<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) INTERNATIONAL
GROWTH FUND
SEMIANNUAL REPORT o NOVEMBER 30, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 22
MFS' Year 2000 Readiness Disclosure ....................................... 28
Trustees and Officers ..................................................... 29
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
One could easily argue that the Internet represents the greatest technological
development most of us may see in our lifetimes. There is no disputing that this
new communication medium is changing forever the way we work, play, and shop.
One might also argue that investing in this new technology represents the
investment opportunity of a lifetime. The question for any investor is whether
and how to take advantage of it.
The popular press, it seems, would have us believe that by surfing the Web, we
can learn everything we need to know about investing. Indeed, there is no
doubt that Internet-delivered information and brokerage services enable
individual investors to be well-informed and to trade at bargain prices. But
we believe the numbers and facts argue that, for most of us, mutual funds
purchased through a financial professional will continue to be one of the best
products for long-term investing in this new millennium.
According to a survey by the Investment Company Institute, a national
association of American investment companies, 44% of American households own
stock or bond mutual funds, while only 25.5% own individual stocks.(1) Of
course that doesn't tell us how well they did owning those funds or stocks,
but another statistic gives us a clue. In the third quarter of 1999, during a
period of volatility in the greatest bull market in history, a quarter of the
7,500 stocks tracked by Morningstar, a popular rating service, lost more than
20% of their value. But during the same period, less than 1% of the mutual
funds tracked by Morningstar -- 6 out of 10,000 funds -- were down by a
similar amount.(2) So, with all things being equal, an investor's chance of
picking one of those losing stocks was about 25 times greater than his or her
chance of picking an equally losing fund.
The numbers also show that a majority of Americans seek professional advice
when buying mutual funds. Outside of employer-sponsored retirement plans,
approximately 68% of fund shareholders state that their primary method of
purchasing shares is through a financial professional.(1)
Why do we at MFS(R) believe that mutual funds plus professional advice will
continue to define the best course of action for many investors? Let's look at
some of the characteristics of a successful long-term investment approach:
o HAVING A PLAN AND STICKING TO IT: Our experience is that successful investors
-- those whose lives are enriched by the fruits of their investing -- share
two characteristics. They have a plan for reaching their monetary goals, and
they stick with that plan through up markets and down ones. And for many
investors, working with a financial professional may be the best way to
develop a plan. Although the Internet abounds with calculators for developing
all sorts of investment plans, none has your broker or consultant's high level
of experience and an understanding of your unique situation. And no calculator
can counsel you during a down market, when you may be tempted to abandon your
goals and your plan.
o DIVERSIFICATION: Few investors can afford to own a large number of holdings,
so poor performance of one company can potentially drag down their entire
portfolio. This is especially true when investing in volatile new areas such
as the Internet. On the other hand, a diversified mutual fund that owns dozens
or even hundreds of holdings is better positioned to survive a disappointment
in one or several investments.
o GOOD IN A DOWN MARKET: As we enter the tenth year of the greatest bull market
in history, it's easy to forget that market downturns are an almost inevitable
part of investing. Few mutual funds, of course, are going to be up when the
overall market is down. But as the numbers above from the third quarter of
1999 demonstrate, mutual funds may be less likely to suffer the extreme
downturns experienced by a large number of individual holdings when the market
heads south.
o MFS ORIGINAL RESEARCH(R): The Internet is one of the greatest research tools
ever invented, but it's still not the same as being eyeball to eyeball with
the management of a company and discussing their plans for their firm's
future.
o GOOD PERFORMANCE AT AN ACCEPTABLE LEVEL OF RISK: Investing in individual
stocks or bonds does indeed offer the potential of exhilarating performance
that few mutual funds even attempt. The downside is that the most exciting
investments are also likely to be the ones that give you sleepless nights. The
diversification and professional management of mutual funds help make them
inherently less risky than individual stock picking, and funds are available
in a wide range of risk profiles.
We believe that now, more than ever, mutual funds sold by an investment
professional may offer many investors the best way to participate in whatever
investment opportunities the new millennium may bring. The combination of
professional portfolio management and professional advice recognizes the key
reason that investors give us their money: because they don't want to make a
hobby or a second profession out of investing; they simply want their money to
work for them so they have a better likelihood of realizing their dreams.
As always, we appreciate your confidence in MFS 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, 1999
(1) Source: Investment Company Institute.
(2) Source: Morningstar CEO Don Phillips' keynote address at The Baltimore
Sun's Dollars and Sense Conference, 10/99. In the period 7/1/99 through 9/
30/99, of the 7,500 stocks tracked by Morningstar, 1,865 lost 20% or more;
of the 10,000 mutual funds tracked by Morningstar, six lost 20% or more.
Mutual fund results are at net asset value; if sales charges had been
reflected, results would have
been lower.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of David R. Mannheim]
David R. Mannheim
For the six months ended November 30, 1999, Class A shares of the Fund
provided a total return of 20.84%, Class B shares 20.45%, Class C shares
20.51%, and Class I shares 21.11%. These returns assume the reinvestment of
any distributions but exclude the effects of any sales charges.
During the same period, the Morgan Stanley Capital International (MSCI) Europe,
Australia, Far East (EAFE) Index, 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, returned 16.58%.
The Fund's returns also compare to a return of 20.27% for the Lipper
International Funds Index (the Lipper Index) and 22.69% for the average
international fund tracked by Lipper Analytical Services, Inc., an independent
firm that reports mutual fund performance. 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.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE?
A. The market environment was supportive, as the global economic recovery
continued. Instead of merely achieving positive gains within the very
largest companies, markets worldwide broadened to include some of the
smaller- and mid-capitalization stocks found in our Fund. Dollar-based
investors in foreign stocks benefited from the fact that the strengthening
of the yen more than offset the continued weakness of the euro. A stronger
yen helped magnify the returns of the Fund's Japanese investments when
translated back into dollars. Relative to the MSCI EAFE Index, the Fund's
performance was helped by an overweighted position in telecommunications
stocks and an underweighted position in the financial services sector.
Q. WHAT MOVES HAVE YOU MADE WITH THE FUND OVER THE PAST SIX MONTHS?
A. Perhaps the most significant change -- both in terms of the make-up of
the Fund and contribution to performance -- was our increase in
telecommunications investments, which increased from about 14% of portfolio
assets six months ago to about 25% at the end of November.
Wireless communications companies made up the lion's share of this
position. Within the industry, subscriber growth was higher than expected.
We believe revenues per customer stabilized because of the increased usage
of wireless data transmission, halting the decline that had caused some
concern. Among our larger investments and better performers were NTT
Mobile Communications Network in Japan and Mannesmann in Germany.
Q. AT THE END OF THE PERIOD, TECHNOLOGY WAS THE FUND'S SECOND-LARGEST SECTOR
ALLOCATION. WHAT OPPORTUNITIES DID YOU FIND THERE?
A. The Fund's technology weighting increased from about 9% six months ago to
about 16% at the end of the period, an overweighted position relative to the
MSCI EAFE Index. Most of the new or increased positions were in Japanese
large-company stocks, including Hitachi, Fujitsu, and Toshiba. Not only have
these firms benefited from strong positions within their particular
industries, but also from significant restructuring programs. For some time,
well-established Japanese companies were undermanaged, overextended, and
involved in too many businesses that didn't produce results. More recently,
the companies have started to sell off unprofitable businesses, choosing
instead to focus on their strengths. By doing so, we feel the companies
should dramatically enhance their growth rates. These stocks have done very
well over the past six months because investors have started to recognize
and appreciate these efforts.
The semiconductor industry was another component of the technology sector
that fared well, in particular those computer chip firms that satisfy the
needs of the expanding telecommunications field. These businesses also
benefited from a rebound brought on by the awakening of Asian economies.
STMicroelectronics, a French semiconductor company, was one of our
additions in this field.
Q. YOU MENTIONED THAT YOU'VE UNDERWEIGHTED FINANCIAL SERVICES STOCKS. WHY?
A. We're coming off a number of years when financial services stocks -- and
European banks in particular -- benefited from falling interest rates and
improving asset quality. We believe that the situation has changed and the
best is behind us, and that these stocks won't be able to sustain the
above-average growth they've offered in recent years. As a result, we've
looked for better opportunities elsewhere.
Nevertheless, financial services stocks still represent about 13% of the
portfolio, down from over 20% six months ago and below that of the MSCI
EAFE Index weighting. We were able to find particular opportunities in
Singapore banks, including Development Bank of Singapore (DBS) and
Overseas Union Bank. The worst news regarding growth in Asia appears to be
behind us, and these stocks were selling at appealing valuations at a time
when they looked ready to benefit from improving asset quality.
Q. LET'S TAKE A LOOK AT THE GEOGRAPHICAL DISTRIBUTION OF THE FUND'S
INVESTMENTS.
A. Investors should remember that investments are chosen for the Fund based on
individual company prospects. Country or region weightings are strictly a
byproduct of our bottom-up, company-by-company research. That said, Japan
represented the largest country weighting at about 23%, up from 15% six
months ago. This was still underweight relative to the MSCI EAFE Index. We
were able to find more opportunities in Japan related to restructuring, as
well as growth among companies that do their business domestically. The
United Kingdom was second, and France was third, with investments there
jumping from 11% six months ago to 15.1% at the end of November. New
purchases included health care firms Sanofi-Synthelabo and Rhone-Poulenc.
Q. WHAT HAS BEEN YOUR APPROACH REGARDING EMERGING MARKETS?
A. The portfolio currently holds about 3% in these stocks, including
investments in Greece and Mexico. Our attraction to individual companies in
emerging markets also depends on our comfort with the stability of the
individual country market. We found no compelling reason to highlight
emerging countries over the past six months.
Q. WHICH STOCKS PROVED TO BE DISAPPOINTMENTS?
A. One area that struggled was the European aerospace and defense industry,
including our investments in Saab and British Aerospace. Problems among U.S.
companies in this field brought down valuations for the whole group
globally, even though there were no internal problems within the companies
themselves. We've maintained investments in these stocks because we believe
the companies' fundamentals appear strong.
Q. WHAT IS YOUR OUTLOOK?
A. We are increasingly optimistic about the corporate earnings outlook in both
Japan and Europe, where we think the short-term driver of growth will be the
continuing global economic recovery. Fiscal and monetary policies in those
two regions have been supportive. While interest rates have backed up over
the past year, they are still low historically. The outlook for inflation is
sanguine, so we're not particularly concerned about interest rates
continuing to move higher.
Looking ahead, we think positive influences may include deregulation and
corporate restructuring at the company level. A more shareholder-friendly
equity culture is developing both in Europe and Japan. Management
incentives have been aligned with shareholder goals, including stock
option programs. Corporations have taken other steps, such as share
buybacks, to improve shareholder value. These are very new developments
within the European and Japanese markets, and are the same types of
programs that have helped U.S. corporations beat earnings forecasts over
the past decade, regardless of the economic backdrop.
However, we believe valuations in general have reached the high end of
their historical range. That is, even though earnings growth has gone up,
equity prices have gone up even more. Nevertheless, we feel that the
outlook for both inflation and interest rates is positive. If corporate
earnings growth continues to surprise on the upside, there should be
plenty of investment opportunities abroad.
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current 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.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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DAVID R. MANNHEIM IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R) AND DIRECTOR OF INTERNATIONAL PORTFOLIO MANAGEMENT. HE IS
PORTFOLIO MANAGER OF MFS(R) GLOBAL EQUITY FUND, MFS(R) INTERNATIONAL
GROWTH FUND, MFS(R) INSTITUTIONAL INTERNATIONAL EQUITY FUND, AND THE
INTERNATIONAL GROWTH SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY
PRODUCTS.
MR. MANNHEIM JOINED MFS IN 1988 AND WAS NAMED INVESTMENT OFFICER IN
1990, ASSISTANT VICE PRESIDENT IN 1991, VICE PRESIDENT AND PORTFOLIO
MANAGER IN 1992, SENIOR VICE PRESIDENT IN 1997, AND DIRECTOR OF
INTERNATIONAL PORTFOLIO MANAGEMENT IN 1999. HE IS A GRADUATE OF AMHERST
COLLEGE AND THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF
MANAGEMENT.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED
BY AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A GLOBAL, COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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 consultant, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS TO PROVIDE CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN NON-U.S. STOCKS GROWING AT RATES
EXPECTED TO BE WELL ABOVE THE GROWTH RATE OF THE
OVERALL U.S. ECONOMY.
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: $101.8 MILLION NET ASSETS AS OF NOVEMBER 30, 1999
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. (See Notes
to Performance Summary.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH NOVEMBER 30, 1999
CLASS A
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +20.84% +21.57% +19.92% +29.16%
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Average Annual Total Return Excluding
Sales Charge -- +21.57% + 6.24% + 6.44%
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Average Annual Total Return Including
Sales Charge -- +15.80% + 4.53% + 5.18%
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CLASS B
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +20.45% +20.86% +18.02% +26.28%
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Average Annual Total Return Excluding
Sales Charge -- +20.86% + 5.68% + 5.85%
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Average Annual Total Return Including
Sales Charge -- +16.86% + 4.77% + 5.44%
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CLASS C
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +20.51% +20.76% +18.10% +26.60%
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Average Annual Total Return Excluding
Sales Charge -- +20.76% + 5.70% + 5.92%
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Average Annual Total Return Including
Sales Charge -- +19.76% + 5.70% + 5.92%
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CLASS I
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +21.11% +22.08% +21.55% +30.90%
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Average Annual Total Return Excluding
Sales Charge -- +22.08% + 6.72% + 6.79%
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* For the period from the commencement of the Fund's investment operations,
October 24, 1995, through November 30, 1999.
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 4.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months. Class I shares have no sales charge and are only available to certain
institutional investors.
Class C share performance includes the performance of the Fund's Class B
shares for periods prior to its inception (blended performance). Class C
blended performance has been adjusted to take into account the lower CDSC
applicable to Class C shares. This blended performance has not been adjusted
to take into account differences in class-specific operating expenses. Because
operating expenses of Class B and C shares are approximately the same, the
blended Class C performance is approximately the same as it would have been
had Class C shares been offered for the entire period.
Class I share performance includes the performance of the Fund's Class A
shares for periods prior to its inception (blended performance). Class I share
blended performance has been adjusted to account for the fact that Class I
shares have no sales charge. This blended performance has not been adjusted to
take into account differences in class-specific operating expenses. Because
operating expenses of Class I shares are lower than those of Class A, the
blended Class I share performance is lower than it would have been had Class I
shares been offered for the entire period.
All 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 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. See the
prospectus for details.
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1999
FIVE LARGEST STOCK SECTORS
UTILITIES & COMMUNICATIONS 25.1%
TECHNOLOGY 15.8%
FINANCIAL SERVICES 13.1%
HEALTH CARE 8.3%
CONSUMER STAPLES 6.9%
TOP 10 STOCK HOLDINGS
NTT MOBILE COMMUNICATIONS NETWORK, TOTAL S.A. 2.8%
INC. 5.0% French oil company
Japanese cellular phone company
BRITISH TELECOMMUNICATIONS PLC 2.7%
MANNESMANN AG 4.4% British telecommunications company
German industrial and telecommunications
company SAAB AB 2.6%
Swedish aircraft manufacturer
CABLE & WIRELESS COMMUNICATIONS PLC 3.8%
British cable television and STMICROELECTRONICS 2.5%
telecommunications company French semiconductor company
HITACHI LTD. 3.1% HELSINGIN PUHELIN OYJ
Japanese electronics manufacturer (HELSINKI TELEPHONE) 2.3%
Finnish telecommunications company
ASTRAZENECA PLC 2.8%
British pharmaceuticals manufacturer
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- November 30, 1999
<TABLE>
<CAPTION>
Stocks - 102.7%
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ISSUER SHARES VALUE
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<S> <C> <C>
Foreign Stocks - 100.8%
Australia - 1.9%
QBE Insurance Group Ltd. (Insurance)* 496,310 $ 1,975,989
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Canada - 3.1%
BCE, Inc. (Telecommunications) 20,600 $ 1,386,215
Canadian National Railway Co. (Railroads) 60,000 1,796,250
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$ 3,182,465
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Finland - 3.3%
Helsingin Puhelin Oyj (Telecommunications) 36,000 $ 2,393,583
HPY Holding - HTF Holding Oyj Abp (Telecommunications)* 26,250 781,428
Perlos Oyj Corp. (Electronics)* 10,000 176,295
------------
$ 3,351,306
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France - 17.6%
Bouygues S.A. (Construction)* 3,320 $ 1,531,813
Castorama-Dubois Investissements (Stores) 6,200 1,611,438
Pernod Ricard Co. (Beverages) 27,000 1,539,509
Rhone-Poulenc S.A. (Pharmaceuticals) 25,000 1,548,878
Sanofi-Synthelabo S.A. (Medical and Health Products)* 40,100 1,652,227
STMicroelectronics Co. (Electronics)* 19,175 2,607,782
Television Francaise (Entertainment) 3,250 1,178,659
Total S.A., "B" (Oils) 22,000 2,927,707
Union des Assurances Federales S.A. (Insurance) 9,700 1,172,614
Vivendi (Business Services) 13,600 1,089,201
Wavecom S.A., ADR (Electronics)* 26,900 1,149,975
------------
$ 18,009,803
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Germany - 6.2%
Henkel KGaA, Preferred (Chemicals) 16,200 $ 1,019,993
Mannesmann AG (Conglomerate) 22,000 4,574,403
Wella AG, Preferred (Consumer Goods and Services) 30,522 737,949
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$ 6,332,345
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Greece - 1.9%
Antenna TV S.A., ADR (Broadcasting)* 56,000 $ 735,000
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 53,800 1,153,777
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$ 1,888,777
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Ireland - 1.6%
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.)* 694,011 $ 1,626,601
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Italy - 2.5%
Telecom Italia Mobile S.p.A. (Telecommunications) 210,280 $ 1,652,322
Telecom Italia Mobile S.p.A., Saving Shares (Telecommunications)* 215,800 845,674
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$ 2,497,996
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Japan - 23.7%
Canon, Inc. (Special Products and Services) 70,000 $ 2,063,882
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 188,000 2,052,757
Chukyo Coca-Cola Bottling Co. Ltd. (Food and Beverage Products) 46,000 485,543
Coca-Cola West Japan Co. Ltd. (Food and Beverage Products) 4,200 169,238
Don Quijote Co., Ltd. (Retail) 2,200 542,703
Fast Retailing Co. (Retail) 3,400 1,269,779
Fuji Heavy Industries Ltd. (Automotive) 162,000 1,211,617
Fujitsu Ltd. (Computer Hardware - Systems) 19,000 675,970
Hitachi Ltd. (Electronics) 232,000 3,214,939
Mikuni Coca-Cola Bottling Co. Ltd. (Food and Beverage Products) 63,000 1,181,366
Mitsubishi Motor Co. (Automotive) 195,000 908,403
Nippon Telephone & Telegraph Co. (Utilities - Telephone) 120 2,158,231
NTT Mobile Communications Network, Inc. (Telecommunications) 150 5,277,641
Olympus Optical Co. (Conglomerate) 1,000 10,909
Sony Corp. (Electronics) 6,900 1,281,671
Takeda Chemical Industries Co. (Pharmaceuticals) 8,000 473,317
Toshiba Corp. (Electronics) 156,000 1,151,410
------------
$ 24,129,376
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Mexico - 0.8%
Coca-Cola Femsa S.A., ADR (Beverages) 26,900 $ 413,588
Kimberly-Clark de Mexico S.A. de C.V. (Forest and Paper
Products) 109,000 409,213
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$ 822,801
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Netherlands - 5.8%
Akzo Nobel N.V. (Chemicals) 41,900 $ 1,793,928
Fox Kids Europe N.V. (Telecommunications)* 6,200 84,632
ING Groep N.V. (Financial Services)* 38,032 2,139,806
Libertel N.V. (Cellular Telephones)* 32,000 652,795
Wolters Kluwer N.V. (Publishing)* 39,900 1,203,849
------------
$ 5,875,010
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Norway - 2.5%
Sparebanken NOR (Banks and Credit Cos.) 64,000 $ 1,485,398
Storebrand ASA (Insurance) 155,000 1,086,930
------------
$ 2,572,328
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Portugal - 2.8%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 91,900 $ 1,971,956
PT Multimedia SGPS S.A. (Conglomerate)* 1,780 70,149
Telecel - Comunicacoes Pessoais, S.A. (Telecommunications)* 62,000 820,709
------------
$ 2,862,814
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Singapore - 2.7%
Chartered Semiconductor Manufacturing Co., ADR (Electronics)* 7,900 $ 420,675
DBS Group Holdings Ltd. (Financial Services)* 80,172 1,040,327
Overseas Union Bank Ltd. (Banks and Credit Cos.) 270,626 1,256,478
------------
$ 2,717,480
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Spain - 1.4%
Repsol S.A. (Oils) 62,000 $ 1,355,356
Terra Networks, S.A. (Internet)* 1,440 49,627
------------
$ 1,404,983
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Sweden - 2.7%
Saab AB, "B" (Aerospace) 356,600 $ 2,767,917
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Switzerland - 1.3%
Nestle S.A. (Food and Beverage Products) 720 $ 1,296,489
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United Kingdom - 19.0%
AstraZeneca PLC (Medical and Health Products) 65,866 $ 2,943,559
BP Amoco PLC (Oils)* 199,000 2,032,215
British Aerospace PLC (Aerospace)* 234,538 1,353,690
British Telecommunications PLC (Telecommunications)* 142,857 2,865,362
Cable & Wireless Communications PLC (Telecommunications)* 351,100 3,946,548
Cable & Wireless Communications PLC, ADR (Telecommunications)* 75,900 963,884
Capital Radio PLC (Broadcasting) 27,700 602,851
NDS Group PLC (Internet) 2,070 62,876
Next PLC (Stores) 148,700 1,187,808
TeleWest Communications PLC (Entertainment)* 266,181 1,255,160
Thus PLC (Internet)* 34,960 218,502
Tomkins PLC (Conglomerate) 228,000 790,663
United News & Media PLC (Broadcasting) 83,000 1,053,388
------------
$ 19,276,506
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $102,590,986
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 1.9%
Computer Software - Systems Open TV Corp.* 140 $ 10,815
- --------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 1.2%
Galileo International, Inc. 39,700 $ 1,270,400
- --------------------------------------------------------------------------------------------------------
Telecommunications - 0.7%
Global TeleSystems Group, Inc.* 3,000 $ 95,813
Partner Communications Co. Ltd.* 35,225 660,469
------------
$ 756,282
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 2,037,497
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $87,045,766) $104,628,483
Other Assets, Less Liabilities - (2.7)% (2,783,221)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $101,845,262
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $87,045,766) $104,628,483
Investments of cash collateral for securities loaned, at
value (identified cost, $9,044,363) 9,044,363
Foreign currency, at value (identified cost, $867,632) 862,372
Receivable for Fund shares sold 128,736
Receivable for investments sold 492,979
Interest and dividends receivable 187,649
Deferred organization expenses 4,683
Other assets 811
------------
Total assets $115,350,076
------------
Liabilities:
Collateral for securities loaned, at value $ 9,044,363
Payable for Fund shares reacquired 1,598,310
Payable for investments purchased 1,286,026
Payable to custodian 1,474,729
Payable to affiliates -
Management fee 8,461
Shareholder servicing agent fee 868
Distribution and service fee 6,725
Accrued expenses and other liabilities 85,332
------------
Total liabilities $ 13,504,814
------------
Net assets $101,845,262
============
Net assets consist of:
Paid-in capital $ 83,793,093
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 17,571,640
Accumulated undistributed net realized gain on
investments and foreign currency transactions 971,794
Accumulated net investment loss (491,265)
------------
Total $101,845,262
============
Shares of beneficial interest outstanding 5,599,813
=========
Class A shares:
Net asset value per share
(net assets of $49,013,639 / 2,676,506 shares of
beneficial interest outstanding) $18.31
======
Offering price per share (100 / 95.25 of net asset value
per share) $19.22
======
Class B shares:
Net asset value and offering price per share
(net assets of $48,652,124 / 2,691,242 shares of
beneficial interest outstanding) $18.08
======
Class C shares:
Net asset value and offering price per share
(net assets of $3,894,176 / 216,617 shares of
beneficial interest outstanding) $17.98
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $285,323 / 15,448 shares of beneficial
interest outstanding) $18.47
======
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, 1999
- -------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 659,019
Interest 105,006
Foreign taxes withheld (86,608)
------------
Total investment income $ 677,417
------------
Expenses -
Management fee $ 469,219
Trustees' compensation 10,605
Shareholder servicing agent fee 48,125
Distribution and service fee (Class A) 119,362
Distribution and service fee (Class B) 221,811
Distribution and service fee (Class C) 19,874
Administrative fee 6,358
Custodian fee 76,855
Printing 27,848
Postage 11,493
Auditing fees 29,353
Legal fees 582
Amortization of organization expenses 2,605
Miscellaneous 117,300
------------
Total expenses $ 1,161,390
Fees paid indirectly (4,064)
------------
Net expenses $ 1,157,326
------------
Net investment loss $ (479,909)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 8,528,085
Foreign currency transactions 97,515
------------
Net realized gain on investments and foreign currency
transactions $ 8,625,600
------------
Change in unrealized appreciation (depreciation) -
Investments $ 11,193,547
Translation of assets and liabilities in foreign currencies (95,746)
------------
Net unrealized gain on investments and foreign currency
translation $ 11,097,801
------------
Net realized and unrealized gain on investments and
foreign currency $ 19,723,401
------------
Increase in net assets from operations $ 19,243,492
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1999 MAY 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (479,909) $ (177,674)
Net realized gain (loss) on investments and foreign
currency transactions 8,625,600 (7,452,326)
Net unrealized gain (loss) on investments and foreign
currency translation 11,097,801 (4,950,889)
------------ ------------
Increase (decrease) in net assets from operations $ 19,243,492 $(12,580,889)
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ -- $ (1,316,893)
From net realized gain on investments and foreign
currency transactions (Class B) -- (1,304,683)
From net realized gain on investments and foreign
currency transactions (Class C) -- (102,675)
From net realized gain on investments and foreign
currency transactions (Class I) -- (3,104)
------------ ------------
Total distributions declared to shareholders $ -- $ (2,727,355)
------------ ------------
Net decrease in net assets from Fund share transactions $ (6,771,448) $(11,566,970)
------------ ------------
Total increase (decrease) in net assets $ 12,472,044 $(26,875,214)
Net assets:
At beginning of period 89,373,218 116,248,432
------------ ------------
At end of period (including accumulated net investment
loss of $491,265 and $11,356, respectively) $101,845,262 $ 89,373,218
============ ============
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ---------------------------------------- PERIOD ENDED
NOVEMBER 30, 1999 1999 1998 1997 MAY 31, 1996*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $15.16 $17.78 $16.90 $16.71 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.06) $ 0.01 $(0.01) $ 0.02 $ 0.03
Net realized and unrealized gain (loss)
on investments and foreign currency 3.21 (2.20) 1.18 0.32 1.69
------ ------ ------ ------ ------
Total from investment operations $ 3.15 $(2.19) $ 1.17 $ 0.34 $ 1.72
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.22) $ -- $(0.01)
From net realized gain on investments
and foreign currency transactions -- (0.43) (0.07) (0.15) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $ -- $(0.43) $(0.29) $(0.15) $(0.01)
------ ------ ------ ------ ------
Net asset value - end of period $18.31 $15.16 $17.78 $16.90 $16.71
====== ====== ====== ====== ======
Total return(+) 20.84%++ (12.30)% 7.08% 2.13% 11.43%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.15%+ 2.01% 2.01% 1.99% 2.24%+
Net investment income (loss) (0.73)%+ 0.09% (0.08)% 0.13% 0.24%+
Portfolio turnover 49% 100% 225% 53% 11%
Net assets at end of period (000 omitted) $49,014 $43,678 $53,659 $56,810 $41,483
* 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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the
results would have been lower.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ---------------------------------------- PERIOD ENDED
NOVEMBER 30, 1999 1999 1998 1997 MAY 31, 1996*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $15.01 $17.71 $16.82 $16.66 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.10) $(0.07) $(0.10) $(0.07) $(0.03)
Net realized and unrealized gain (loss)
on investments and foreign currency 3.17 (2.20) 1.19 0.31 1.69
------ ------ ------ ------ ------
Total from investment operations $ 3.07 $(2.27) $ 1.09 $ 0.24 $ 1.66
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.13) $ -- $ --
From net realized gain on investments
and foreign currency transactions $ -- (0.43) (0.07) (0.08) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $ -- $(0.43) $(0.20) $(0.08) --
------ ------ ------ ------ ------
Net asset value - end of period $18.08 $15.01 $17.71 $16.82 $16.66
====== ====== ====== ====== ======
Total return 20.45%++ (12.80)% 6.59% 1.56% 11.07%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.65%+ 2.51% 2.51% 2.53% 2.85%+
Net investment loss (1.26)%+ (0.42)% (0.57)% (0.42)% (0.31)%+
Portfolio turnover 49% 100% 225% 53% 11%
Net assets at end of period (000 omitted) $48,652 $41,959 $59,055 $62,958 $43,264
* 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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ------------------------------------ PERIOD ENDED
NOVEMBER 30, 1999 1999 1998 MAY 31, 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.93 $17.62 $16.76 $16.83
------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.09) $(0.07) $(0.10) $(0.04)
Net realized and unrealized gain (loss) on
investments and foreign currency 3.14 (2.19) 1.19 0.15
------ ------ ------ ------
Total from investment operations $ 3.05 $(2.26) $ 1.09 $ 0.11
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.16) $ --
From net realized gain on investments and foreign
currency transactions -- (0.43) (0.07) (0.18)
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.43) $(0.23) $(0.18)
------ ------ ------ ------
Net asset value - end of period $17.98 $14.93 $17.62 $16.76
====== ====== ====== ======
Total return 20.51%++ (12.87)% 6.62% 0.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.65%+ 2.51% 2.52% 2.50%+
Net investment loss (1.13)%+ (0.43)% (0.56)% (0.27)%+
Portfolio turnover 49% 100% 225% 53%
Net assets at end of period (000 omitted) $3,894 $3,608 $3,380 $2,397
* 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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
SIX MONTHS ENDED ------------------------------------ PERIOD ENDED
NOVEMBER 30, 1999 1999 1998 MAY 31, 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $15.26 $17.81 $16.94 $15.90
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.03) $ 0.10 $ 0.10 $ 0.11
Net realized and unrealized gain (loss) on
investments and foreign currency 3.24 (2.22) 1.15 0.93
------ ------ ------ ------
Total from investment operations $ 3.21 $(2.12) $ 1.25 $ 1.04
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.31) $ --
From net realized gain on investments and foreign
currency transactions -- (0.43) (0.07) --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.43) $(0.38) $ --
------ ------ ------ ------
Net asset value - end of period $18.47 $15.26 $17.81 $16.94
====== ====== ====== ======
Total return 21.11%++ (11.94)% 7.65% 6.54%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.69%+ 1.51% 1.52% 1.52%+
Net investment income (loss) (0.39)%+ 0.65% 0.59% 1.40%+
Portfolio turnover 49% 100% 225% 53%
Net assets at end of period (000 omitted) $285 $128 $155 $84
* 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.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS International Growth Fund (the Fund) is a diversified series of MFS Series
Trust X (the Trust). The Trust is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Fund
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Non-U.S. dollar
denominated short-term obligations are valued at amortized cost as calculated
in the foreign currency and translated into U.S. dollars at the closing daily
exchange rate. Securities for which there are no such quotations or valuations
are valued in good faith by 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.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the Fund to certain qualified
institutions (the "Borrowers") approved by the Fund. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State
Street provides the Fund with indemnification against Borrower default. The
Fund bears the risk of loss with respect to the investment of cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the Fund and the lending agent. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and the lending agent. Income from
securities lending is included in interest income on the Statement of
Operations. The dividend and interest income earned on the securities loaned
is accounted for in the same manner as other dividend and interest income.
At November 30, 1999, the value of securities loaned was $8,184,474. These
loans were collateralized by cash of $9,044,363, which was invested in the
following obligation:
AMORTIZED
COST AND
SHARES VALUE
- ------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 9,044,363 $9,044,363
--------- ----------
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 payments received in additional securities are
recorded on the ex-dividend 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. 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
be reported in the financial statements as distributions from paid-in 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 daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. 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 0.90%.
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 $2,837
for the six months ended November 30, 1999.
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
$12,856 for the six months ended November 30, 1999, 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 $2,850 for the six months ended November
30, 1999. Fees incurred under the distribution plan during the six months ended
November 30, 1999, 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 $133 and $2 for Class B and Class C shares, respectively, for the
six months ended November 30, 1999. Fees incurred under the distribution plan
during the six months ended November 30, 1999, were 1.00% of average daily net
assets attributable to Class B and Class C shares, on an annualized basis.
Certain Class A 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 redemptions 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, 1999, were $842,
$77,634, and $668 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 annual rate of
0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$45,783,718 and $47,627,237, respectively.
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $87,045,766
-----------
Gross unrealized appreciation $20,895,740
Gross unrealized depreciation (3,313,023)
-----------
Net unrealized appreciation $17,582,717
===========
(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, 1999 YEAR ENDED MAY 31, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,994,068 $ 144,082,965 19,265,541 $ 313,672,087
Shares issued to shareholders
in reinvestment of distributions -- -- 80,466 1,204,607
Shares reacquired (9,197,934) (148,581,346) (19,483,471) (318,825,781)
---------- -------------- ------------ -------------
Net decrease (203,866) $ (4,498,381) (137,464) $ (3,949,087)
========== ============== ============ =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED NOVEMBER 30, 1999 YEAR ENDED MAY 31, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,237,201 $ 19,674,804 1,382,116 $ 22,299,934
Shares issued to shareholders
in Reinvestment of distributions -- -- 76,087 1,131,101
Shares reacquired (1,340,771) (21,473,382) (1,998,294) (31,687,051)
---------- -------------- ------------ -------------
Net decrease (103,570) $ (1,798,578) (540,091) $ (8,256,016)
========== ============== ============ =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED NOVEMBER 30, 1999 YEAR ENDED MAY 31, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,207,192 $ 34,964,898 3,492,233 $ 56,401,138
Shares issued to shareholders
in reinvestment of distributions 22 343 6,506 96,225
Shares reacquired (2,232,292) (35,557,128) (3,448,938) (55,848,685)
---------- -------------- ------------ -------------
Net increase (decrease) (25,078) $ (591,887) 49,801 $ 648,678
========== ============== ============ =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED NOVEMBER 30, 1999 YEAR ENDED MAY 31, 1999
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 7,202 $ 119,741 2,259 $ 34,678
Shares issued to shareholders
in reinvestment of distributions -- -- 206 3,103
Shares reacquired (144) (2,343) (2,759) (48,326)
---------- -------------- ------------ -------------
Net increase (decrease) 7,058 $ 117,398 (294) $ (10,545)
========== ============== ============ =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $820 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, 1999, was $346. The Fund had no
significant borrowings during the period.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and
on behalf of the MFS funds, is committed to the effective
use of technology in managing our portfolio investments,
delivering high-quality service to MFS fund shareholders, [Graphic Omitted]
retirement plan participants, and MFS' institutional
clients, and supporting the financial consultants who sell
our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the same stringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com, call our toll-free line, 1-800-637-4406, or
write to the MFS Year 2000 Program Management Office by e-mail at [email protected] or
by letter at 500 Boylston Street, Boston, MA 02116-3741.
<PAGE>
<TABLE>
MFS(R) INTERNATIONAL GROWTH FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management(R) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
J. Atwood Ives+ - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified services CUSTODIAN
company) State Street Bank and Trust Company
Lawrence T. Perera+ - Partner, Hemenway INVESTOR INFORMATION
& Barnes (attorneys) For information on MFS mutual funds, call your
financial consultant or, for an information kit,
William J. Poorvu+ - Adjunct Professor, Harvard call toll free: 1-800-637-2929 any business day
University Graduate School of Business from 9 a.m. to 5 p.m. Eastern time (or leave a
Administration message anytime).
Charles W. Schmidt+ - Private Investor INVESTOR SERVICE MFS Service Center, Inc.
P.O. Box 2281
Arnold D. Scott* - Senior Executive Boston, MA 02107-9906
Vice President, Director, and Secretary,
MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from
Jeffrey L. Shames* - Chairman and Chief 8 a.m. to 8 p.m. Eastern time.
Executive Officer, MFS Investment Management
For service to speech- or hearing-impaired, call
Elaine R. Smith+ - Independent Consultant toll free: 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use this service,
David B. Stone+ - Chairman, your phone must be equipped with a Telecommunications
North American Management Corp. Device for the Deaf.)
(investment advisers)
For share prices, account balances, exchanges, or
INVESTMENT ADVISER stock and bond outlooks, call toll free:
Massachusetts Financial Services Company 1-800-MFS-TALK (1-800-637-8255) anytime from a
500 Boylston Street touch-tone telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
DISTRIBUTOR www.mfs.com
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
David R. Mannheim*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) INTERNATIONAL GROWTH FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
MIF-3 01/00 24M 86/286/386/886
