<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) EMERGING
MARKETS EQUITY FUND
(FORMERLY MFS(R)/FOREIGN & COLONIAL
EMERGING MARKETS EQUITY FUND)
SEMIANNUAL REPORT o NOVEMBER 30, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
MFS' Year 2000 Readiness Disclosure ....................................... 32
Trustees and Officers ..................................................... 33
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
For the six months ended November 30, 1999, Class A shares of the Fund
provided a total return of 11.26%, Class B shares 11.00%, Class C shares
10.98%, and Class I shares 11.53%. These returns assume the reinvestment of
any distributions but exclude the effects of any sales charges.
During the same period, the average emerging market fund tracked by Lipper
Analytical Services, Inc., an independent firm that reports mutual fund
performance, returned 19.80%. The Fund's returns also compare to a 17.53% return
for the Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF)
Index, a broad, unmanaged, market-capitalization-weighted index of equities in
emerging markets, and to an 18.32% return for the Lipper Emerging Markets Funds
Index (the Lipper Index). The Lipper mutual fund indices are unmanaged indices
of the largest qualifying mutual funds within their respective investment
objectives, adjusted for the reinvestment of capital gain distributions and
income dividends.
Q. HOW HAS THE PORTFOLIO PERFORMED OVER THE PAST SIX MONTHS, AND WHAT FACTORS
HAVE AFFECTED THAT PERFORMANCE?
A. Emerging markets overall performed well during the recent period, led
primarily by rebounding markets in Asia. Latin America and Central Europe
lagged for most of the period but did well during the last month or so.
Specifically, the portfolio benefited by being overweighted in Russia and
underweighted in Taiwan, but underweighted positions in India, South Korea,
and Greece hurt performance. In the latter two markets, smaller companies
have done especially well as domestic retail investors have gone on a
buying spree. Because smaller companies within emerging markets tend to be
very illiquid, we have chosen to concentrate on shares of larger companies.
Q. HAS THE RECENT RUN-UP IN OIL PRICES HELPED THE FUND'S RUSSIAN HOLDINGS?
A. Yes, strengthening worldwide oil prices have been very positive for the
Russian stock market as a whole and have made Russia the big winner in
Eastern Europe. The portfolio has benefited from owning shares in
the two largest listed Russian oil stocks, Lukoil and Surgutneftegaz.
Q. HOW HAS THE FUND DONE IN OTHER EASTERN EUROPEAN COUNTRIES?
A. Frankly, other markets in Eastern Europe have been disappointing
performers, primarily due to a slowdown in exports to Western
Europe. Holdings in Poland and Hungary have hurt the portfolio's
performance, with companies such as Polish cable and wire
manufacturer Elektrim and Hungarian telecommunications company
Magyar Tavkozlesi underperforming.
Q. HAVE RISING OIL PRICES HELPED THE FUND'S LATIN AMERICAN HOLDINGS?
A. Yes, to some extent. The Mexican market has risen sharply due to a
combination of rising global oil prices and the continued strength of the
U.S. economy. Our holdings in Mexico, such as Mexican tele-communications
company Telefonos de Mexico, have done very well.
We feel most Latin American economies, however, have yet to begin a full-
fledged recovery. Brazil, the region's largest economy, continues to suffer
from the effects of internal politics and the devaluation of its currency,
the real, in January of 1999. Recently, though, the situation in Brazil has
started to improve; the market was up sharply in November, led by blue-chip
companies such as Petrobras, one of Brazil's largest energy companies.
Q. YOU MENTIONED THAT EMERGING MARKETS IN ASIA HAVE BEEN DOING WELL. HAVE THEY
BEEN LIFTED BY THE APPARENT BEGINNING OF A JAPANESE RECOVERY?
A. Actually, the recovery in the Japanese economy has so far had a limited
effect on the rest of the region. Asian emerging market economies that have
rebounded appear to have done so due to their own domestic factors. One of
the best-performing markets in the region has been South Korea, which has
undertaken structural reform. In that country, Samsung Electronics has done
very well for the Fund. Taiwan is another economy that has performed well,
benefiting from an improvement in the electronics business. Thailand, on
the other hand, has lagged the region, partly because its banking sector
has yet to address the issue of nonperforming loans.
Q. WHERE DO YOU EXPECT TO FIND EMERGING MARKET OPPORTUNITIES IN THE YEAR 2000,
AND HOW IS THE PORTFOLIO POSITIONED TO TAKE ADVANTAGE OF THESE OPPORTUNITIES?
A. As of the end of the period, our largest country positions are in South
Korea, where we expect a strong recovery in the economy and the corporate
sector; Brazil, whose economy we feel will recover strongly in the year
2000; and Mexico, which we believe will continue to benefit from firm oil
prices and a healthy U.S. economy.
Our overall outlook for emerging markets is positive. We see recoveries in Japan
and Germany benefiting Asia and Eastern Europe, respectively. We expect
commodity prices to remain stable in 2000, which should help the export bases of
emerging market countries. Finally, we believe emerging market stock valuations
remain comparatively low, and therefore attractive, in relation to historical
levels and current U.S. valuations.
/s/ Arnab Kumar Banerji /s/ Jeffrey Chowdhry
Arnab Kumar Banerji Jeffrey Chowdhry
Portfolio Manager Portfolio Manager
Note to shareholders: Effective December 1, 1999, the Fund will be managed by
a committee of MFS international research analysts under the general
supervision of David A. Antonelli, Director of International Equity Research.
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. The managers' views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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ARNAB KUMAR BANERJI IS CHIEF INVESTMENT OFFICER OF FOREIGN & COLONIAL
MANAGEMENT LTD. AND PORTFOLIO MANAGER OF MFS(R)/FOREIGN & COLONIAL EMERGING
MARKETS EQUITY FUND, THE EMERGING MARKETS EQUITY SERIES OFFERED THROUGH
MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND MFS(R)/FOREIGN & COLONIAL EMERGING
MARKETS EQUITY SERIES, (PART OF MFS(R) VARIABLE INSURANCE TRUST (SM)). DR.
BANERJI WAS BORN IN INDIA IN 1956. HE EARNED DEGREES IN PHYSIOLOGY AND
MEDICINE FROM OXFORD UNIVERSITY BEFORE ENTERING THE INVESTMENT MANAGEMENT
BUSINESS WITH J. HENRY SCHRODER WAGG IN LONDON. HE LEFT THAT FIRM TO BECOME A
RESEARCH ANALYST AND LATER DIRECTOR OF NOMURA SECURITIES. HE JOINED CITIBANK,
INITIALLY AS HEAD OF EQUITY RESEARCH AT CITIBANK SCRIMGEOUR VICKERS, BEFORE
MOVING TO CITIBANK GLOBAL ASSET MANAGEMENT TO SET UP THEIR EMERGING MARKETS
OPERATION, WHICH HE HEADED UNTIL 1993 WHEN HE JOINED FOREIGN & COLONIAL.
JEFFREY CHOWDHRY IS A DIRECTOR OF FOREIGN & COLONIAL EMERGING MARKETS LTD.
AND A PORTFOLIO MANAGER OF MFS(R)/FOREIGN & COLONIAL EMERGING MARKETS EQUITY
FUND, THE EMERGING MARKETS EQUITY SERIES OFFERED THROUGH MFS(R)/SUN LIFE
ANNUITY PRODUCTS, AND THE MFS(R)/FOREIGN & COLONIAL EMERGING MARKETS EQUITY
SERIES (PART OF MFS(R) VARIABLE INSURANCE TRUST(SM)). MR. CHOWDHRY IS HEAD OF
THE DEPARTMENT AT FOREIGN & COLONIAL THAT INVESTS IN EASTERN EUROPE, THE
MIDDLE EAST, AND AFRICA. MR. CHOWDHRY BEGAN HIS CAREER AS AN INVESTMENT
ANALYST IN 1982. HE JOINED ROYAL INSURANCE PLC IN 1985 AS A FUND MANAGER
BEFORE JOINING BZW INVESTMENT MANAGEMENT IN 1987, WHERE HE WAS A DIRECTOR IN
ITS EMERGING MARKETS DIVISION. HE JOINED FOREIGN & COLONIAL EMERGING MARKETS
IN 1994. HE HAS MANAGED INVESTMENTS IN THE UNITED STATES, EUROPE, LATIN
AMERICA, AND ASIA. MR. CHOWDHRY HOLDS A BACHELOR'S DEGREE IN ECONOMICS FROM
BRUNEL UNIVERSITY IN LONDON AND A MASTER OF BUSINESS ADMINISTRATION DEGREE
FROM KINGSTON BUSINESS SCHOOL IN ENGLAND.
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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 STOCKS OF COMPANIES IN EMERGING
MARKET COUNTRIES.
COMMENCEMENT OF
INVESTMENT OPERATIONS: OCTOBER 24, 1995
CLASS INCEPTION: CLASS A OCTOBER 24, 1995
CLASS B OCTOBER 24, 1995
CLASS C JUNE 27, 1996
CLASS I JANUARY 2, 1997
SIZE: $67.4 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 +11.26% +24.35% -0.25% +6.03%
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Average Annual Total Return Excluding
Sales Charge -- +24.35% -0.08% +1.44%
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Average Annual Total Return Including
Sales Charge -- +18.45% -1.69% +0.24%
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CLASS B
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +11.00% +23.70% -1.72% +3.83%
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Average Annual Total Return Excluding
Sales Charge -- +23.70% -0.58% +0.92%
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Average Annual Total Return Including
Sales Charge -- +19.70% -1.55% +0.44%
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CLASS C
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +10.98% +23.75% -1.41% -6.82%
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Average Annual Total Return Excluding
Sales Charge -- +23.75% -0.47% +1.01%
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Average Annual Total Return Including
Sales Charge -- +22.75% -0.47% +1.01%
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* For the period from the commencement of the Fund's investment operations,
October 24, 1995, through November 30, 1999.
CLASS I
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +11.53% +24.94% +1.26% -3.45%
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Average Annual Total Return Excluding
Sales Charge -- +24.94% +0.42% +1.81%
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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 29.1%
FINANCIAL SERVICES 21.0%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 14.8%
BASIC MATERIALS 8.8%
CONSUMER STAPLES 5.6%
TOP 10 STOCK HOLDINGS
TELEFONOS DE MEXICO S.A. 5.3% HOUSING & COMMERCIAL BANK OF KOREA 1.8%
Mexican telecommunications company South Korean banking company
SAMSUNG ELECTRONICS 3.3% KOREA ELECTRIC POWER CORP. 1.8%
South Korean electronics company South Korean electric utility
TAIPEI FUND 2.9% MAGYAR TAVKOZLESI RT 1.7%
Closed-end Taiwanese country fund Hungarian telecommunications company
PETROLEO BRASILEIRO S.A. 1.9% CENTRAIS ELETRICAS BRASILEIRAS S.A. 1.6%
Brazilian oil company Brazilian electric utility
EGYPT MOBILE PHONE 1.8% POHANG IRON & STEEL CO., LTD. 1.6%
Egyptian cellular phone company South Korean steel company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- November 30, 1999
<TABLE>
<CAPTION>
Stocks - 93.2%
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ISSUER SHARES VALUE
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<S> <C> <C>
Foreign Stocks - 93.2%
Brazil - 14.1%
Banco Bradesco S.A., Preferred (Banks and Credit Cos.) 73,730,000 $ 412,596
Centrais Eletricas Brasileiras S.A., Preferred, "B"
(Utilities - Electric) 49,254,090 1,020,465
Cia Brasileira de Distribuicao Grupo Pao de Acucar,
ADR (Supermarkets) 2,400 64,050
Companhia Cervejaria Brahma, Preferred (Beverages) 668,000 429,801
Companhia Energetica de Sao Paulo S.A., ADR
(Utilities - Electric) 17,287 326,552
Companhia Paranaense de Energia, Preferred "B"
(Utilities - Electric) 29,574 228,617
Companhia Sidurgicia Nacional (Steel) 8,569,000 294,406
Companhia Vale Rio Doce, Bonus Shares (Mining)* 24,000 0
Companhia Vale Rio Doce, Preferred (Mining) 36,300 874,337
Embratel Participacoes S.A. (Telecommunications)* 27,910,704 319,498
Embratel Participacoes S.A., Preferred
(Telecommunications) 23,232,652 447,480
Itausa Investimentos Itau S.A., Preferred
(Conglomerate) 571,000 422,082
Light Servicos de Electricidade S.A. (Utilities -
Electric)* 2,242,000 219,415
Petroleo Brasileiro S.A., Preferred (Oils) 5,886,435 1,190,463
Tele Centro Sul Participacoes S.A
(Telecommunications)* 40,636,704 376,540
Tele Centro Sul Participacoes S.A., Preferred
(Telecommunications) 21,505,000 298,898
Tele Norte Leste Participacoes S.A
(Telecommunications) 25,420,604 370,789
Tele Norte Leste Participacoes S.A., Preferred
(Telecommunications)* 21,820,000 397,553
Tele Sudeste Celular Participacoes S.A
(Telecommunications) 89,440,000 234,658
Telebras, ADR (Telecommunications)* 3,973,000 103
Telesp Celular Participacoes S.A. (Telecommunications) 34,570,704 238,990
Telesp Celular Participacoes S.A., Preferred
(Telecommunications) 14,984 171,524
Telesp Participacoes S.A. (Telecommunications) 16,530,704 195,339
Telesp Participacoes S.A., Preferred
(Telecommunications) 25,190 452,397
Unibanco S.A. (Banks and Credit Cos.) 6,918,000 327,714
Usinas Siderurgicas de Minas Gerais S.A. (Steel) 47,100 199,581
-----------
$ 9,513,848
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Chile - 1.8%
Compania Cervecerias Unidas S.A., ADR (Brewery) 4,510 $ 126,280
Compania de Telecom de Chile, ADR (Utilities -
Telephone) 22,440 412,335
Distribucion y Servicio D&S S.A., ADR (Supermarkets) 6,250 110,937
Embotelladora Adina S.A., ADR (Beverages) 6,250 108,594
Empresa Nacional de Electricidad, ADR (Utilities -
Electric) 21,685 290,037
Enersis S.A., ADR (Utilities - Electric) 8,120 187,775
-----------
$ 1,235,958
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Egypt - 2.1%
Ahram Beverage Co., GDR (Beverages)*## 3,936 $ 62,976
Egypt Mobile Phone (Telecommunications)* 33,200 1,135,992
Suez Cement Co., GDR (Construction)## 14,600 235,790
-----------
$ 1,434,758
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Estonia - 0.6%
AS Eesti Telekom, GDR (Telecommunications) 24,570 $ 428,746
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Greece - 2.3%
Alpha Credit Bank S.A., GDR (Banks and Credit Cos.) 4,280 $ 344,039
Attica Enterprises S.A., GDR (Transportation) 692 13,142
Commercial Bank of Greece (Banks and Credit Cos.) 1,026 75,548
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 24,880 533,568
National Bank of Greece, GDR (Banks and Credit Cos.) 6,887 492,110
Panafon S.A. (Telecommunications) 9,780 116,421
-----------
$ 1,574,828
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Hungary - 2.6%
Gedeon Richter Ltd., GDR (Pharmaceuticals) 1,415 $ 72,660
Gedeon Richter Rt. (Pharmaceuticals) 2,215 114,088
Magyar Olaj Es Gazipari KT (Gas) 15,280 295,818
Magyar Tavkozlesi Rt., ADR (Telecommunications) 34,450 1,039,960
OTP Bank Rt. (Banks and Credit Cos.) 4,210 198,956
Synergon Information Systems Ltd., GDR (Computer
Hardware - Systems)*## 2,840 21,655
-----------
$ 1,743,137
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India - 0.1%
EIH Ltd. (Restaurants and Lodging) 50 $ 215
Hindustan Lever Ltd. (Consumer Goods and Services)* 150 7,910
Hindustan Petroleum Corp. Ltd. (Oils)* 12,975 0
Larsen & Toubro Ltd., GDR (Construction - Special) 5,604 50,698
State Bank of India (Banks and Credit Cos.) 100 539
-----------
$ 59,362
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Indonesia - 1.2%
PT Bank Pan Indonesia TBK (Banks and Credit Cos.)* 1,032,000 $ 88,478
PT Gudang Garam TBK (Tobacco) 36,000 85,926
PT Hanjaya Mandala Sampoerna TBK (Tobacco) 57,000 130,576
PT Indah Kiat Pulp & Paper Corp. TBK (Paper Products) 636,000 226,831
PT Indofood Sukses Makmur TBK (Food Products) 111,000 122,191
PT Telekomunikasi Indonesia (Telecommunications)* 321,000 137,603
-----------
$ 791,605
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Israel - 4.1%
Bank Hapoalim (Banks and Credit Cos.) 172,430 $ 455,579
Bank Leumi Le-Israel (Banks and Credit Cos.) 182,349 336,300
Bezek Israeli Telecommunications Corp. Ltd.
(Telecommunications) 37,033 174,473
Check Point Software Technologies Ltd.
(Computer Data Security)* 2,319 328,428
Clal Industries Ltd. (Diversified Operations) 14,346 104,269
Discount Investment Corp. (Holding Company) 5,045 218,216
ECI Telecom Ltd. (Telecommunications) 4,907 122,982
Elbit Systems Ltd. (Aerospace) 12,862 184,530
IDB Holding Corp. Ltd. (Investment Cos.) 5,269 161,916
Israel Chemicals Ltd. (Chemicals) 227,275 231,370
Property & Building Corp. Ltd. (Real Estate) 1,046 100,789
Teva Pharmaceutical Industries Ltd., ADR
(Pharmaceuticals) 6,740 369,857
-----------
$ 2,788,709
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Japan - 0.1%
Softbank Corp. (Computer - Software) 2,310 $ 73,920
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Malaysia - 4.9%
Malayan Banking Berhad (Banks and Credit Cos.)+ 127,000 $ 412,750
Malaysia International Shipping Corp. Berhad
(Transportation - Marine)+ 256,000 361,600
Public Bank Berhad (Banks and Credit Cos.)+ 384,000 364,800
Resorts World Berhad (Entertainment)+ 156,000 397,800
RHB Capital Berhad (Banks and Credit Cos.)+ 150,000 129,000
Rothmans of Pall Mall Berhad (Tobacco)+ 39,800 268,650
Sime Darby Berhad (Conglomerate)+ 303,000 339,360
Telekom Malaysia Berhad (Telecommunications)+ 217,000 651,000
Tenaga Nasional Berhad (Utilities - Electric)+ 180,000 378,000
-----------
$ 3,302,960
- --------------------------------------------------------------------------------------------------------
Mexico - 14.9%
Alfa S.A. de C.V. (Conglomerate) 83,000 $ 360,525
Apasco S.A. de C.V. (Building Materials) 23,000 153,398
Cemex S.A. (Construction)* 28,423 698,140
Cemex S.A. Preferred (Construction)* 4 20
Cifra S.A. de C.V. (Retail)* 513,510 970,739
Controladora Comercial Mexicana S.A. de C.V (Supermarkets) 194,500 206,150
Desc S.A. de C.V.,"B" (Conglomerate) 160,000 142,736
Fomento Economico Mexicano S.A. (Food and Beverage Products) 12,095 458,098
Grupo Carso, S.A. (Conglomerate)* 58,869 273,838
Grupo Financiero Banamex (Finance)* 210,000 708,103
Grupo Mexico, S.A. (Metals) 72,000 298,216
Grupo Modelo S.A. de C.V. (Brewery) 314,040 905,500
Grupo Television S.A. de C.V., GDR (Entertainment)* 15,300 746,831
Kimberly-Clark de Mexico S.A. de C.V. (Forest and
Paper Products) 124,824 468,620
Organiz Soriana S.A., "B" (General Merchandise) 38,962 179,997
Telefonos de Mexico S.A. (Telecommunications) 719,716 3,336,406
Tubos de Acero de Mexico S.A. (Steel) 10,000 125,625
-----------
$10,032,942
- --------------------------------------------------------------------------------------------------------
Peru - 1.4%
Compania de Minas Buenaventura S.A. (Mining) 18,140 $ 149,737
CPT Telefonica del Peru S.A., "B" (Utilities - Telephone) 349,870 442,226
Credicorp Ltd. Holdings Co. (Banks and Credit Cos.) 11,732 126,852
Ferreyros S.A. (Construction) 98,000 51,402
Sociedad Quimica Minera (Industrial) 3,500 99,531
Southern Peru Copper Corp. (Metals) 4,400 65,450
-----------
$ 935,198
- --------------------------------------------------------------------------------------------------------
Philippines - 3.0%
Manila Electric Co.,"B" (Utilities - Electric) 197,000 $ 505,746
Metropolitan Bank & Trust Co. (Banks and Credit Cos.) 33,000 238,019
Philippine Long Distance Telephone Co., ADR
(Utilities - Telephone) 34,200 702,396
San Miguel Corp., "B" (Brewery) 160,800 222,132
SM Prime Holdings, Inc. (Real Estate) 2,100,000 333,741
-----------
$ 2,002,034
- --------------------------------------------------------------------------------------------------------
Poland - 2.9%
Agora S.A. (Entertainment)*## 12,140 $ 123,525
Bank Handlowy w Warszawie, GDR (Banks and Credit Cos.)## 19,660 281,138
Bank Rozwoju Eksportu S.A. (Banks and Credit Cos.) 6,080 174,368
Elektrim Spolka Akcyjna S.A. (Electrical Equipment) 28,120 210,206
Orbis S.A. (Restaurants and Lodging)* 20,710 159,195
Telekomunikacja Polska S.A. (Telecommunications)*## 151,360 840,048
WBK Wielkopolski S.A. (Consumer Goods and Services) 31,620 176,905
-----------
$ 1,965,385
- --------------------------------------------------------------------------------------------------------
Russia - 1.5%
AO Mosenergo (Electric, Gas, Sanitary) 9,580 $ 27,974
Lukoil Oil Co., ADR (Oils) 12,905 433,608
Rostelecom, GDR (Telecommunications)* 4,396 80,776
Surgutneftegaz (Oils)* 43,804 415,262
Unified Energy Systems, GDR (Utilities - Electric) 8,650 63,664
-----------
$ 1,021,284
- --------------------------------------------------------------------------------------------------------
Singapore - 2.5%
City Developments Ltd. (Real Estate) 9,000 $ 51,161
DBS Group Holdings Ltd. (Financial Services)* 26,238 340,469
DBS Land Ltd. (Real Estate) 80,000 156,190
Natsteel Electronics Ltd. (Electronics) 35,000 144,792
Neptune Orient Lines Ltd. (Transportation - Marine) 70,000 104,167
Overseas Chinese Bank Ltd. (Banks and Credit Cos.) 16,800 126,000
Overseas Union Bank Ltd. (Banks and Credit Cos.) 37,686 174,971
Singapore Airlines Ltd. (Airlines) 19,000 192,262
Singapore Press Holdings Ltd. (Printing and Publishing) 12,400 232,500
Singapore Telecommunications, Ltd. (Telecommunications) 88,000 166,571
-----------
$ 1,689,083
- --------------------------------------------------------------------------------------------------------
South Africa - 5.3%
ABSA Group Ltd. (Banks and Credit Cos.) 22,863 $ 86,234
Anglo American Platinum Corp. Ltd. (Metals) 17,320 518,689
AngloGold Ltd. (Mining) 4,578 233,439
De Beers Centenary AG (Diamonds - Precious Stones) 16,783 453,705
Dimension Data Holdings Ltd. (Electrical & Electronic Equipment) 70,827 366,890
FirstRand Ltd. (Financial Services) 230,979 280,054
Imperial Holdings Ltd. (Conglomerate)* 18,403 187,679
JD Group Ltd. (Stores)* 29,113 214,430
Liberty Life Association of Africa Ltd. (Insurance) 13,598 135,375
Nedcor Investment Bank Holdings (Banks and Credit Cos.)* 17,170 8,060
Nedcor Ltd. (Banks and Credit Cos.) 15,224 278,973
Real Africa Holdings Ltd. (Conglomerate) 42,681 51,127
Rembrandt Controlling Investments Ltd. (Diversified Operations) 22,360 174,826
Sanlam Ltd. (Insurance) 73,775 86,345
Sasol Ltd. (Oils) 23,498 178,208
South African Breweries Ltd. (Brewery) 30,812 289,291
-----------
$ 3,543,325
- --------------------------------------------------------------------------------------------------------
South Korea - 17.1%
Daewoo Heavy Industries (Machinery - Industrial) 47,600 $ 51,132
Hansol Paper Co. (Paper & Related Products) 20,536 301,218
Honam Petrochemical Corp. (Chemicals) 16,750 310,720
Housing & Commercial Bank of Korea (Banks and Credit Cos.) 40,700 1,141,286
Hyundai Industrial Development & Construction (Construction) 18,842 152,817
Hyundai Merchant Marine (Transportation - Marine) 22,600 185,051
Hyundai Motor Co. Ltd. (Automotive) 15,750 319,349
Hyundai Motor Co. Ltd., GDR (Automotive)* 19,600 218,540
Kookmin Bank (Banks and Credit Cos.) 42,092 700,928
Korea Electric Power Corp. (Utilities - Electric) 27,870 1,106,143
Korea Telecom Corp. (Telecommunications)* 13,350 707,550
L.G. Chemical Ltd. (Chemicals) 11,705 349,433
Medison Co. (Medical and Health Products) 34,390 424,312
Pohang Iron & Steel Co. Ltd. (Steel) 7,485 996,170
Samsung Electronics (Electronics) 10,057 2,082,554
Samsung Fire & Marine Insurance (Insurance)* 3,750 166,631
Samsung SDI Co. Ltd. (Electrical Equipment)*## 46,450 608,495
Samsung Securities Co. Ltd. (Financial Services) 22,132 903,230
SK Corp. (Oil Refining) 13,400 337,601
SK Telecom Ltd. (Telecommunications) 102 235,771
SK Telecom Ltd., ADR (Telecommunications) 7,740 183,341
-----------
$11,482,272
- --------------------------------------------------------------------------------------------------------
Taiwan - 2.7%
Taipei Fund (Holding Company & Other Investments)* 199 $ 1,843,735
- --------------------------------------------------------------------------------------------------------
Thailand - 3.7%
Advanced Info Service Public Co. Ltd. (Telecommunications) 14,000 $ 200,514
Bangkok Expressway (Transportation) 333,000 145,303
BEC World Public Co. Ltd. (Television) 31,000 173,460
Electricity Generating Public Co. Ltd. (Utilties - Electric) 119,000 152,721
PTT Exploration and Production Public Co. Ltd., ADR
(Oil Services) 56,400 347,433
Siam Cement Public Co. Ltd. (Building Materials) 9,400 273,121
Siam Commercial Bank Public Co. Ltd., Convertible
Preferred (Banks and Credit Cos.)* 218,000 230,814
TelecomAsia Corp. Ltd. (Utilities - Telephone) 421,000 416,029
Thai Farmers Bank (Banks and Credit Cos.) 396,000 533,624
-----------
$ 2,473,019
- --------------------------------------------------------------------------------------------------------
Turkey - 4.0%
Akbank T.A.S. (Banks and Credit Cos.) 6,886,512 $ 109,058
Arcelik A.S. (Consumer Goods and Services) 5,600,980 262,314
Eregli Demir ve Celik Fabrikalari T.A.S
(Manufacturing - Metals) 4,148,900 116,184
Haci Omer Sabanci Holdings A.S. (Conglomerate) 34,100 274,505
Haci Omer Sabanci Holdings A.S., ADR (Conglomerate)## 17,084 137,526
Migros Turk T.A.S. (Retail) 317,900 130,466
Tupras Turkiye Petrol Rafinerileri A.S. (Oils) 1,400,000 98,689
Turkiye Is Bankasi A.S. (Banks and Credit Cos.) 30,887,962 730,755
Vestel Electronik Sanayi ve Ticaret A.S. (Electronics)* 884,200 119,535
Yapi ve Kredi Bankasi (Banks and Credit Cos.) 36,913,030 677,251
-----------
$ 2,656,283
- --------------------------------------------------------------------------------------------------------
United Kingdom - 0.3%
Anglo American PLC (Metals) 3,314 $ 194,307
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $53,266,441) $62,786,698
- --------------------------------------------------------------------------------------------------------
Rights - 0.1%
- --------------------------------------------------------------------------------------------------------
Attica Enterprises Holding S.A. (Transportation)* 6,925 $ 6,352
Hyundai Merchant Marine (Transportation - Marine)* 7,466 1,868
Hyundai Motor Co. (Automotive)* 4,166 24,802
SK Corp. (Oil Refining)* 3,266 32,970
- --------------------------------------------------------------------------------------------------------
Total Rights (Identified Cost, $52,468) $ 65,992
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 10.3%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
CIT Group Holdings, Inc., due 12/01/99 $ 1,000 $ 1,000,000
Federal Home Loan Mortgage Discount Notes, due 12/01/99 5,930 5,930,000
- --------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 6,930,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $60,248,909) $69,782,690
Other Assets, Less Liabilities - (3.6%) (2,409,676)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $67,373,014
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $60,248,909) $69,782,690
Foreign currency, at value (identified cost, $279,857) 275,248
Receivable for Fund shares sold 164,376
Receivable for investments sold 84,602
Dividends receivable 63,729
Deferred organization expenses 4,688
Other assets 1,024
-----------
Total assets $70,376,357
-----------
Liabilities:
Payable to custodian $ 32,488
Payable for Fund shares reacquired 2,839,206
Payable to affiliates -
Management fee 7,064
Shareholder servicing agent fee 573
Distribution and service fee 4,275
Accrued expenses and other liabilities 119,737
-----------
Total liabilities $ 3,003,343
-----------
Net assets $67,373,014
===========
Net assets consist of:
Paid-in capital $77,151,820
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 9,502,517
Accumulated net realized loss on investments and foreign
currency transactions (18,477,066)
Accumulated net investment loss (804,257)
-----------
Total $67,373,014
===========
Shares of beneficial interest outstanding 4,424,853
=========
Class A shares:
Net asset value per share
(net assets of $31,715,544/2,069,918 shares of
beneficial interest outstanding) $15.32
======
Offering price per share (100/95.25 of net asset value per
share) $16.09
======
Class B shares:
Net asset value and offering price per share
(net assets of $30,906,208/2,040,667 shares of
beneficial interest outstanding) $15.15
======
Class C shares:
Net asset value and offering price per share
(net assets of $4,095,525/271,916 shares of beneficial
interest outstanding) $15.06
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $655,737/42,352 shares of beneficial
interest outstanding) $15.48
======
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:
Income -
Interest $ 63,123
Dividends 546,755
Foreign taxes withheld (41,579)
-----------
Total investment income $ 568,299
-----------
Expenses -
Management fee $ 438,112
Trustees' compensation 5,676
Shareholder servicing agent fee 34,988
Distribution and service fee (Class A) 80,537
Distribution and service fee (Class B) 163,773
Distribution and service fee (Class C) 21,725
Administrative fee 4,677
Custodian fee 64,490
Registration fees 37,747
Printing 25,485
Auditing fees 21,898
Postage 15,263
Interest expense 13,587
Amortization of organization expenses 2,602
Legal fees 1,981
Miscellaneous 43,386
-----------
Total expenses $ 975,927
Fees paid indirectly (5,488)
Reduction of expenses by investment adviser (43,272)
-----------
Net expenses $ 927,167
-----------
Net investment loss $ (358,868)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 4,009,823
Foreign currency transactions (259,224)
-----------
Net realized gain on investments and foreign currency
transactions $ 3,750,599
-----------
Change in unrealized appreciation -
Investments $ 4,219,980
Translation of assets and liabilities in foreign currencies 1,195
-----------
Net unrealized gain on investments and foreign currency
translation $ 4,221,175
-----------
Net realized and unrealized gain on investments and
foreign currency $ 7,971,774
-----------
Increase in net assets from operations $ 7,612,906
===========
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 income (loss) $ (358,868) $ 77,597
Net realized gain (loss) on investments and foreign currency
transactions 3,750,599 (22,490,682)
Net unrealized gain on investments and foreign currency
translation 4,221,175 10,911,175
----------- -----------
Increase (decrease) in net assets from operations $ 7,612,906 $(11,501,910)
----------- -----------
Distributions declared to shareholders -
In excess of net realized gain on investments and foreign
currency transactions (Class A) $ -- $ (197,155)
In excess of net realized gain on investments and foreign
currency transactions (Class B) -- (200,996)
In excess of net realized gain on investments and foreign
currency transactions (Class C) -- (17,217)
In excess of net realized gain on investments and foreign
currency transactions (Class I) -- (2,833)
----------- -----------
Total distributions declared to shareholders $ -- $ (418,201)
----------- -----------
Net decrease in net assets from Fund share transactions $(6,452,045) $(2,421,006)
----------- -----------
Total increase (decrease) in net assets $ 1,160,861 $(14,341,117)
Net assets:
At beginning of period 66,212,153 80,553,270
----------- -----------
At end of period (including accumulated net investment loss
of $804,257 and $445,389, respectively) $67,373,014 $66,212,153
=========== ===========
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 $13.77 $16.06 $18.96 $16.52 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.06) $ 0.05 $(0.02) $(0.07) $ 0.04
Net realized and unrealized gain (loss)
on investments and foreign currency 1.61 (2.25) (2.64) 2.74 1.50
------ ------ ------ ------ ------
Total from investment operations $ 1.55 $(2.20) $(2.66) $ 2.67 $ 1.54
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.02)
From net realized gain on investments
and foreign currency transactions -- -- (0.16) (0.23) --
In excess of net investment income -- -- (0.08) -- --
In excess of net realized gain on
investments and foreign currency
transactions -- (0.09) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $ -- $(0.09) $(0.24) $(0.23) $(0.02)
------ ------ ------ ------ ------
Net asset value - end of period $15.32 $13.77 $16.06 $18.96 $16.52
====== ====== ====== ====== ======
Total return(+) 11.26%++ (13.56)% (14.09)% 16.43% 10.24%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 2.40%+ 2.45% 2.35% 2.51% 2.48%+
Net investment income (loss) (0.79)%+ 0.37% (0.12)% (0.42)% 0.35%+
Portfolio turnover 28% 108% 83% 47% 22%
Net assets at end of period (000 Omitted) $31,716 $29,233 $36,669 $37,540 $19,861
* For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## 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.
(S) Effective July 1, 1999, the investment adviser voluntarily waived a portion of its fee. For the years ended May 31,
1998 and 1997, subject to reimbursement by the Fund, MFS voluntarily agreed, under a temporary expense reimbursement
agreement, to pay all of the Fund's operating expenses, exclusive of management and distribution fees. In
consideration, the Fund paid MFS a fee not greater than 0.75% of average daily net assets. For the period ended May
31, 1996, the Adviser voluntarily agreed to maintain total expenses of the Fund at not more than 2.50%, 3.07%, and
3.00% of average daily net assets for Class A, Class B, and Class C shares, respectively. If these fees had been
incurred by the Fund, the net investment income (loss) ratios would have been:
Net investment income (loss) $(0.07) $ -- $(0.02) $(0.06) $ 0.02
Ratios (to average net assets):
Expenses## 2.53%+ -- 2.31% 2.45% 2.73%+
Net investment income (loss) (0.91)%+ -- (0.08)% (0.37)% 0.10%+
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 $13.64 $16.00 $18.89 $16.47 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.09) $(0.01) $(0.13) $(0.15) $(0.02)
Net realized and unrealized gain (loss)
on investments and foreign currency 1.60 (2.26) (2.60) 2.73 1.50
------ ------ ------ ------ ------
Total from investment operations $ 1.51 $(2.27) $(2.73) $ 2.58 $ 1.48
====== ====== ====== ====== ======
Less distributions declared to shareholders -
From net realized gain on investments
and foreign currency transactions $ -- $ -- $(0.16) $(0.16) $ --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gain on
investments and foreign currency
transactions -- (0.09) -- -- --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $ -- $(0.09) $(0.16) $(0.16) $(0.01)
------ ------ ------ ------ ------
Net asset value - end of period $15.15 $13.64 $16.00 $18.89 $16.47
====== ====== ====== ====== ======
Total return 11.00%++ (14.05)% (14.49)% 15.87% 9.85%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 2.90%+ 2.95% 2.85% 3.04% 3.06%+
Net investment income (loss) (1.26)%+ (0.09)% (0.67)% (0.87)% (0.19)%+
Portfolio turnover 28% 108% 83% 47% 22%
Net assets at end of period (000 Omitted) $30,906 $32,257 $39,978 $51,020 $20,021
* For the period from the commencement of the Fund's investment operations, October 24, 1995, through May 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(S) Effective July 1, 1999, the investment adviser voluntarily waived a portion of its fee. For the years ended May 31,
1998 and 1997, subject to reimbursement by the Fund, MFS voluntarily agreed, under a temporary expense reimbursement
agreement, to pay all of the Fund's operating expenses, exclusive of management and distribution fees. In
consideration, the Fund paid MFS a fee not greater than 0.75% of average daily net assets. For the period ended May
31, 1996, the Adviser voluntarily agreed to maintain total expenses of the Fund at not more than 2.50%, 3.07%, and
3.00% of average daily net assets for Class A, Class B, and Class C shares, respectively. If these fees had been
incurred by the Fund, the net investment income (loss) ratios would have been:
Net investment loss $(0.10) $ -- $(0.12) $(0.14) $(0.08)
Ratios (to average net assets):
Expenses## 3.01%+ -- 2.81% 2.98% 3.30%+
Net investment loss (1.38)%+ -- (0.63)% (0.82)% (0.44)%+
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 $13.57 $15.88 $18.76 $16.77
------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.08) $(0.01) $(0.12) $(0.08)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.57 (2.21) (2.58) 2.36
------ ------ ------ ------
Total from investment operations $ 1.49 $(2.22) $(2.70) $ 2.28
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.02) $ --
From net realized gain on investments and foreign
currency transactions -- -- (0.16) (0.29)
In excess of net realized gain on investments and
foreign currency transactions -- (0.09) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.09) $(0.18) $(0.29)
------ ------ ------ ------
Net asset value - end of period $15.06 $13.57 $15.88 $18.76
====== ====== ====== ======
Total return 10.98%++ (13.84)% (14.44)% 13.89%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 2.90%+ 2.93% 2.84% 3.00%+
Net investment income (loss) (1.13)%+ (0.10)% (0.66)% (0.48)%+
Portfolio turnover 28% 108% 83% 47%
Net assets at end of period (000 Omitted) $4,096 $4,182 $3,478 $2,659
* For the period from the inception of offering of Class C, June 27, 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.
(S) Effective July 1, 1999, the investment adviser voluntarily waived a portion of its fee. For the year ended May 31,
1998 and the period ended May 31, 1997, subject to reimbursement by the Fund, MFS voluntarily agreed, under a
temporary expense reimbursement agreement, to pay all of the Fund's operating expenses, exclusive of management and
distribution fees. In consideration, the Fund paid MFS a fee not greater than 0.75% of average daily net assets. If
these fees had been incurred by the Fund, the net investment income (loss) per share and the ratios would have been:
Net investment loss $(0.09) $ -- $(0.12) $(0.07)
Ratios (to average net assets):
Expenses## 3.01%+ -- 2.80% 2.97%+
Net investment loss (1.25)%+ -- (0.62)% (0.39)%+
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 $13.88 $16.11 $19.00 $16.47
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.02) $ 0.11 $ 0.08 $ 0.10
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.62 (2.25) (2.65) 2.43
------ ------ ------ ------
Total from investment operations $ 1.60 $(2.14) $(2.57) $ 2.53
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.16) $ --
From net realized gain on investments and foreign
currency transactions -- -- (0.16) --
In excess of net realized gain on investments and
foreign currency transactions -- (0.09) -- --
------ ------ ------ ------
Total distributions declared to shareholders $ -- $(0.09) $(0.32) $ --
------ ------ ------ ------
Net asset value - end of period $15.48 $13.88 $16.11 $19.00
====== ====== ====== ======
Total return 11.53%++ (13.09)% (13.66)% 15.36%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.90%+ 1.96% 1.85% 2.01%+
Net investment income (loss) (0.29)%+ 0.88% 0.43% 1.14%+
Portfolio turnover 28% 108% 83% 47%
Net assets at end of period (000 Omitted) $656 $540 $428 $299
* For the period from the inception of Class I, January 2, 1997, through May 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(S) Effective July 1, 1999, the investment adviser voluntarily waived a portion of its fee. For the year ended May 31,
1998 and the period ended May 31, 1997, subject to reimbursement by the Fund, MFS voluntarily agreed, under a
temporary expense reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management and
distribution fees. In consideration, the Fund paid MFS a fee not greater than 0.75% of average daily net assets. If
these fees had been incurred by the Fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.03) $ -- $ 0.09 $ 0.10
Ratios (to average net assets):
Expenses## 2.02%+ -- 1.81% 1.99%+
Net investment income (loss) (0.41)%+ -- 0.47% 1.14%+
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS(R) Emerging Markets Equity Fund (formerly MFS(R)/Foreign & Colonial
Emerging Markets Equity Fund) (the Fund) is a diversified series of MFS Series
Trust X (the Trust). The Trust is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. 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. Debt securities (other than short-term obligations which
mature in 60 days or less), including listed issues and forward contracts are
valued on the basis of valuations furnished by dealers or by a pricing service
with consideration to factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data, without exclusive reliance
upon exchange or over-the-counter prices. Short-term obligations, which mature
in 60 days or less, are valued at amortized cost, which approximates market
value. Non-U.S. dollar denominated short-term obligations are valued at
amortized cost as calculated in the foreign currency and translated into U.S.
dollars at the closing daily exchange rate. Securities for which there are no
such quotations or valuations are valued 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.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. The Fund may enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, the Fund may enter into contracts to deliver
or receive foreign currency it will receive from or require for its normal
investment activities. The Fund may also use contracts in a manner intended to
protect foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its 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.
Realized gain is reported net of any foreign capital gains tax in the
Statement of Operations.
At May 31, 1999, the Fund, for federal income tax purposes, had a capital loss
carryforward of $13,682,812 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on May 31, 2007.
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 1.25%
of the Fund's average daily net assets. Effective July 1, 1999, the investment
adviser has voluntarily agreed to waive 0.15% of its fee, which is shown as a
reduction of expenses in the Statement of Operations. The effective annual
waiver rate for the six months ended November 30, 1999, was 0.12%.
The advisory agreement permits the adviser to engage one or more sub-advisers
and the adviser has engaged Foreign & Colonial Management Ltd. ("FCM") and
Foreign & Colonial Emerging Markets Ltd.("FCEM"), each an England and Wales
Company, to assist in the performance of its services. Effective December 1,
1999, MFS will assume all portfolio management responsibilities for emerging
market securities from FCM and FCEM for the Fund, and the sub-investment
advisory agreements pursuant to which FCM and FCEM provide their services will
terminate.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of $1,863
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
$12,212 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 $6,466 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 Trustees have adopted a distribution plan relating 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 $1,664 and $476 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, respectively, on an
annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
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 $786, $55,007, and $1,588 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
$18,887,758 and $31,520,036, 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 $60,802,815
-----------
Gross unrealized appreciation $13,511,906
Gross unrealized depreciation (4,532,031)
-----------
Net unrealized depreciation $ 8,979,875
===========
(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 3,773,790 $ 54,915,740 9,572,824 $ 123,603,865
Shares issued to shareholders
in reinvestment of distributions -- -- 15,201 172,987
Shares reacquired (3,827,200) (56,364,661) (9,748,073) (126,386,045)
---------- ------------ ---------- -------------
Net decrease (53,410) $ (1,448,921) (160,048) $ (2,609,193)
========== ============ ========== =============
<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 1,110,414 $ 15,996,272 2,255,671 $ 29,849,662
Shares issued to shareholders
in reinvestment of distributions -- -- 16,140 182,444
Shares reacquired (1,434,255) (20,446,504) (2,406,513) (31,134,564)
---------- ------------ ---------- -------------
Net decrease (323,841) $ (4,450,232) (134,702) $ (1,102,458)
========== ============ ========== =============
<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 713,009 $ 10,107,116 1,073,599 $ 13,797,921
Shares issued to shareholders
in reinvestment of distributions -- -- 1,344 15,106
Shares reacquired (749,347) (10,708,125) (985,737) (12,683,053)
---------- ------------ ---------- -------------
Net increase (decrease) (36,338) $ (601,009) 89,206 $ 1,129,974
========== ============ ========== =============
<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 13,699 $ 198,757 17,858 $ 233,209
Shares issued to shareholders
in reinvestment of distributions -- -- 248 2,833
Shares reacquired (10,288) (150,640) (5,718) (75,371)
---------- ------------ ---------- -------------
Net increase 3,411 $ 48,117 12,388 $ 160,671
========== ============ ========== =============
</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. Interest expense incurred on the
borrowings amounted to $13,587 for the six months ended November 30, 1999. The
average dollar amount of borrowings was $482,060 and the weighted average
interest rate on these borrowings was 5.55%. A commitment fee of $277 which is
based on the average daily unused portion of the line of credit is included in
miscellaneous expense.
(7) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At November 30,
1999, the Fund owned the following restricted securities, excluding securities
issued under Rule 144A, constituting 4.90% of net assets which may not be
publicly sold without registration under the Securities Act of 1933. The Fund
does not have the right to demand that such securities be registered. The
value of these securities is determined by valuations furnished by dealers or
by a pricing service, or if not available, in good faith by the Trustees.
<TABLE>
<CAPTION>
DATE OF SHARE/PAR
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Malayan Banking Berhad 5/12/1999 127,000 $362,688 $ 412,750
Malyasia International Shipping Corp. Berhad 5/12/1999 256,000 445,269 361,600
Public Bank Berhad 5/13/1999 384,000 355,934 364,800
Resorts World Berhad 5/12/1999 156,000 307,938 397,800
RHB Capital Berhad 5/12/1999 150,000 180,284 129,000
Rothmans of Pall Mall Berhad 5/12/1999 39,800 272,965 268,650
Sime Darby Berhad 5/12/1999 303,000 391,380 339,360
Telekom Malaysia Berhad 5/12/1999 217,000 720,573 651,000
Tenaga Nasional Berhad 5/12/1999 180,000 410,033 378,000
----------
$3,302,960
==========
</TABLE>
<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) EMERGING MARKETS EQUITY FUND
<S> <C>
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey - Private Investor; Mark E. Bradley*
Former Chairman and Director (until 1991), Ellen Moynihan*
MFS Investment Management(R) James O. Yost*
J. Atwood Ives+ - Chairman and Chief Executive SECRETARY
Officer, Eastern Enterprises (diversified services Stephen E. Cavan*
company)
ASSISTANT SECRETARY
Lawrence T. Perera+ - Partner, Hemenway James R. Bordewick, Jr.*
& Barnes (attorneys)
CUSTODIAN
William J. Poorvu+ - Adjunct Professor, Harvard State Street Bank and Trust Company
University Graduate School of Business
Administration Charles W. Schmidt+ - Private INVESTOR INFORMATION
Investor For information on MFS mutual funds, call your
financial consultant or, for an information kit,
Arnold D. Scott* - Senior Executive call toll free: 1-800-637-2929 any business day
Vice President, Director, and Secretary, from 9 a.m. to 5 p.m. Eastern time (or leave a
MFS Investment Management message anytime).
Jeffrey L. Shames* - Chairman and Chief INVESTOR SERVICE MFS Service Center, Inc.
Executive Officer, MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Elaine R. Smith+ - Independent Consultant
For general information, call toll free:
David B. Stone+ - Chairman, 1-800-225-2606 any business day from
North American Management Corp 8 a.m. to 8 p.m. Eastern time.
(investment advisers)
For service to speech- or hearing-impaired, call
INVESTMENT ADVISER toll free: 1-800-637-6576 any business day from 9
Massachusetts Financial Services Company a.m. to 5 p.m. Eastern time. (To use this service,
500 Boylston Street your phone must be equipped with a
Boston, MA 02116-3741 Telecommunications Device for the Deaf.)
DISTRIBUTOR For share prices, account balances, exchanges, or
MFS Fund Distributors, Inc. stock and bond outlooks, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255) anytime from a
Boston, MA 02116-3741 touch-tone telephone.
CHAIRMAN AND PRESIDENT WORLD WIDE WEB
Jeffrey L. Shames* www.mfs.com
PORTFOLIO MANAGERS
Arnab Kumar Banerji*
Jeffrey Chowdhry*
TREASURER
W. Thomas London*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) EMERGING MARKETS EQUITY 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
FEM-3 01/00 22.5M 85/285/385/885
