<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) INTERNATIONAL
GROWTH AND INCOME FUND
SEMIANNUAL REPORT O NOVEMBER 30, 1998
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 21
MFS(R) Prepares for the Year 2000 ......................................... 27
Trustees and Officers ..................................................... 29
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
[Photo of Frederick J. Simmons]
Frederick J. Simmons
For the six months ended November 30, 1998, Class A shares of the Fund
provided a total return of -2.10%, Class B shares -2.37%, Class C shares
- -2.34%, and Class I shares -1.79%. These returns assume the reinvestment of
distributions but exclude the effects of any sales charges and compare to
returns of -5.89% for the Lipper International Funds Index (the Lipper Index)
and 2.24% 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 MSCI EAFE
Index is an unmanaged market-capitalization-weighted total return index of
developed-country global stock markets, excluding the United States, Canada,
and the South African mining component. 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. The Fund's returns also compare to a 0.48%
return for the MSCI EAFE Index. The Fund is discontinuing the use of the
blended index and changing its benchmark to the MSCI EAFE Index because we
believe this index better reflects the universe in which the
Fund invests.
Q. COULD YOU TALK ABOUT SOME THINGS THAT HAVE AFFECTED THE FUND'S RECENT
PERFORMANCE?
A. The primary thing that helped performance relative to the Lipper Index was
the "flight to quality" in both fixed-income and equity investments. This
has worked in our favor because we have stressed large-cap, quality growth
and income stocks. Until very recently, that has been the place to be.
Second, we had a very small exposure to emerging markets, between 1% and 2%
for the period. Finally, our decision to avoid more economically sensitive
stocks was the right one.
Q. YOU'RE STILL HEAVILY WEIGHTED IN EUROPE, WITH OVER 50% OF ASSETS. WHAT DO YOU
LIKE ABOUT EUROPE?
A. We still think Europe offers good growth at reasonable valuations.
Companies such as Compass, a British caterer, and Pinault-Printemps-
Redoute, a French retailer that has benefited from new management, have
helped performance.
Q. IN SPITE OF JAPAN'S ONGOING CRISIS, YOU ALSO HAVE ABOUT 10% OF THE FUND'S
ASSETS IN JAPAN. WHAT KINDS OF COMPANIES DO YOU LIKE THERE?
A. It is 10%, but that's less than half the Japanese weighting of the MSCI
EAFE Index. We have a mixture of export-oriented stocks such as Canon,
Rohm, and Olympus Optical, and companies that we think should respond
favorably to a strong economy that has yet to materialize, such as Kirin
Beverage and Tokyo Broadcasting. Another holding, Takeda Chemical
Industries, a major pharmaceutical company, has both domestic and export
sales.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO IN THE PAST SIX
MONTHS?
A. Not really. We've increased positions in some holdings and subtracted from
others as we have tried to fine tune our positions, a strategy which, for
the most part, seems to be paying off. But there have been no sweeping
changes across the portfolio.
Q. WHAT DO YOU SEE AS THE BIGGEST RISK TO THE MARKETS IN THE NEXT FEW MONTHS?
A. I think the biggest risk is the possibility of more trouble from some of
the emerging markets, which could cause further deterioration in business
activity around the world. Another major risk is that Japan just can't get
going. Japan is the world's second-largest economy, and it's just too much
a part of the world's business activity to be ignored. Another concern is
that Brazil or China might have to devalue their currencies in a major way.
It doesn't seem likely, but the risk is definitely there. So investors need
to be aware that these risks are still out there and not be fooled into
thinking that these problems are over if the market ticks up.
Q. IN GENERAL, THOUGH, WOULD YOU SAY YOUR OVERALL OUTLOOK IS FAVORABLE?
A. Yes. I think there are still a lot of things to be happy about, such as low
inflation and low interest rates. There's no reason to believe that
interest rates will rise, and this type of environment should be reasonably
favorable for the equity markets.
Q. WHAT IMPACT DO YOU SEE EUROPEAN MONETARY UNION HAVING ON THE MARKETS WHERE
YOU INVEST?
A. As time goes on, the euro should facilitate business in Europe, creating an
environment similar to that of the United States, where business is
conducted across state lines. That's a major positive. Another interesting
side effect should be the ability of investment analysts to better compare
companies in different countries. Right now, currency differences come into
the picture and, as hard as we try, we can't easily neutralize these
differences. Now, for example, we'll be able to compare more accurately
results for auto companies in Germany, France, and Italy.
Q. DO YOU THINK WE'LL SEE A LOT OF EUROPEAN COMPANIES MOVING TO OTHER PARTS OF
EUROPE WHERE LABOR AND OTHER COSTS MAY BE CHEAPER?
A. I think labor standards in the different countries will make that
difficult. But, having said that, managements are going to have a much
clearer picture after a few years of which plants are the most efficient.
While they may not necessarily close a plant in one country in favor of
another, they might, over time, be inclined to route production to the more
efficient plants. Also, when they're thinking of building new plants, they
will take this into consideration. I think many managers are going to find
out some things that they suspected but could never document.
/s/ Frederick J. Simmons
Frederick J. Simmons
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
FREDERICK J. SIMMONS IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND PORTFOLIO MANAGER OF MFS(R) GLOBAL TOTAL RETURN FUND,
MFS(R) INTERNATIONAL GROWTH AND INCOME FUND, MFS(R) MERIDIAN(SM) GLOBAL
BALANCED FUND, AND THE WORLD TOTAL RETURN SERIES AND INTERNATIONAL
GROWTH AND INCOME SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY
PRODUCTS. HE ALSO MANAGES THE NOMURA GLOBAL BALANCED OPEN FUND AND THE
NOMURA GN GLOBAL TOTAL RETURN FUND UNDER SUBADVISORY AGREEMENTS WITH
NOMURA ASSET MANAGEMENT CO. OF JAPAN.
MR. 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. HE WAS NAMED PORTFOLIO MANAGER OF MFS(R) GLOBAL TOTAL RETURN
FUND IN 1991.
MR. SIMMONS GRADUATED WITH HONORS FROM 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.
- --------------------------------------------------------------------------------
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.
<PAGE>
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
OBJECTIVE: THE FUND SEEKS BOTH 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: $40.6 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>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return -2.10% +18.19% +29.32% +30.89%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +18.19% + 8.95% + 9.06%
- -------------------------------------------------------------------------------------------------------
SEC Results -- +12.58% + 7.19% + 7.36%
- -------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return -2.37% +17.59% +27.34% +28.89%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +17.59% + 8.39% + 8.52%
- -------------------------------------------------------------------------------------------------------
SEC Results -- +13.59% + 7.53% + 7.70%
- -------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return -2.34% +17.59% +27.59% +29.15%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +17.59% + 8.46% + 8.59%
- -------------------------------------------------------------------------------------------------------
SEC Results -- +16.59% + 8.46% + 8.59%
- -------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
6 Months 1 Year 3 Years 10 Years/Life*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return -1.79% +18.87% +30.04% +31.64%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +18.87% + 9.15% + 9.26%
- -------------------------------------------------------------------------------------------------------
* 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 B for periods prior to the inception of I. Because operating expenses
of B are greater than those of I, I performance generally would have been
higher than B performance. The B performance included in the I performance has
been adjusted to reflect the fact that I have no CDSC. These results represent
the percentage change in net asset value.
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
CONSUMER STAPLES 15.7%
FINANCIAL SERVICES 12.0%
UTILITIES & COMMUNICATIONS 11.4%
HEALTH CARE 8.7%
ENERGY 8.5%
TOP 10 STOCK HOLDINGS
PINAULT-PRINTEMPS-REDOUTE S.A. 3.2% PHILIP MORRIS COS., INC. 2.8%
French department store chain U.S. tobacco, food, and beverage
conglomerate
BRITISH PETROLEUM PLC 3.1%
Oil exploration and production company BRITISH AEROSPACE PLC 2.7%
Defense and aircraft company
CANADIAN NATIONAL RAILWAY 3.0%
Railway/transportation company TAKEDA CHEMICAL INDUSTRIES 2.6%
Japanese pharmaceutical company
IBERDROLA S.A. 3.0%
Spanish electric utility HENKEL KGAA 2.5%
German consumer products company
COMPASS GROUP PLC 2.9%
British commercial food catering company TELECOM ITALIA MOBILE SPA 2.3%
Italian cellular telephone company
Portfolio information is as of November 30, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- November 30, 1998
<TABLE>
<CAPTION>
Stocks - 95.8%
- ------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 10.2%
Albertsons, Inc. (Retail) 7,600 $ 433,675
Anheuser Busch Cos., Inc. (Food and Beverage) 3,300 200,063
Associates First Capital Corp., "A" (Financial Services) 4,300 334,862
Conoco, Inc., "A" (Oils)* 5,600 132,650
McDonalds Corp. (Restaurants) 7,459 522,596
Newell Co. (Consumer Goods and Services) 4,700 207,975
Philip Morris Cos., Inc. (Tobacco) 19,400 1,085,187
ReliaStar Financial Corp. (Insurance) 9,240 434,280
Rite Aid Corp. (Retail) 7,031 326,063
Xerox Corp. (Office Equipment) 4,070 437,525
- ------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 4,114,876
- ------------------------------------------------------------------------------------------------------
Foreign Stocks - 85.6%
Australia - 2.6%
QBE Insurance Group Ltd. (Insurance)* 162,823 $ 699,556
Seven Network Ltd. (Entertainment) 110,376 366,381
-----------
$ 1,065,937
- ------------------------------------------------------------------------------------------------------
Austria - 0.7%
Austria Tabak AG (Tobacco) 3,823 $ 288,335
- ------------------------------------------------------------------------------------------------------
Canada - 2.9%
Canadian National Railway Co. (Railroads) 21,904 $ 1,182,816
- ------------------------------------------------------------------------------------------------------
Chile - 0.2%
Enersis SA, ADR (Utilities - Electric) 4,327 $ 101,144
- ------------------------------------------------------------------------------------------------------
Finland - 1.0%
Helsingin Puhelin Oyj (Telecommunications) 5,680 $ 302,895
Sonera Group OYJ (Telecommunications)* 7,400 106,188
-----------
$ 409,083
- ------------------------------------------------------------------------------------------------------
France - 12.4%
Pinault-Printemps-Redoute SA (Retail) 7,365 $ 1,255,765
Sanofi SA (Medical and Health Products) 4,337 773,784
SEITA (Tobacco) 14,100 817,894
Television Francaise (Broadcasting) 2,840 496,713
Thomson CSF (Aerospace and Defense) 5,990 225,323
Total SA, ADR (Oils) 13,906 850,004
Union des Assurances Federales SA (Insurance) 4,787 633,611
-----------
$ 5,053,094
- ------------------------------------------------------------------------------------------------------
Germany - 6.7%
Henkel KGAA (Consumer Products) 11,708 $ 990,507
Mannesmann AG (Machinery and Telecommunications) 5,090 550,652
Prosieben Media AG (Entertainment) 5,926 284,037
Volkswagen AG (Automotive)* 6,840 556,491
Wella AG (Cosmetics)* 361 319,243
-----------
$ 2,700,930
- ------------------------------------------------------------------------------------------------------
Greece - 1.2%
Hellenic Telecommunication Organization SA, GDR
(Telecommunications)* 17,686 $ 441,342
Panafon Hellenic Telecom Co. SA (Telecommunications) 1,600 28,680
-----------
$ 470,022
- ------------------------------------------------------------------------------------------------------
Hong Kong - 1.0%
Dairy Farm International (Retail) 94,000 $ 125,960
Hong Kong Electric Holdings Ltd. (Utilities - Electric) 89,500 297,678
-----------
$ 423,638
- ------------------------------------------------------------------------------------------------------
Ireland - 0.6%
Allied Irish Banks PLC (Banks and Credit Cos.) 14,500 $ 224,071
- ------------------------------------------------------------------------------------------------------
Italy - 7.2%
ENI S.p.A, ADR (Oils) 5,916 $ 361,616
Instituto Nazionale delle Assicurazioni (Insurance) 226,169 596,741
Sao Paolo Imi S.p.A. (Banks)* 14,001 229,736
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications) 208,565 878,234
Telecom Italia S.p.A. (Telecommunications) 121,600 759,728
Unione Immobiliare S.p.A. (Real Estate)* 226,269 113,202
-----------
$ 2,939,257
- ------------------------------------------------------------------------------------------------------
Japan - 9.6%
Canon, Inc. (Office Equipment) 35,000 $ 773,041
Eisai Co. Ltd. (Pharmaceuticals) 13,000 200,568
Kirin Beverage Corp. (Beverages) 32,000 576,858
Olympus Optical Co. (Optical Equipment) 24,000 262,704
Osaka Sanso Kogyo Ltd. (Chemicals) 30,000 52,375
Rohm Co. (Electronics) 4,000 337,800
Takeda Chemical Industries Co. (Pharmaceuticals) 30,000 1,010,962
Terumo Corp. (Medical Equipment) 19,000 421,965
Tokyo Broadcasting System, Inc. (Broadcasting) 8,000 80,877
Ushio, Inc. (Electronics) 20,000 175,071
-----------
$ 3,892,221
- ------------------------------------------------------------------------------------------------------
Netherlands - 10.5%
Akzo Nobel N.V. (Chemicals) 14,418 $ 591,013
Benckiser N.V. (Consumer Goods) 7,412 437,915
Equant N.V. Registered Shares (Computer Systems)* 1,700 95,944
Hunter Douglas N.V., ADR (Consumer Goods)* 10,615 365,192
IHC Caland N.V. (Marine Equipment)* 7,177 303,951
ING Groep N.V. (Financial Services)* 7,002 400,878
Koninklijke Ahold N.V., ADR (Food/Retail) 19,093 662,288
Royal Dutch Petroleum Co., ADR (Oils) 15,777 741,519
Wolters Kluwer N.V. (Publishing)* 3,476 662,450
-----------
$ 4,261,150
- ------------------------------------------------------------------------------------------------------
Portugal - 1.4%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 18,754 $ 342,051
Electricidade de Portugal S.A. (Utilities - Electric) 9,350 207,210
-----------
$ 549,261
- ------------------------------------------------------------------------------------------------------
South Korea - 0.3%
Korea Electric Power Corp. (Utilities - Electric) 6,240 $ 120,289
- ------------------------------------------------------------------------------------------------------
Spain - 4.4%
Iberdrola SA (Utilities - Electric) 71,324 $ 1,181,729
Telefonica de Espana SA (Utilities - Telephone) 13,072 614,406
-----------
$ 1,796,135
- ------------------------------------------------------------------------------------------------------
Sweden - 3.3%
Astra AB (Pharmaceuticals) 38,931 $ 696,504
Saab AB, "B" (Aerospace)* 44,405 458,645
Volvo AB, "B" (Automotive) 8,227 191,191
-----------
$ 1,346,340
- ------------------------------------------------------------------------------------------------------
Switzerland - 2.4%
Ciba Specialty Chemicals AG (Chemicals) 1,803 $ 169,729
Clariant AG (Chemicals) 262 129,603
Nestle AG, Registered Shares (Food and Beverage Products) 251 521,082
UBS AG (Banks and Credit Cos.)* 500 150,333
-----------
$ 970,747
- ------------------------------------------------------------------------------------------------------
United Kingdom - 17.2%
Allied Zurich (Insurance)* 12,551 $ 178,939
AMP, Inc. (Electronics) 8,825 426,909
Avis Europe PLC (Auto Rental)## 135,869 521,040
British Aerospace PLC (Aerospace and Defense)* 123,101 1,057,084
British Petroleum PLC, ADR (Oils) 13,057 1,202,876
Compass Group PLC (Food and Catering) 108,248 1,140,069
Lloyds TSB Group PLC (Banks and Credit Cos.) 23,860 331,322
LucasVarity PLC (Automotive) 132,017 452,588
Next PLC (Retail) 9,200 74,301
Rentokil Initial (Office Services) 24,500 162,772
Reuters Group PLC (Computer - Services) 2,000 115,000
Reuters Group PLC (Computer - Services) 20,200 194,934
Tomkins PLC (Diversified Operations)* 148,951 689,859
Williams PLC (Diversified Operations) 67,664 418,215
-----------
$ 6,965,908
- ------------------------------------------------------------------------------------------------------
Total Foreign Stocks $34,760,378
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $33,960,987) $38,875,254
- ------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
Warrants
Vivendi (Utilities - Water) (France)* (Identified
Cost, $0) 1,150 $ 2,325
- ------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.6%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn., due 12/01/98, at
Amortized Cost $ 1,465 $ 1,465,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $35,425,987) $40,342,579
Other Assets, Less Liabilities - 0.6% 255,509
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $40,598,088
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------
NOVEMBER 30, 1998
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $35,425,987) $40,342,579
Foreign currency, at value (identified cost, $12,543) 12,457
Cash 5,523
Receivable for Fund shares sold 207,064
Receivable for investments sold 293,514
Interest and dividends receivable 75,177
Other assets 23,294
Deferred organization expenses 10,512
-----------
Total assets $40,970,120
-----------
Liabilities:
Payable for Fund shares reacquired $ 153,750
Payable for investments purchased 152,217
Payable to affiliates -
Management fee 3,302
Shareholder servicing agent fee 381
Distribution and service fee 19,416
Accrued expenses and other liabilities 42,966
-----------
Total liabilities $ 372,032
-----------
Net assets $40,598,088
===========
Net assets consist of:
Paid-in capital $34,905,050
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 4,918,101
Accumulated net realized gain on investments and foreign
currency transactions 862,995
Accumulated net investment loss (88,058)
-----------
Total $40,598,088
===========
Shares of beneficial interest outstanding 2,188,978
=========
Class A shares:
Net asset value and redemption price per share
(net assets of $16,648,949 / 894,630 shares of
beneficial interest outstanding) $18.61
======
Offering price per share (100 / 95.25 of net asset value
per share) $19.54
======
Class B shares:
Net asset value and offering price per share
(net assets of $22,329,897 / 1,206,185 shares of
beneficial interest outstanding) $18.51
======
Class C shares:
Net asset value and offering price per share
(net assets of $1,583,103 / 86,221 shares of beneficial
interest outstanding) $18.36
======
Class I shares:
Net asset value and offering price per share
(net assets of $36,139 / 1,942 shares of beneficial
interest outstanding) $18.61
======
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 loss:
Income -
Interest $ 57,298
Dividends 345,917
Foreign taxes withheld (33,244)
---------
Total investment income $ 369,971
---------
Expenses -
Management fee $ 179,135
Trustees' compensation 3,039
Shareholder servicing agent fee 20,669
Distribution and service fee (Class A) 38,588
Distribution and service fee (Class B) 99,754
Distribution and service fee (Class C) 6,737
Administrative fee 2,276
Custodian fee 19,101
Registration fees 27,224
Printing 20,086
Postage 5,852
Auditing fees 8,194
Legal fees 418
Amortization of organization expenses 2,675
Miscellaneous 10,645
---------
Total expenses $ 444,393
Fees paid indirectly (2,006)
---------
Net expenses $ 442,387
---------
Net investment loss $ (72,416)
---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 191,387
Foreign currency transactions (4,546)
---------
Net realized gain on investments and foreign currency
transactions $ 186,841
---------
Change in unrealized appreciation (depreciation) -
Investments $(773,310)
Translation of assets and liabilities in foreign currencies 3,301
---------
Net unrealized loss on investments and foreign currency
translation $(770,009)
---------
Net realized and unrealized loss on investments and
foreign currency $(583,168)
---------
Decrease in net assets from operations $(655,584)
=========
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 in net assets:
From operations -
Net investment loss $ (72,416) $ (173,845)
Net realized gain on investments and foreign currency
transactions 186,841 3,556,834
Net unrealized gain (loss) on investments and foreign
currency translation (770,009) 2,571,252
----------- -----------
Increase (decrease) in net assets from operations $ (655,584) $ 5,954,241
----------- -----------
Distributions declared to shareholders -
From net realized gain on investments and foreign currency
transactions (Class A) $ -- $ (450,497)
From net realized gain on investments and foreign currency
transactions (Class B) -- (568,428)
From net realized gain on investments and foreign currency
transactions (Class C) -- (11,433)
From net realized gain on investments and foreign currency
transactions (Class I) -- (67)
In excess of net investment income (Class A) -- (94,237)
In excess of net investment income (Class B) -- (45,813)
In excess of net investment income (Class C) -- (1,657)
In excess of net investment income (Class I) -- (24)
----------- -----------
Total distributions declared to shareholders $ -- $(1,172,156)
----------- -----------
Fund share (principal) transactions -
Net increase in net assets from Fund share transactions $ 6,349,586 $ 711,945
----------- -----------
Total increase in net assets $ 5,694,002 $ 5,494,030
Net assets:
At beginning of period 34,904,086 29,410,056
----------- -----------
At end of period (including accumulated net investment loss
of $88,058 and $15,642, respectively) $40,598,088 $34,904,086
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ------------------------------------------
NOVEMBER 30, 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 $19.01 $16.32 $15.98 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $(0.05) $ 0.11 $ 0.11
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (0.39) 3.45 0.35 0.90
------ ------ ------ ------
Total from investment operations $(0.40) $ 3.40 $ 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 transactions -- (0.59) (0.04) --
In excess of net investment income and foreign
currency transactions -- (0.12) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.71) $(0.12) $(0.03)
------ ------ ------ ------
Net asset value - end of period $18.61 $19.01 $16.32 $15.98
====== ====== ====== ======
Total return(+) (2.10)%++ 21.77% 2.88% 6.71%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.13%+ 2.22% 2.39% 2.52%+
Net investment income (0.09)%+ (0.28)% 0.72% 1.04%+
Portfolio turnover 30% 158% 89% 29%
Net assets at end of period (000 omitted) $16,649 $15,087 $13,425 $11,950
* 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'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 sales charge had been included,
the results would have been lower.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ------------------------------------------
NOVEMBER 30, 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 $18.96 $16.27 $15.94 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.05) $(0.14) $ 0.03 $ 0.05
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (0.40) 3.47 0.34 0.90
------ ------ ------ ------
Total from investment operations $(0.45) $ 3.33 $ 0.37 $ 0.95
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $(0.01)
From net realized gain on investments and foreign
currency transactions -- (0.59) (0.04) --
In excess of net investment income and foreign
currency transactions -- (0.05) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.64) $(0.04) $(0.01)
------ ------ ------ ------
Net asset value - end of period $18.51 $18.96 $16.27 $15.94
====== ====== ====== ======
Total return (2.37)%++ 21.26% 2.33% 6.37%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.63%+ 2.72% 2.94% 3.11%+
Net investment income (0.61)%+ (0.79)% 0.18% 0.49%+
Portfolio turnover 30% 158% 89% 29%
Net assets at end of period (000 omitted) $22,330 $18,987 $15,749 $13,641
* 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's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED --------------------------
NOVEMBER 30, 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 $18.80 $16.19 $16.02
------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.07) $(0.10) $ 0.12
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.37) 3.39 0.21
------ ------ ------
Total from investment operations $(0.44) $ 3.29 $ 0.33
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.12)
From net realized gain on investments and foreign currency
transactions -- (0.59) (0.04)
In excess of net investment income and foreign currency
transactions -- (0.09) --
------ ------ ------
Total distributions declared to shareholders $ -- $(0.68) $(0.16)
------ ------ ------
Net asset value - end of period $18.36 $18.80 $16.19
====== ====== ======
Total return (2.34)%++ 21.15% 2.09%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.65%+ 2.71% 2.64%+
Net investment income (0.77)%+ (0.61)% 0.80%+
Portfolio turnover 30% 158% 89%
Net assets at end of period (000 omitted) $1,583 $824 $235
** For the period from the inception of Class C, July 1, 1996, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ---------------------------
NOVEMBER 30, 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 $18.95 $16.32 $15.71
------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $ 0.06 $ 0.16
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.33) 3.37 0.45
------ ------ ------
Total from investment operations $(0.34) $ 3.43 $ 0.61
------ ------ ------
Less distributions declared to shareholders -
From net realized gain on investments and foreign currency
transactions $ -- $(0.59) $ --
In excess of net investment income and foreign currency
transactions -- (0.21) --
------ ------ ------
Total distributions declared to shareholders $ -- $(0.80) $ --
------ ------ ------
Net asset value - end of period $18.61 $18.95 $16.32
====== ====== ======
Total return (1.79)%++ 22.08% 3.88%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.62%+ 1.64% 1.89%+
Net investment income (0.15)%+ 0.33% 2.33%+
Portfolio turnover 30% 158% 89%
Net assets at end of period (000 omitted) $36 $6 $ --
*** 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's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS International Growth and Income 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, and
swap agreements, 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.
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. 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 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.
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 0.975%
of the Fund's average daily net assets up to $500 million, after which the
rate is reduced to 0.925%.
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 $505
for the six months ended November 30, 1998.
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%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$14,002 for the six months 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 $2,080 for
the six months ended November 30, 1998. Fees incurred under the distribution
plan during the six months ended November 30, 1998, were 0.50% of average
daily net assets attributable to Class A shares on an annualized basis.
The Trustees have adopted a distribution plan relating solely to 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 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 $1,889 and $90 for
Class B and Class C shares, respectively, for the six months ended November
30, 1998. Fees incurred under the distribution plan during the six months
ended November 30, 1998, were 1.00% of average daily net assets attributable
to both Class B and Class C shares.
Certain Class A and Class C 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 six months ended November 30, 1998,
were $0, $42,761, and $675 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%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$16,367,719 and $10,267,269, 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 $35,426,072
-----------
Gross unrealized appreciation $ 5,804,411
Gross unrealized depreciation (887,904)
-----------
Net unrealized appreciation $ 4,916,507
===========
(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>
<CAPTION>
Class A Shares
SIX MONTHS ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
---------------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 690,215 $ 13,157,664 464,915 $ 8,316,277
Shares issued to shareholders in
reinvestment of distributions -- -- 31,181 488,613
Shares reacquired (589,071) (11,292,635) (525,443) (9,254,269)
------- ------------ ------- ------------
Net increase (decrease) 101,144 $ 1,865,029 (29,347) $ (449,379)
======= ============ ======= ============
<CAPTION>
Class B Shares
SIX MONTHS ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
---------------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 570,976 $ 10,741,932 382,384 $ 6,745,390
Shares issued to shareholders in
reinvestment of distributions -- -- 33,907 530,985
Shares reacquired (366,267) (7,051,599) (382,617) (6,634,549)
------- ------------ ------- ------------
Net increase 204,709 $ 3,690,333 33,674 $ 641,826
======= ============ ======= ============
<CAPTION>
Class C Shares
SIX MONTHS ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
---------------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 149,934 $ 2,755,379 58,848 $ 1,059,923
Shares issued to shareholders in
reinvestment of distributions -- -- 789 12,254
Shares reacquired (107,534) (1,989,006) (30,361) (558,286)
------- ------------ ------- ------------
Net increase 42,400 $ 766,373 29,276 $ 513,891
======= ============ ======= ============
<CAPTION>
Class I Shares
SIX MONTHS ENDED NOVEMBER 30, 1998 YEAR ENDED MAY 31, 1998
---------------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,628 $ 28,280 358 $ 6,503
Shares issued to shareholders in
reinvestment of distributions -- -- 5 88
Shares reacquired (25) (429) (53) (984)
------- ------------ ------- ------------
Net increase 1,603 $ 27,851 310 $ 5,607
======= ============ ======= ============
</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 months ended November 30, 1998, was $165.
(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, swap agreements, 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.
<PAGE>
<TABLE>
MFS(R) INTERNATIONAL GROWTH AND INCOME 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,
Lawrence T. Perera - Partner, Hemenway call toll free: 1-800-637-4458 anytime from
& Barnes (attorneys) a 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, call
Administration toll free: 1-800-637-2929 any business day from 9
a.m. to 5 p.m. Eastern time (or leave a message
Charles W.Schmidt - Private Investor 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 Management For general information, call toll free:
1-800-225-2606 any business day from
Elaine R. Smith - Independent Consultant 8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman and Director, For service to speech- or hearing-impaired, call
North American Management Corp. toll free: 1-800-637-6576 any business day from 9
(investment advisers) a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a
INVESTMENT ADVISER Telecommunications Device for the Deaf.) For share
Massachusetts Financial Services Company prices, account balances, and exchanges, call toll
500 Boylston Street free: 1-800-MFS-TALK (1-800-637-8255) anytime from
Boston, MA 02116-3741 a touch-tone telephone.
DISTRIBUTOR WORLD WIDE WEB
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Frederick J. Simmons*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
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MFS(R) INTERNATIONAL Bulk Rate
GROWTH AND INCOME FUND U.S. Postage
Paid
MFS
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[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
MGI-3 1/99 16M 86/286/386/886
