest rates, which the central bank is maintaining
in order to defend the rand. In the Middle East and North Africa, markets
remained defensive in the face of global turmoil. Egypt and Israel were
both down modestly as foreign selling was partly absorbed by domestic
investors.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES IN THE FUND'S ALLOCATIONS TO MARKETS OR
INDUSTRIES IN THE PAST SIX MONTHS?
A. The main change has been an increase in exposure to Latin America, where
the Fund moved from a large underweighted position to a more neutral
stance. Specifically, we significantly increased the Fund's exposure to
Brazil and Mexico. Elsewhere, the major changes in Asia were a reduction in
exposure to India and Hong Kong, while in the Middle East and Africa our
weighting was increased in Greece and decreased in Egypt, although the Fund
remains overweighted in the latter.
Q. COULD YOU GIVE US EXAMPLES OF ANY PARTICULARLY GOOD STOCK STORIES IN THE
PORTFOLIO?
A. Stock selection has proved to be particularly challenging in emerging
markets over the report period. However, there have been several notable
success stories throughout the portfolio. In Morocco, SNI, the second-
largest conglomerate, increased 11.5% in U.S. dollar terms, while the state
Bank of Mauritius, that country's second-largest commercial bank, increased
7.4%. In Argentina, Telecom Argentina, the integrated telecommunications
provider, increased 2.7%.
Q. DO YOU SEE THE MOVEMENT TOWARD ECONOMIC AND MONETARY UNION IN EUROPE (EMU)
HAVING AN EFFECT ON THE EMERGING MARKETS?
A. The movement toward economic and monetary union has had and will continue
to have a greater effect on the emerging markets of Europe than on emerging
markets in general. For example, Portugal has performed extremely well over
the past three years as its economy has "converged" toward those of
developed Europe, and it will be in the first wave of countries joining EMU
in 2000, with Greece expected to join in 2001. Like Portugal, Greece has
been one of the best-performing emerging markets in 1998 following its
entry into the exchange rate mechanism in March. The next wave of EMU
applicants includes Eastern European countries such as Poland, Hungary,
Czech Republic, Estonia, and Slovenia. These countries are aiming for EMU
convergence in 2002.
Q. LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR EMERGING MARKETS, AND HOW IS THIS
REFLECTED IN THE FUND'S ALLOCATIONS?
A. The short-term outlook remains mixed, but the medium-term outlook remains
positive. As world growth slows, the uncertainty created by the deflationary
outlook has given investors an extreme aversion to risk. The credit crunch
across most of Asia has deepened with the worsening of Japan's financial
crisis, and the cost of capital has risen sharply. Although market volatility
is likely to persist in the short term, we believe that the current
environment presents investors with some outstanding long-term buying
opportunities. The Fund remains broadly invested, with a slight bias away
from Asia toward Latin America and the European, Middle Eastern, and African
regions.
/s/ Arnab Kumar Banerji /s/ Jeffrey Chowdhry
Arnab Kumar Banerji Jeffrey Chowdhry
Portfolio Manager Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are only through the end of the period of the report as stated on the cover.
The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' PROFILES
- --------------------------------------------------------------------------------
ARNAB KUMAR BANERJI IS CHIEF INVESTMENT OFFICER OF FOREIGN & COLONIAL
MANAGEMENT LTD. AND PORTFOLIO MANAGER OF MFS(R)/FOREIGN & COLONIAL
EMERGING MARKETS EQUITY FUND. HE ALSO MANAGES THE EMERGING MARKETS PORTION
OF MFS(R) GLOBAL GROWTH FUND, THE EMERGING MARKETS EQUITY SERIES, AND THE
EMERGING MARKETS PORTION OF THE WORLD GROWTH SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND MFS(R)/FOREIGN & COLONIAL EMERGING
MARKETS EQUITY SERIES, PART OF MFS(R) VARIABLE INSURANCE TRUST(SM). DR.
BANERJI WAS BORN IN INDIA IN 1956. HE EARNED DEGREES IN PHYSIOLOGY AND
MEDICINE FROM OXFORD UNIVERSITY BEFORE ENTERING THE INVESTMENT MANAGEMENT
BUSINESS WITH J. HENRY SCHRODER WAGG IN LONDON. HE LEFT THAT FIRM TO
BECOME A RESEARCH ANALYST AND LATER DIRECTOR OF NOMURA SECURITIES. HE
JOINED CITIBANK, INITIALLY AS HEAD OF EQUITY RESEARCH AT CITIBANK
SCRIMGEOUR VICKERS, BEFORE MOVING TO CITIBANK GLOBAL ASSET MANAGEMENT TO
SET UP ITS EMERGING MARKETS OPERATION, WHICH HE HEADED UNTIL 1993 WHEN HE
JOINED FOREIGN & COLONIAL.
JEFFREY CHOWDHRY IS A DIRECTOR OF FOREIGN & COLONIAL EMERGING MARKETS LTD.
AND PORTFOLIO MANAGER OF MFS(R)/FOREIGN & COLONIAL EMERGING MARKETS EQUITY
FUND AND THE EMERGING MARKETS EQUITY SERIES OFFERED THROUGH MFS(R)/SUN
LIFE ANNUITY PRODUCTS AND MFS(R) VARIABLE INSURANCE TRUST(SM). HE ALSO
MANAGES THE EMERGING MARKETS PORTION OF MFS(R)R GLOBAL GROWTH FUND AND THE
WORLD GROWTH SERIES OFFERED THOUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS. MR.
CHOWDHRY IS HEAD OF THE DEPARTMENT AT FOREIGN & COLONIAL THAT INVESTS IN
EASTERN EUROPE, THE MIDDLE EAST, AND AFRICA. MR. CHOWDHRY BEGAN HIS CAREER
AS AN INVESTMENT ANALYST IN 1982, JOINING ROYAL INSURANCE PLC IN 1985 AS A
FUND MANAGER BEFORE JOINING BZW INVESTMENT MANAGEMENT IN 1987, WHERE HE
WAS A DIRECTOR IN THEIR EMERGING MARKETS DIVISION. HE JOINED FOREIGN &
COLONIAL EMERGING MARKETS IN 1994. HE HAS MANAGED INVESTMENTS IN THE
UNITED STATES, EUROPE, LATIN AMERICA, AND ASIA. MR. CHOWDHRY HOLDS A
BACHELOR'S DEGREE IN ECONOMICS FROM LONDON'S BRUNEL UNIVERSITY AND A
MASTER OF BUSINESS ADMINISTRATION DEGREE FROM KINGSTON BUSINESS SCHOOL IN
ENGLAND.
- -----------------------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
OBJECTIVE: SEEKS TO PROVIDE CAPITAL APPRECIATION BY INVESTING
PRIMARLY IN STOCKS OF COMPANIES IN EMERGING
MARKET COUNTRIES.
COMMENCEMENT OF
INVESTMENT OPERATIONS: OCTOBER 24, 1995
CLASS INCEPTION: CLASS A OCTOBER 24, 1995
CLASS B OCTOBER 24, 1995
CLASS C JUNE 27, 1996
CLASS I JANUARY 2, 1997
SIZE: $57.4 MILLION NET ASSETS AS OF NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH NOVEMBER 30, 1998
<TABLE>
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return -22.67% -28.10% -14.61% -14.75%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -28.10% - 5.13% - 5.01%
- -------------------------------------------------------------------------------------------------------
SEC Results -- -31.52% - 6.66% - 6.49%
- -------------------------------------------------------------------------------------------------------
CLASS B
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return -22.88% -28.45% -15.90% -16.08%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -28.45% - 5.61% - 5.49%
- -------------------------------------------------------------------------------------------------------
SEC Results -- -31.28% - 6.54% - 6.39%
- -------------------------------------------------------------------------------------------------------
CLASS C
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return -22.73% -28.31% -15.61% -15.80%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -28.31% - 5.50% - 5.39%
- -------------------------------------------------------------------------------------------------------
SEC Results -- -29.02% - 5.50% - 5.39%
- -------------------------------------------------------------------------------------------------------
CLASS I
6 Months 1 Year 3 Years 10 Years/Life*
- ---------------------------------------------------------------------------------------------------------
Cumulative Total Return -22.42% -27.69% -13.72% -13.85%
- ---------------------------------------------------------------------------------------------------------
Average Annual Total Return -- -27.69% - 4.80% - 4.69%
- ---------------------------------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations, October 24, 1995, through
November 30, 1998.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 4.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
C results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of B for periods prior to the inception of C. Operating expenses of C
are not significantly different than those of B. The B performance included in
the C SEC performance has been adjusted to reflect the CDSC generally
applicable to C rather than the CDSC generally applicable to B.
I results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of A for periods prior to the inception of I. Because
operating expenses of A are greater than those of I, I performance generally
would have been higher than A performance. The A performance included in the I
performance has been adjusted to reflect the fact that I have no initial
sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and
capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably
affected by changes in interest rates and currency exchange rates, market
conditions, and the economic and political conditions of the countries where
investments are made. These risks may increase share price volatility.
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1998
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 20.4%
FINANCIAL SERVICES 26.2%
ENERGY 9.8%
BASIC MATERIALS 8.4%
TECHNOLOGY 8.2%
<TABLE>
TOP 10 STOCK HOLDINGS
<S> <C>
TAIPEI FUND 4.3% TELECOMUNICACOES BRASILIERAS (PREFERRED) 2.5%
Closed-end Taiwanese country fund Brazilian telecommunications company
POHANG IRON & STEEL 4.1% TELEFONOS DE MEXICO S.A. 2.4%
South Korean steel company Mexican telecommunications company
ELECTROBAS CENT EL 3.4% MAGYAR TAVKOZLESI RT. 2.2%
Brazilian utility Hungarian telecommunications company
TELECOMUNICACOES BRASILIERAS 2.7% YPF SOCIEDAD ANONIMA 1.8%
Brazilian telecommunications company Argentine oil and gas company
SAMSUNG ELECTRONIC 2.7% TELEFONICA PERU 1.8%
South Korean electronics company Peruvian telecommunications company
</TABLE>
Portfolio information is as of November 30, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- November 30, 1998
Stocks - 95.3%
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 95.3%
Argentina - 4.3%
Banco de Galicia y Buenos Aires S.A. de C.V., ADR
(Banks and Credit Cos.) 8,343 $ 179,375
Perez Companc S.A. (Oils) 86,808 451,469
Siderca S.A. (Steel) 103,370 150,943
Telecom S.A., ADR (Telecommunications) 4,100 125,050
Telefonica de Argentina, ADR (Utilities - Telephone) 16,750 542,281
YPF Sociedad Anonima, ADR (Oils) 33,900 1,000,050
-----------
$ 2,449,168
- ------------------------------------------------------------------------------------------------------
Brazil - 17.1%
Banco Bradesco S.A., Preferred (Banks and Credit Cos.) 42,605,000 $ 308,526
Centrais Eletricas Brasileiras S.A., Preferred, "B"
(Utilities - Electric) 62,296,090 1,762,999
Companhia Cervejaria Brahma, Preferred (Beverages) 693,000 373,784
Companhia Energetica de Sao Paulo S.A., ADR
(Utilities - Electric) 27,687 698,820
Companhia Paranaense de Energia, Preferred, "B"
(Utilities - Electric) 32,058 308,199
Embratel Participacoes S.A. (Telecommunications)* 17,738,704 191,946
Itausa Investimentos Itau S.A., Preferred
(Conglomerate) 612,000 432,995
Petroleo Brasileiro S.A., Preferred (Oils) 6,454,435 918,685
Tele Centro Sul Participacoes S.A
(Telecommunications)* 17,738,704 118,120
Tele Norte Lests Participacoes S.A
(Telecommunications)* 17,738,704 156,509
Tele Sudeste Celular Participacoes S.A
(Telecommunications)* 17,738,704 53,154
Telecomunicacoes Brasileiras S.A
(Telecommunications)* 24,400,000 1,391,210
Telecomunicacoes Brasileiras S.A., Preferred
(Telecommunications)* 13,440,000 1,289,855
Telecomunicacoes do Rio de Janeiro S.A
(Telecommunications) 1,696,000 61,408
Telecomunicacoes do Rio de Janeiro S.A., Preferred,
"B" (Telecommunications)* 2,194 79,349
Telesp Celular Participacoes S.A
(Telecommunications)* 17,738,704 106,308
Telesp Participacoes S.A. (Telecommunications)* 21,038,704 385,260
Unibanco S.A. (Banks and Credit Cos.) 9,222,000 445,211
Vale Rio do Doce Cia, Preferred (Mining) 50,900 741,427
-----------
$ 9,823,765
- ------------------------------------------------------------------------------------------------------
China - 3.4%
Guangdong Kelon Electric Holdings Co. Ltd.
(Consumer Goods and Services) 522,000 $ 455,115
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 62,850 934,894
Qingling Motors Co. (Automotive) 1,508,000 298,016
Zhenhai Refining and Chemical Co., Ltd. (Oils) 1,633,000 288,970
-----------
$ 1,976,995
- ------------------------------------------------------------------------------------------------------
Colombia - 0.3%
Cementos Diamante S.A., ADR (Construction)## 36,485 $ 162,358
- ------------------------------------------------------------------------------------------------------
Egypt - 2.5%
Ahram Beverage Co., GDR (Beverages)## 12,268 $ 347,184
Egypt Gas Co. (Utilities - Gas) 3,000 226,913
Egypt Trust (Closed-end Fund)* 88,050 862,890
Madinet Nasar City (Housing) 190 5,742
-----------
$ 1,442,729
- ------------------------------------------------------------------------------------------------------
Greece - 4.0%
Alpha Credit Bank (Banking) 6,670 $ 632,961
Attica Enterprises S.A., GDR (Transportation) 15,250 130,514
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 22,340 557,479
Intracom S.A. (Telecommunications) 4,700 241,178
National Bank of Greece, GDR (Banks and Credit Co.) 2,590 463,254
Panafon Hellenic Telecommunication S.A
(Telecommunications)* 5,720 102,531
Titan Cement Co., GDR (Building Materials) 2,620 193,378
-----------
$ 2,321,295
- ------------------------------------------------------------------------------------------------------
Hungary - 4.1%
Magyar Olaj Es Gazipari KT (Gas) 35,836 $ 834,249
Magyar Olaj Es Gazipari KT, GDR (Oils)## 250 5,750
Magyar Tavkozlesi Rt., ADR (Telecommunications) 43,100 1,177,169
OTP Bank Rt. (Banks and Credit Cos.) 7,530 322,146
-----------
$ 2,339,314
- ------------------------------------------------------------------------------------------------------
India - 3.6%
Bajaj Auto Ltd. (Automotive) 450 $ 5,740
Bharat Heavy Electricals Ltd. (Utilities - Electric) 5,000 27,521
EIH Ltd. (Hotels) 8,400 46,669
Hindustan Lever Ltd. (Consumer Goods and Services) 14,900 558,181
Hindustan Petroleum Corp. Ltd. (Oils and Gas) 24,350 139,490
Industrial Development Bank of India Ltd. (Banks and
Credit Cos.) 600 508
Infosys Technologies Ltd. (Computer - Software) 2,200 120,729
ITC Ltd. (Tobacco) 23,000 369,054
Larsen & Toubro Ltd. (Conglomerate) 30,500 104,653
Larsen & Toubro Ltd., GDR (Conglomerate) 9,003 30,892
Mahanagar Telephone Nigam Ltd. (Telecommunications) 73,600 304,778
Reliance Industries Ltd. (Conglomerate) 57,000 154,054
State Bank of India (Banks and Credit Cos.) 66,000 233,443
-----------
$ 2,095,712
- ------------------------------------------------------------------------------------------------------
Israel - 4.3%
Bank Hapoalim (Banks and Credit Cos.) 218,886 $ 420,572
Bezek Israeli Telecommunications Corp. Ltd.
(Telecommunications)* 87,650 256,180
Discount Investment Corp. (Financial Services) 7,210 182,473
ECI Telecom Ltd. (Telecommunications) 15,630 558,773
Formula System (1985) Ltd. (Computer Software -
Systems)* 11,761 292,029
Makhteshim-Agam Industries Ltd. (Chemicals)* 140,264 304,033
Super Sol Ltd. (Supermarkets) 78,703 182,444
Teva Pharmaceutical Industries Ltd., ADR
(Pharmaceuticals) 6,264 272,484
-----------
$ 2,468,988
- ------------------------------------------------------------------------------------------------------
Jordan - 1.2%
Arab Bank Corp. (Banks and Credit Cos.) 2,290 $ 678,279
- ------------------------------------------------------------------------------------------------------
Mauritius - 1.5%
Mauritius Commercial Bank Ltd. (Banks and Credit Cos.) 48,000 $ 207,431
New Mauritius Hotels Ltd. (Restraurants and Lodging) 82,000 175,525
Rogers & Co. Ltd. (Conglomerate) 29,000 174,516
State Bank of Mauritius Ltd. (Banks and Credit Cos.) 445,000 319,911
-----------
$ 877,383
- ------------------------------------------------------------------------------------------------------
Mexico - 8.9%
Cementos Mexicanos S.A. (Construction) 84,119 $ 203,915
Cifra S.A. de C.V. (Retail) 214,510 264,726
Desc S.A. de C.V., "B" (Conglomerate) 320,000 288,491
Fomento Economico Mexicano S.A. (Beverages) 9,995 237,381
Grupo Carso S.A., "A1" (Conglomerate) 286,869 890,808
Grupo Financiero Banamex, "B" (Finance)* 111,000 131,203
Grupo GEO S.A. de C.V. (Housing)*## 37,200 417,384
Grupo Modelo S.A. de C.V. (Brewery) 209,040 414,604
Grupo Television S.A. de C.V., GDR (Entertainment)* 13,200 335,775
Kimberly-Clark de Mexico SA de C.V. (Forest and Paper
Products) 105,824 289,392
Organiz Soriana S.A., "B" (Real Estate) 124,962 365,510
Telefonos de Mexico S.A. (Utilities - Telephone) 559,716 1,292,342
-----------
$ 5,131,531
- ------------------------------------------------------------------------------------------------------
Morocco - 1.6%
Banque Marocaine Commerce (Banks and Credit Cos.) 1,800 $ 131,705
Brasseries Maroc (Consumer Goods and Services) 836 236,643
Ona Omnium Nord Africain S.A. (Conglomerate) 1,500 181,055
Societe Nationale d'Investissement (Conglomerate) 1,200 125,361
Wafabank (Banks and Credit Cos.) 2,000 253,156
-----------
$ 927,920
- ------------------------------------------------------------------------------------------------------
Peru - 3.1%
Alicorp S.A. (Consumer Goods and Services)* 226,395 $ 47,105
Compania de Minas Buenaventura S.A. (Mining) 65,140 400,348
Credicorp Ltd. Holdings Co. (Banks and Credit Cos.) 30,832 339,152
Telefonica del Peru S.A., "B" (Utilities - Telephone) 671,370 1,001,468
-----------
$ 1,788,073
- ------------------------------------------------------------------------------------------------------
Poland - 4.6%
Bank Handlowy w Warszawie, GDR (Banks and Credit
Cos.)## 21,750 $ 265,350
Bank Rozwoju Eksportu S.A. (Banks and Credit Cos.) 11,674 264,861
BIG Bank Gdanski S.A. (Banks and Credit Cos.) 18,517 290,717
Elektrim Spolka Akcyjna S.A. (Electrical Equipment) 47,033 395,769
Orbis S.A. (Restaurants and Lodging) 34,538 262,854
Softbank Corp. (Computer-Software) 15,200 334,400
Telekomunikacja Polska S.A. (Telecommunications)* 130,000 614,250
WBK Wielkopolski S.A. (Banks and Credit Cos.) 40,000 218,265
-----------
$ 2,646,466
- ------------------------------------------------------------------------------------------------------
Russia - 2.1%
AO Mosenergo (Utilities) 76,580 $ 191,450
JSC Surgutneftegaz Co., ADR (Oils) 66,700 266,800
Lukoil Oil Co., ADR (Oils) 25,768 530,821
Unified Energy Systems, GDR (Utilities - Electric) 8,650 36,330
Vimpel Communications, GDR (Telecommunications)* 8,271 149,912
-----------
$ 1,175,313
- ------------------------------------------------------------------------------------------------------
Singapore - 1.7%
City Developments Ltd. (Real Estate) 35,000 $ 166,818
Development Bank of Singapore Ltd. (Banks and Credit
Cos.) 12,000 91,075
Overseas Union Bank Ltd. (Banks and Credit Cos.) 32,000 129,204
Singapore Press Holdings Ltd. (Printing & Publishing) 18,000 193,443
Singapore Press Holdings Ltd. (Printing & Publishing)* 20,400 218,506
Singapore Telecommunications, Ltd.
(Telecommunications) 108,000 180,328
-----------
$ 979,374
- ------------------------------------------------------------------------------------------------------
South Africa - 9.1%
Anglo American Corp. of South Africa Ltd. (Mining) 27,635 $ 885,874
DeBeers Centenary AG (Diamonds - Precious Stones) 24,284 364,900
Dimension Data Holdings Ltd. (Financial Institutions) 119,673 450,088
Imperial Holdings Ltd. (Conglomerate) 38,315 249,149
JD Group Ltd. (Stores)* 40,960 172,766
Liberty Life Association of Africa Ltd. (Insurance) 33,704 576,345
Nedcor Ltd. (Banks and Credit Cos.)* 36,231 742,449
Real Africa Durolink Holdings Ltd. (Diversified
Financial Services)* 6,647 8,528
Real Africa Holdings Ltd. (Conglomerate) 202,134 595,034
Sasol Ltd. (Oils) 58,766 228,764
South African Breweries Ltd. (Brewery) 57,203 968,128
-----------
$ 5,242,025
- ------------------------------------------------------------------------------------------------------
South Korea - 7.0%
Pohang Iron & Steel Co. Ltd. (Steel) 39,730 $ 2,231,900
Samsung Electronics (Electronics) 27,189 1,454,448
SK Telecom Ltd. (Telecommunications) 460 323,570
-----------
$ 4,009,918
- ------------------------------------------------------------------------------------------------------
Taiwan - 4.1%
Taipei Fund (Country Fund)* 264 $ 2,349,600
- ------------------------------------------------------------------------------------------------------
Thailand - 2.0%
Bangkok Expressway Public Co. Ltd.
(Public Through Fares) 171,000 $ 163,421
Electricity Generating Public Co. Ltd.
(Utilities - Electric) 96,000 255,291
PTT Exploration and Production Public Co. Ltd.
(Oil Services) 61,000 490,027
Thai Farmers Bank Public Co. Ltd.
(Banks and Credit Cos.) 117,000 210,665
-----------
$ 1,119,404
- ------------------------------------------------------------------------------------------------------
Turkey - 4.8%
Akbank (Banks and Credit Cos.) 17,585,606 $ 359,185
Arcelik A.S. (Consumer Goods and Services) 11,151,553 323,287
Cimsa Cimento Sanayi ve Ticaret A.S. (Construction
Services) 10,520,333 235,672
Haci Omer Sabanci Holdings A.S., ADR (Conglomerate)## 54,984 237,806
Turkiye Is Bankasi (Banks and Credit Cos.) 20,109,410 563,103
Vestel Electronic (Electronics)* 3,362,863 326,814
Yapi ve Kredi Bankasi (Banks and Credit Cos.) 46,308,750 564,462
Yapi ve Kredi Bankasi A.S. (Banks and Credit Cos.)*## 11,114,100 135,471
-----------
$ 2,745,800
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $62,531,901) $54,751,410
- ------------------------------------------------------------------------------------------------------
Preferred Stock
Brazil
Companhia Vale do Rio Doce, Preferred, 1s, 1999
(Mining)
(Identified Cost $ 0) BRL 24 $ 0
- ------------------------------------------------------------------------------------------------------
Short-Term Obligations - 5.4%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------------------------------
Student Loan Marketing Discount Note, due 12/01/98,
at Amortized Cost $ 3,100 $ 3,100,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $65,631,901) $57,851,410
Other Assets, Less Liabilities - (0.7)% (422,805)
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $57,428,605
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
Abbreviations have been used throughout this report to indicate amounts shown in currencies other than
the U.S. dollar. A list of abbreviations is shown below.
BRL = Brazilian Cruzeiro
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $65,631,901) $57,851,410
Cash 440,689
Foreign currency, at value (identified cost, $470,149) 471,812
Receivable for Fund shares sold 74,960
Receivable for investments sold 1,896,345
Dividends receivable 220,349
Deferred organization expenses 9,882
Other assets 5,750
-----------
Total assets $60,971,197
-----------
Liabilities:
Payable for Fund shares reacquired $ 1,629,974
Payable for investments purchased 1,768,399
Payable to affiliates -
Management fee 6,174
Shareholder servicing agent fee 556
Distribution and service fee 28,884
Accrued expenses and other liabilities 108,605
-----------
Total liabilities $ 3,542,592
-----------
Net assets $57,428,605
===========
Net assets consist of:
Paid-in capital $80,932,342
Unrealized depreciation on investments and translation of
assets and liabilities in
foreign currencies (7,783,072)
Accumulated net realized loss on investments and foreign
currency transactions (15,616,628)
Accumulated net investment loss (104,037)
-----------
Total $57,428,605
===========
Shares of beneficial interest outstanding 4,640,691
=========
Class A shares:
Net asset value and redemption price per share
(net assets of $27,187,956 / 2,188,827 shares of
beneficial interest outstanding) $12.42
======
Offering price per share (100 / 95.25 of net asset value
per share) $13.04
======
Class B shares:
Net asset value and offering price per share
(net assets of $27,276,127 / 2,210,835 shares of
beneficial interest outstanding) $12.34
======
Class C shares:
Net asset value and offering price per share
(net assets of $2,583,401 / 210,510 shares of beneficial
interest outstanding) $12.27
======
Class I shares:
Net asset value and offering price per share
(net assets of $381,121 / 30,519 shares of beneficial
interest outstanding) $12.49
======
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, 1998
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 880,132
Interest 69,412
Foreign taxes withheld (53,287)
------------
Total investment income $ 896,257
------------
Expenses -
Management fee $ 399,392
Trustees' compensation 11,747
Shareholder servicing agent fee 35,945
Distribution and service fee (Class A) 74,752
Distribution and service fee (Class B) 154,628
Distribution and service fee (Class C) 13,572
Administrative fee 4,083
Auditing fees 28,464
Custodian fee 28,395
Printing 25,177
Registration fee 21,302
Postage 18,841
Interest expense 2,871
Amortization of organization expenses 2,606
Legal fees 500
Miscellaneous 33,563
------------
Total expenses $ 855,838
Fees paid indirectly (8,273)
------------
Net expenses $ 847,565
------------
Net investment income $ 48,692
------------
Realized and unrealized gain (loss) on investments:
Realized loss (identified cost basis) -
Investment transactions $(15,324,661)
Foreign currency transactions (193,342)
------------
Net realized loss on investments and foreign
currency transactions $(15,518,003)
------------
Change in unrealized appreciation (depreciation) -
Investments $ (2,159,246)
Translation of assets and liabilities in foreign currencies 6,007
------------
Net unrealized loss on investments and foreign currency
translation $ (2,153,239)
------------
Net realized and unrealized loss on investments
and foreign currency $(17,671,242)
------------
Decrease in net assets from operations $(17,622,550)
============
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1998 MAY 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment gain (loss) $ 48,692 $ (429,632)
Net realized gain (loss) on investments and foreign
currency transactions (15,518,003) 3,739,746
Net unrealized loss on investments and foreign
currency translation (2,153,239) (19,038,139)
------------ ------------
Decrease in net assets from operations $(17,622,550) $(15,728,025)
------------ ------------
Distributions declared to shareholders -
In excess of net investment income (Class A) $ -- $ (192,963)
In excess of net investment income (Class C) -- (4,544)
In excess of net investment income (Class I) -- (3,738)
From net realized gain on investments and foreign
currency transactions (Class A) -- (388,703)
From net realized gain on investments and foreign
currency transactions (Class B) -- (448,541)
From net realized gain on investments and foreign
currency transactions (Class C) -- (35,329)
From net realized gain on investments and foreign
currency transactions (Class I) -- (3,734)
------------ ------------
Total distributions declared to shareholders $ -- $ (1,077,552)
------------ ------------
Net increase (decrease) in net assets from Fund share
transactions $ (5,502,115) $ 5,841,208
------------ ------------
Total decrease in net assets $(23,124,665) $(10,964,369)
Net assets:
At beginning of period 80,553,270 91,517,639
------------ ------------
At end of period (including accumulated undistributed net
investment loss of $104,037 and $152,729, respectively) $ 57,428,605 $ 80,553,270
============ ============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR ENDED MAY 31, ENDED
NOVEMBER 30, ------------------------------- MAY 31,
1998 1998 1997 1996*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.06 $18.96 $16.52 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $ 0.03 $(0.02) $(0.07) $ 0.04
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (3.67) (2.64) 2.74 1.50
------ ------ ------ ------
Total from investment operations $(3.64) $(2.66) $ 2.67 $ 1.54
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $(0.02)
From net realized gain on investments and
foreign currency transactions -- (0.16) (0.23) --
In excess of net investment income -- (0.08) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.24) $(0.23) $(0.02)
------ ------ ------ ------
Net asset value - end of period $12.42 $16.06 $18.96 $16.52
====== ====== ====== ======
Total return(+) (22.67)%++ (14.09)% 16.43% 10.24%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.41%+ 2.35% 2.51% 2.48%+
Net investment income (loss) 0.39%+ (0.12)% (0.42)% 0.35%+
Portfolio turnover 53% 83% 47% 22%
Net assets at end of period (000 omitted) $27,188 $36,669 $37,540 $19,861
* For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the
results would have been lower.
(S) For the year ended May 31, 1998, and 1997, the Adviser voluntarily agreed to bear, subject to reimbursement by the
Fund, expenses of each class of shares of the Fund such that expenses, exclusive of management, distribution,
service fees, and certain other expenses, of the Fund's Class A, Class B, Class C and Class I shares do not exceed
0.75%, respectively, of the Fund's average daily net assets on an annualized basis. For the period ended May 31,
1996, the Adviser voluntarily agreed to maintain total expenses of the Fund at not more than 2.50%, 3.07%, and 3.00%
of average daily net assets for Class A, Class B, and Class C shares, respectively. To the extent that actual
expenses were over/ under these limitations, the net investment income (loss) per share and the ratios would have
been:
Net investment income (loss) $ -- $(0.02) $(0.06) $ 0.02
Ratios (to average net assets):
Expenses## -- 2.31% 2.45% 2.73%+
Net investment income (loss) -- (0.08)% (0.37)% 0.10%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR ENDED MAY 31, ENDED
NOVEMBER 30, ------------------------------- MAY 31,
1998 1998 1997 1996*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.00 $18.89 $16.47 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.00) $(0.13) $(0.15) $(0.02)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (3.66) (2.60) 2.73 1.50
------ ------ ------ ------
Total from investment operations $(3.66) $(2.73) $ 2.58 $ 1.48
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ --
From net realized gain on investments and
foreign currency transactions -- (0.16) (0.16) --
In excess of net investment income -- -- -- (0.01)
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.16) $(0.16) $(0.01)
------ ------ ------ ------
Net asset value - end of period $12.34 $16.00 $18.89 $16.47
====== ====== ====== ======
Total return (22.88)%++ (14.49)% 15.87% 9.85%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.90%+ 2.85% 3.04% 3.06%+
Net investment loss (0.06)%+ (0.67)% (0.87)% (0.19)%+
Portfolio turnover 53% 83% 47% 22%
Net assets at end of period (000 omitted) $27,276 $39,978 $51,020 $20,021
* For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
(S) For the year ended May 31, 1998, and 1997, the Adviser voluntarily agreed to bear, subject to reimbursement by the
Fund, expenses of each class of shares of the Fund such that expenses, exclusive of management, distribution,
service fees, and certain other expenses, of the Fund's Class A, Class B, Class C, and Class I shares do not exceed
0.75%, respectively, of the Fund's average daily net assets on an annualized basis. For the period ended May 31,
1996, the Adviser voluntarily agreed to maintain total expenses of the Fund at not more than 2.50%, 3.07%, and 3.00%
of average daily net assets for Class A, Class B, and Class C shares, respectively. To the extent that actual
expenses were over/ under these limitations, the net investment income (loss) per share and the ratios would have
been:
Net investment loss $ -- $(0.12) $(0.14) $(0.08)
Ratios (to average net assets):
Expenses## -- 2.81%+ 2.98% 3.30%+
Net investment loss -- (0.63)%+ (0.82)% (0.44)%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
NOVEMBER 30, MAY 31, MAY 31,
1998 1998 1997**
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $15.88 $18.76 $16.77
------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.01) $(0.12) $(0.08)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (3.60) (2.58) 2.36
------ ------ ------
Total from investment operations $(3.61) $(2.70) $ 2.28
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.02) $ --
From net realized gain on investments and foreign
currency transactions -- (0.16) (0.29)
------ ------ ------
Total distributions declared to shareholders $ -- $(0.18) $(0.29)
------ ------ ------
Net asset value - end of period $12.27 $15.88 $18.76
====== ====== ======
Total return (22.73)%++ (14.44)% 13.89%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.91%+ 2.84% 3.00%+
Net investment loss (0.08)%+ (0.66)% (0.48)%+
Portfolio turnover 53% 83% 47%
Net assets at end of period (000 omitted) $2,583 $3,478 $2,659
* For the period from the inception of Class C, June 27, 1996, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of
cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are
calculated without reduction for this expense offset arrangement.
(S) For the year ended May 31, 1998, and the period ended May 31, 1997, the Adviser voluntarily agreed to
bear, subject to reimbursement by the Fund, expenses of each class of shares of the Fund such that
expenses, exclusive of management, distribution, service fees, and certain other expenses, of the Fund's
Class A, Class B, Class C, and Class I shares do not exceed .75%, respectively, of the Fund's average
daily net assets on an annualized basis. To the extent that actual expenses were over/under these
limitations, the net investment income (loss) per share and the ratios would have been:
Net investment loss $ -- $(0.12) $(0.07)
Ratios (to average net assets):
Expenses## -- 2.80% 2.97%+
Net investment loss -- (0.62)% (0.39)%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
NOVEMBER 30, MAY 31, MAY 31,
1998 1998 1997***
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $16.11 $19.00 $16.47
------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.06 $ 0.08 $ 0.10
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (3.68) (2.65) 2.43
------ ------ ------
Total from investment operations $(3.62) $(2.57) $ 2.53
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.16) $ --
From net realized gain on investments and foreign
currency transactions -- (0.16) --
------ ------ ------
Total distributions declared to shareholders $ -- $(0.32) $ --
------ ------ ------
Net asset value - end of period $12.49 $16.11 $19.00
====== ====== ======
Total return (22.42)%++ (13.66)% 15.36%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.91%+ 1.85% 2.01%+
Net investment income (loss) 0.89%+ 0.43% 1.14%+
Portfolio turnover 53% 83% 47%
Net assets at end of period (000 omitted) $381 $428 $299
*** For the period from the inception of Class I, January 2, 1997, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of
cash maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are
calculated without reduction for this expense offset arrangement.
(S) For the year ended May 31, 1998, and the period ended May 31, 1997, the Adviser voluntarily agreed to
bear, subject to reimbursement by the Fund, expenses of each class of shares of the Fund such that
expenses, exclusive of management, distribution, service fees, and certain other expenses, of the Fund's
Class A, Class B, Class C and Class I shares do not exceed .75%, respectively, of the Fund's average daily
net assets on an annualized basis. To the extent that actual expenses were over/under these limitations,
the net investment income (loss) per share and the ratios would have been:
Net investment income $ -- $ 0.09 $ 0.10
Ratios (to average net assets):
Expenses## -- 1.81% 1.99%+
Net investment income -- 0.47% 1.14%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS/Foreign & Colonial Emerging Markets Equity 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. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues, forward contracts, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon exchange
or over-the-counter prices. Short-term obligations, which mature in 60 days or
less, are valued at amortized cost, which approximates market value. Non-U.S.
dollar denominated short-term obligations are valued at amortized cost as
calculated in the 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 results 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 may enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Fund may also use contracts in a manner intended to protect
foreign-currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. 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 month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its 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 net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 1.25%
of the Fund's average daily net assets.
The advisory agreement permits the adviser to engage one or more sub-advisers
and the adviser has engaged Foreign & Colonial Management Ltd. and Foreign &
Colonial Emerging Markets Ltd., each an England and Wales Company, to assist
in the performance of its services.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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 $1,871
for the period ended November 30, 1998.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$9,492 for the period ended November 30, 1998, 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
paid 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 and 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. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $8,348 for
the period ended November 30, 1998. Fees incurred under the distribution plan
during the period ended November 30, 1998, 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 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 $2,168 and $75 for
Class B and Class C shares, respectively, for the period ended November 30,
1998. Fees incurred under the distribution plan during the period ended
November 30, 1998, were 1.00% of average daily net assets attributable to both
Class B and Class C shares on an annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemption's of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the period ended November 30,
1998, were $773, $47,787, and $630 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 0.1125%. Prior to January 1, 1998, the fee was calculated as a
percentage of the average Fund's daily net assets at an effective annual rate
of 0.13%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$32,657,777 and $34,712,842, 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 $ 65,631,901
------------
Gross unrealized depreciation $(11,519,182)
Gross unrealized appreciation 3,738,691
------------
Net unrealized depreciation $ (7,780,491)
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
Class A Shares
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,219,118 $ 41,183,377 3,867,672 $ 72,468,218
Shares issued to shareholders in
reinvestment of distributions -- -- 31,963 552,163
Shares reacquired (3,313,667) (43,002,219) (3,596,132) (66,970,563)
---------- ------------ ---------- ------------
Net increase (decrease) (94,549) $ (1,818,842) 303,503 $ 6,049,818
========== ============ ========== ============
</TABLE>
<TABLE>
Class B Shares
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 630,339 $ 8,214,278 2,811,180 $ 53,134,945
Shares issued to shareholders in
reinvestment of distributions -- -- 22,800 394,934
Shares reacquired (918,714) (11,801,973) (3,036,072) (55,624,554)
---------- ------------ ---------- ------------
Net decrease (288,375) $ (3,587,695) (202,092) $ (2,094,675)
========== ============ ========== ============
</TABLE>
<TABLE>
Class C Shares
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 233,937 $ 2,901,719 293,766 $ 5,576,988
Shares issued to shareholders in
reinvestment of distributions -- -- 1,950 33,682
Shares reacquired (242,475) (3,046,204) (218,393) (3,930,561)
---------- ------------ ---------- ------------
Net increase (decrease) (8,538) $ (144,485) 77,323 $ 1,680,109
========== ============ ========== ============
</TABLE>
<TABLE>
Class I Shares
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 6,486 $ 84,664 16,312 $ 308,734
Shares issued to shareholders in
reinvestment of distributions -- -- (631) (12,723)
Shares reacquired (2,520) (35,757) (4,882) (90,055)
---------- ------------ ---------- ------------
Net increase 3,966 $ 48,907 10,799 $ 205,956
========== ============ ========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 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 month period ended November 30, 1998, was $269.
<PAGE>
<TABLE>
MFS(R)/FOREIGN & COLONIAL EMERGING MARKETS EQUITY FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified
services company) INVESTOR INFORMATION
For MFS stock and bond market outlooks, call
Lawrence T. Perera - Partner, Hemenway toll free: 1-800-637-4458 anytime from a
& Barnes (attorneys) touch-tone telephone.
William J. Poorvu - Adjunct Professor, Harvard For information on MFS mutual funds, call your
University Graduate School of Business financial adviser or, for an information kit,
Administration call toll free: 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time (or leave a
Charles W. Schmidt - Private Investor message anytime).
Arnold D. Scott* - Senior Executive Vice INVESTOR SERVICE
President, Director, and Secretary, MFS Service Center, Inc.
MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief Executive
Officer, and Director, MFS Investment For general information, call toll free:
Management 1-800-225-2606 any business day from 8 a.m. to
8 p.m. Eastern time.
Elaine R. Smith - Independent Consultant
For service to speech- or hearing-impaired,
David B. Stone - Chairman and Director, call toll free: 1-800-637-6576 any business day
North American Management Corp. from 9 a.m. to 5 p.m. Eastern time. (To use
(investment advisers) this service, your phone must be equipped with
a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, and
500 Boylston Street exchanges, call toll free: 1-800-MFS-TALK
Boston, MA 02116-3741 (1-800-637-8255) anytime from a touch-tone
telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
PORTFOLIO MANAGERS
Arnab Kumar Banerji*
Jeffrey Chowdhry*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
----------------
MFS(R)/FOREIGN & COLONIAL Bulk Rate
EMERGING MARKETS EQUITY FUND U.S. Postage
Paid
MFS
----------------
[Logo] M F S(R
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
FEM-3 1/99 24M 85/285/385/885
