<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) RESEARCH
INTERNATIONAL FUND
SEMIANNUAL REPORT o FEBRUARY 29, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 22
Trustees and Officers ..................................................... 29
MFS(R) ORIGINAL RESEARCH(SM)
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
- --------------------------------------------------------------------------------
<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 an
investment 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, the 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, fewer than 1% of the mutual funds tracked by
Morningstar -- 6 out of 10,000 funds -- were down by a similar amount.(2) So 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 an investment 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 as well as down
markets. And for many investors, working with an investment 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
investment professional'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)
March 15, 2000
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(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 A. Antonelli]
David A. Antonelli
For the six months ended February 29, 2000, Class A shares of the Fund provided
a total return of 36.53%, Class B shares 36.20%, Class C shares 36.14%, and
Class I shares 36.96%. These returns, which include the reinvestment of any
distributions but exclude the effects of any sales charges, compare to a 13.77%
return for the Fund's benchmark, the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, an unmanaged index of international
stocks, and to a 27.21% return for the average international fund tracked by
Lipper Inc., an independent firm that reports mutual fund performance.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S OUTPERFORMANCE OF ITS BENCHMARK AND
ITS PEER GROUP?
A. Most of the Fund's outperformance boiled down to good security selection. As
an example, the Fund's weighting in Japan, one of the period's top-
performing markets, was in line with the MSCI EAFE Index at about 27% of
investments, but the Japanese stocks we held outperformed that market as a
whole. NTT Mobile Communications, also known as NTT DoCoMo, was one of our
major holdings as well as one of our best performers. Demand has been quite
strong for DoCoMo's I-mode phones, which provide Internet access at very
attractive prices. Nippon Telegraph & Telephone, which owns a majority stake
in DoCoMo, also performed quite well. Finally, Keyence, Rohm, and Ushio, all
of which provide electronic components to telecommunications and other
industries, benefited from the incredible demand for telecommunications
products and services. However, one of our largest Japanese holdings, Don
Quijote, didn't perform as well as we had expected; the discount retailer
posted disappointing same-store sales figures when it raised merchandise
prices and this hurt the stock's performance. Consequently, we sold our
position.
In addition, the Fund was well positioned in the telecommunications,
technology, and media sectors, the three industry groups that dominated the
global market's gains during the past six months.
Q. WHAT TRENDS MADE THOSE SECTORS SO ATTRACTIVE?
A. Obviously, the explosive growth of the Internet is critical, generating a new
source of revenue for telecom companies. Unlike the telecom companies in the
United States, many foreign telecom companies have their own Internet
businesses. Many Asian and European telecom companies also have wireless
businesses, which have provided another source of incremental growth. As a
result, many telecom companies in Europe and Asia have transformed themselves
into fast-growing, dynamic businesses from old-line, slow-growth utilities.
One of our best telecommunications ideas was Mannesmann, which recently was
purchased by Vodafone. Not only did that mega-deal boost the share price of
Mannesmann, but it also helped drive up the prices and valuations of many of
our other wireless companies, including Telecom Italia and KPN. Another good
performer was Wavecom, a French maker of wireless handset components. After
its initial public offering, Wavecom's stock languished. But based on our
conversations with company management in Paris, we forecasted that the
company had tremendous growth potential.
Another important trend was the increase in advertising spending by dot.com
companies. As a result, European media companies were among the top
performers in the market. Benefiting from this surge in advertising
expenditures by dot.com companies were the United Kingdom's Capital Radio,
France's Television Francaise, and Germany's ProSieben. While the growth in
dot.com advertising is the main force behind their recent success, we think
these companies also will benefit from globalization. Companies across many
industries now need to do more television advertising in order to distinguish
themselves in an increasingly competitive world.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. Financial services offered some very interesting opportunities. In parts of
Asia, we turned our focus away from banks toward nonbank financials. Asia's
economic rebound and the surge in equity trading volume made securities
firms attractive. One of our favorites was the Japanese securities firm
Daiwa Securities. In Singapore, however, we continued to maintain a stake
in bank stocks, which are considered by many to be the "blue-chip" stocks
of that market. In contrast to other areas of Asia, Singapore's monetary
authority maintained good control over the banking system, and as a result
the banks in Singapore were much healthier than in other parts of Asia. We
own shares in Overseas Union Bank and Overseas-Chinese Banking Corp. We
also found attractive opportunities in the oil sector. Despite the fact
that the price of oil has nearly doubled over the past six months to $30 a
barrel or more, most oil stocks reflect a much lower price per barrel. We
believe companies such as BP Amoco should benefit from stable or rising oil
prices.
Q. WHAT'S YOUR APPROACH TO EMERGING MARKETS?
A. We believe that emerging markets have started to regain their above-average
growth pattern relative to their risk, although we're still relatively
light in them with less than 6% of our assets invested in those markets.
Two of our emerging market holdings are China Telecom, which is listed on
the Hong Kong stock exchange, and Telesp, a telecom company in Brazil. With
many Asian and Latin American economies clearly on the mend and stock
valuations attractive, we feel the market presently has more attractive
opportunities than it had a year ago, and we are looking for opportunities
to increase our weighting.
Q. WHAT'S AHEAD FOR THE FUND?
A. We're likely to maintain our holdings in telecommunications and technology
stocks as long as we're confident that their fundamental growth rates are
strong and that the demand for their products and services is solid.
Currently, we believe there's plenty of evidence that fundamental growth
and demand will remain intact for the months to come. Wireless subscription
growth rates around the world are much better than expected, and the demand
for data transmission products and services is increasing much faster then
first forecast. But with valuations on many telecom and tech stocks high,
we're taking a very selective approach. We emphasize only companies we
believe have real franchises and legitimate business models that we feel
can be sustained over the long term. We'll also continue to look for
opportunities among financial stocks, many of which we believe offer the
potential for attractive returns.
/s/ David A. Antonelli
David A. Antonelli
Director of International Equity Research
The committee of MFS international equity research analysts is responsible for
the day-to-day management of the Fund under the general supervision of Mr.
Antonelli.
The opinions expressed in this report are those of the Director of
International Equity Research and are current only through the end of the
period of the report as stated on the cover. His 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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FUND FACTS
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OBJECTIVE: SEEKS CAPITAL APPRECIATION.
COMMENCEMENT OF
INVESTMENT OPERATIONS: JANUARY 2, 1997
CLASS INCEPTION: CLASS A JANUARY 2, 1997
CLASS B JANUARY 2, 1998
CLASS C JANUARY 2, 1998
CLASS I JANUARY 2, 1997
SIZE: $92.9 MILLION NET ASSETS AS OF FEBRUARY 29, 2000
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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 FEBRUARY 29, 2000
CLASS A
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +36.53% +55.34% +95.03% +92.10%
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Average Annual Total Return Excluding
Sales Charge -- +55.34% +24.94% +22.98%
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Average Annual Total Return Including
Sales Charge -- +46.41% +22.50% +20.69%
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CLASS B
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +36.20% +54.42% +92.89% +90.00%
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Average Annual Total Return Excluding
Sales Charge -- +54.42% +24.48% +22.55%
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Average Annual Total Return Including
Sales Charge -- +50.42% +23.83% +21.94%
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CLASS C
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +36.14% +54.38% +92.67% +89.78%
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Average Annual Total Return Excluding
Sales Charge -- +54.38% +24.43% +22.51%
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Average Annual Total Return Including
Sales Charge -- +53.38% +24.43% +22.51%
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*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through February 29, 2000.
CLASS I
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +36.96% +55.99% +96.90% +93.95%
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Average Annual Total Return Excluding
Sales Charge -- +55.99% +25.34% +23.35%
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*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through February 29, 2000.
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% 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 B and C share performance includes the performance of the Fund's Class A
shares for periods prior to their inception (blended performance). Class B and C
blended performance has been adjusted to take into account the CDSC applicable
to Class B and C shares rather than the initial sales charge (load) applicable
to Class A shares. These blended performance figures have not been adjusted to
take into account differences in class-specific operating expenses. Because
operating expenses of Class B and C shares are higher than those of Class A, the
blended Class B and C share performance is higher than it would have been had
Class B and C 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. MORE RECENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN. 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 FEBRUARY 29, 2000
FIVE LARGEST SECTORS
[Graphic Omitted]
UTILITIES & 23.4%
COMMUNICATIONS
TECHNOLOGY 21.4%
FINANCIAL 13.9%
SERVICES
HEALTH CARE 7.7%
INDUSTRIAL GOODS 7.1%
& SERVICES
<TABLE>
<CAPTION>
TOP 10 STOCK HOLDINGS
<S> <C>
VODAFONE AIRTOUCH PLC 3.8% DAIWA SECURITIES GROUP, INC. 1.8%
Wireless communications services provider Japanese investment banking and
brokerage company
KPN N.V. 3.7%
Dutch telecommunications services provider NIPPON TELEGRAPH & TELEPHONE CO. 1.8%
Japanese telecommunications services company
NTT MOBILE COMMUNICATIONS
NETWORK, INC. 2.9% SKANDIA FORSAKRINGS AB 1.8%
Japanese cellular phone company Swedish financial services and
insurance company
CHINA TELECOM LTD. 2.2%
Wireless communications services provider UNITED NEWS & MEDIA PLC 1.8%
Information and publication services company
FAST RETAILING CO. LTD. 2.0%
Japanese retailer CHUGAI PHARMACEUTICAL CO. LTD. 1.8%
Japanese pharmaceuticals company
</TABLE>
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 29, 2000
<TABLE>
<CAPTION>
Stocks - 97.2%
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ISSUER SHARES VALUE
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Foreign Stocks - 91.8%
Australia - 2.0%
<S> <C> <C>
Cable & Wireless Optus Ltd. (Telecommunications) 331,704 $ 1,317,827
QBE Insurance Group Ltd. (Insurance)* 122,437 557,211
------------
$ 1,875,038
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Bermuda - 0.7%
FLAG Telecom Holdings Ltd. (Telecommunications)* 7,440 $ 212,970
Global Crossing Ltd. (Telecommunications)* 9,700 452,262
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$ 665,232
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Brazil - 1.0%
Telecomunicacoes De Sao Paulo S.A.
(Telecommunications)* 28,500 $ 974,344
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Canada - 2.7%
Aliant, Inc. (Telecommunications) 21,250 $ 506,372
AT&T Canada, Inc. (Telecommunications)* 9,500 551,000
BCE, Inc. (Telecommunications) 9,150 1,005,928
Manitoba Telephone Systems (Telecommunications) 28,100 493,953
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$ 2,557,253
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Denmark - 0.5%
ISS International Service System A/S (Commercial
Services) 6,570 $ 438,295
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Finland - 0.7%
Tieto Corp. (Computer Software - Systems) 10,055 $ 693,123
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France - 9.4%
Alcatel (Telecommunications) 2,190 $ 513,487
Axa, ADR (Insurance) 7,673 965,379
Banque Nationale de Paris (Banks and Credit Cos.) 9,880 781,075
Sanofi-Synthelabo S.A. (Medical and Health Products)* 15,840 610,701
STMicroelectronics Co. (Electronics)* 4,320 857,972
Technip (Building) 10,970 1,201,453
Television Francaise (Entertainment) 820 533,629
Total S.A., "B" (Oils) 9,333 1,237,217
Vivendi (Business Services) 11,720 1,378,509
Wavecom S.A., ADR (Electronics)* 4,448 618,272
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$ 8,697,694
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Germany - 2.5%
Fielmann AG, Preferred (Retail) 696 $ 18,788
Freenet.de AG (Internet)* 130 25,292
Henkel KGaA, Preferred (Chemicals) 11,826 618,870
Karstadtquelle AG (Retail) 6,800 213,066
MobilCom AG (Cellular Telephones) 3,200 431,146
ProSieben Media AG, Preferred (Entertainment) 7,100 1,016,020
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$ 2,323,182
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Hong Kong - 3.7%
China Telecom Ltd. (Telecommunications) 214,000 $ 1,972,978
Li & Fung Ltd. (Consumer Goods and Services) 368,000 1,432,771
------------
$ 3,405,749
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Ireland - 0.9%
Bank of Ireland (Banks and Credit Cos.)* 54,638 $ 319,483
Elan Corp. PLC, ADR (Health Products)* 11,590 476,639
Trintech Group PLC, ADR (Computer Software -
Products)* 150 16,800
------------
$ 812,922
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Israel - 0.3%
Partner Communications Co. Ltd., ADR (Cellular
Telephones)* 19,315 $ 328,355
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Italy - 1.5%
San Paolo - Imi S.p.A. (Banks and Credit Cos.) 53,477 $ 845,537
Telecom Italia S.p.A. (Telecommunications) 28,760 504,918
------------
$ 1,350,455
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Japan - 27.7%
Canon, Inc. (Special Products and Services) 29,000 $ 1,206,354
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 102,000 1,559,803
Daikin Industries (Consumer Goods and Services) 33,000 493,528
Daiwa Securities Group, Inc. (Banks and Credit Cos.) 101,000 1,604,269
East Japan Railway Co. (Railroads) 100 451,484
Eisai Co. Ltd. (Medical and Health Products) 41,000 968,460
Fast Retailing Co. Ltd. (Retail) 6,400 1,820,499
Hitachi Ltd. (Electronics) 109,000 1,487,266
Keyence Corp. (Electronics) 2,410 807,282
Meitec Corp. (Computer Software - Systems) 12,000 344,074
Mimasu Semiconductor Industry Co. Ltd. (Electronics) 23,700 462,739
Murata Manufacturing Co. Ltd. (Electronics) 5,000 952,121
Nintendo Co. (Toys) 2,300 502,248
Nippon Telegraph & Telephone Co. (Utilities -
Telephone) 115 1,591,116
Nitto Denko Corp. (Industrial Goods and Services) 10,000 389,587
NTT Mobile Communications Network, Inc.
(Telecommunications) 63 2,540,415
Orix Corp. (Financial Services) 4,900 847,442
Pioneer Electronic Corp. (Electronics) 14,000 444,748
Rohm Co. (Electronics) 2,800 908,611
Sanyo Electric Co. (Electronics) 194,000 791,116
Secom Co. (Consumer Goods and Services) 11,000 985,254
Softbank Corp. (Internet) 300 436,920
Sony Corp. (Electronics) 4,900 1,449,572
Sumitomo Bank Ltd. (Banks and Credit Cos.) 28,000 330,566
Ushio, Inc. (Electronics) 46,000 1,004,915
Yahoo Japan Corp. (Internet)* 1 1,365,374
------------
$ 25,745,763
- --------------------------------------------------------------------------------------------------------
Netherlands - 8.6%
Akzo Nobel N.V. (Chemicals) 18,583 $ 716,814
Fugro N.V. (Engineering)* 15,032 800,702
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 18,192 438,473
ING Groep N.V. (Financial Services)* 18,276 925,397
Koninklijke Ahrend Groep N.V. (Consumer Goods and
Services)* 25,758 316,624
Koninklijke Philips Electronics N.V. (Electronics) 4,998 926,370
KPN N.V. (Telecommunications)* 26,000 3,310,044
Versatel Telecommunications Co. (Telecommunications)* 9,630 583,981
------------
$ 8,018,405
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New Zealand - 0.2%
Warehouse Group Ltd. (Retail) 40,890 $ 156,827
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Norway - 0.5%
Schibsted ASA (Printing & Publishing) 13,500 $ 394,926
Stepstone ASA (Internet)* 16,480 62,968
------------
$ 457,894
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Singapore - 4.2%
Chartered Semiconductor Manufacturing Co., ADR
(Electronics)* 12,975 $ 1,145,044
Datacraft Asia Ltd. (Telecommunications) 60,045 507,380
DBS Group Holdings Ltd. (Financial Services)* 35,260 435,890
Natsteel Electronics Ltd. (Electronics) 65,600 395,961
Overseas Union Bank Ltd. (Banks and Credit Cos.) 240,000 1,065,583
Overseas-Chinese Banking Corp. Ltd. (Banks and Credit
Cos.) 50,600 320,104
------------
$ 3,869,962
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South Korea - 0.4%
Korea Telecom Corp. (Telecommunications) 8,355 $ 363,442
- --------------------------------------------------------------------------------------------------------
Spain - 1.1%
Altadis S.A. (Tobacco) 41,177 $ 452,169
Cortefiel S.A. (Retail) 25,231 540,019
------------
$ 992,188
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Sweden - 5.2%
Allgon AB, "B" (Electronics) 27,770 $ 765,127
Ericsson LM, "B" (Telecommunications) 12,318 1,181,525
Saab AB, "B" (Aerospace) 155,191 1,339,536
Skandia Forsakrings AB (Insurance) 38,239 1,569,430
------------
$ 4,855,618
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Switzerland - 2.1%
Julius Baer Holdings (Banks and Credit Cos.) 139 $ 427,179
Nestle S.A. (Food and Beverage Products) 485 818,911
Novartis AG (Medical and Health Products) 10 12,749
Synthes-Stratec, Inc. (Medical Products)* 1,350 666,225
------------
$ 1,925,064
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United Kingdom - 15.9%
Boots Co. PLC (Retail)* 55,160 $ 391,741
BP Amoco PLC (Oils) 1,040 8,026
BP Amoco PLC, ADR (Oils) 13,000 611,000
British Aerospace PLC (Aerospace)* 147,309 724,766
British Telecommunications PLC (Telecommunications)* 72,667 1,267,248
Cable & Wireless Communications PLC
(Telecommunications) 24,892 421,523
Cable & Wireless Communications PLC, ADR
(Telecommunications)* 21,000 434,826
Capital Radio PLC (Broadcasting) 18,654 465,884
Carlton Communicatons PLC (Broadcasting) 16,900 190,435
CGU PLC (Insurance) 38,380 457,314
Diageo PLC (Food and Beverage Products)* 79,172 606,004
Halifax Group (Banks and Credit Cos.) 26,000 233,069
Lloyds TSB Group PLC (Banks and Credit Cos.)* 48,220 445,190
Matalan PLC (Retail)* 50,750 460,539
Next PLC (Stores) 50,788 419,204
Nycomed Amersham PLC (Medical and Health Products) 101,600 808,941
Reuters Group PLC (Business Services) 30,651 689,321
Royal Bank Scotland Group PLC (Banks and Credit Cos.)* 16,100 211,403
United News & Media PLC (Broadcasting) 117,600 1,566,434
Vodafone AirTouch PLC (Telecommunications)* 609,678 3,410,978
Zeneca Group PLC (Medical and Health Products) 27,971 913,778
------------
$ 14,737,624
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Total Foreign Stocks $ 85,244,429
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 5.4%
Internet - 0.1%
VIA NET.WORKS, Inc.* 1,640 $ 108,240
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Medical and Health Products - 0.9%
Pharmacia & Upjohn, Inc. 17,342 $ 825,913
- --------------------------------------------------------------------------------------------------------
Oils - 2.1%
Atlantic Richfield Co. 15,290 $ 1,085,590
Exxon Mobil Corp. 11,550 869,859
------------
$ 1,955,449
- --------------------------------------------------------------------------------------------------------
Telecommunications - 2.3%
Nortel Networks Corp. 8,800 $ 981,200
NTL, Inc.* 5,400 494,100
UnitedGlobalCom, Inc.* 6,580 687,610
------------
$ 2,162,910
- --------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 5,052,512
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $76,301,819) $ 90,296,941
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.6%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 3/01/00 at Amortized Cost $ 3,385 $ 3,385,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $79,686,819) $ 93,681,941
Other Assets, Less Liabilities - (0.8)% (775,383)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 92,906,558
- --------------------------------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $79,686,819) $ 93,681,941
Investments of cash collateral for securities loaned, at
value (identified cost, $9,335,140) 9,335,140
Cash 3,278
Foreign currency, at value (identified cost, $5,949) 6,104
Receivable for Fund shares sold 1,911,537
Receivable for investments sold 2,180,869
Interest and dividends receivable 79,914
Other assets 80
------------
Total assets $107,198,863
------------
Liabilities:
Payable for Fund shares reacquired $ 9,390
Payable for investments purchased 4,942,791
Collateral for securities loaned, at value 9,335,140
Payable to affiliates -
Management fee 2,433
Distribution and service fee 1,578
Accrued expenses and other liabilities 973
------------
Total liabilities $ 14,292,305
------------
Net assets $ 92,906,558
============
Net assets consist of:
Paid-in capital $ 74,351,418
Unrealized appreciation on investments and translation of
assets and liabilities
in foreign currencies 13,980,964
Accumulated undistributed net realized gain on
investments and foreign
currency transactions 4,828,175
Accumulated net investment loss (253,999)
------------
Total $ 92,906,558
============
Shares of beneficial interest outstanding 5,611,481
=========
Class A shares:
Net asset value per share
(net assets of $47,062,570 / 2,829,238 shares of
beneficial interest outstanding) $16.63
======
Offering price per share (100 / 94.25 of net asset value
per share) $17.64
======
Class B shares:
Net asset value and offering price per share
(net assets of $31,335,891 / 1,902,797 shares of
beneficial interest outstanding) $16.47
======
Class C shares:
Net asset value and offering price per share
(net assets of $12,393,523 / 753,198 shares of
beneficial interest outstanding) $16.45
======
<PAGE>
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $2,114,574 / 126,248 shares of
beneficial interest outstanding) $16.75
======
On sales of $50,000 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 FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
Net investment loss:
Income -
Dividends $ 223,168
Interest 83,974
Foreign taxes withheld (24,124)
-----------
Total investment income $ 283,018
-----------
Expenses -
Management fee $ 262,633
Shareholder servicing agent fee 26,268
Distribution and service fee (Class A) 47,483
Distribution and service fee (Class B) 87,928
Distribution and service fee (Class C) 31,712
Administrative fee 3,533
Custodian fee 51,999
Printing 8,897
Postage 5,981
Auditing fees 932
Registration fees 43,694
Miscellaneous 9,644
-----------
Total expenses $ 580,704
Fees paid indirectly (2,199)
Reduction of expenses by investment adviser (43,696)
-----------
Net expenses $ 534,809
-----------
Net investment loss $ (251,791)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 5,422,028
Foreign currency transactions (39,860)
-----------
Net realized gain on investments and foreign
currency transactions $ 5,382,168
-----------
Change in unrealized appreciation (depreciation) -
Investments $11,383,893
Translation of assets and liabilities in foreign currencies (15,827)
-----------
Net unrealized gain on investments and foreign currency
translation $l1,368,066
-----------
Net realized and unrealized gain on investments
and foreign currency $16,750,234
-----------
Increase in net assets from operations $16,498,443
===========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment income (loss) $ (251,791) $ 1,580
Net realized gain on investments and foreign currency
transactions 5,382,168 665,065
Net unrealized gain on investments and foreign
currency translation 11,368,066 3,694,691
----------- -----------
Increase in net assets from operations $16,498,443 $ 4,361,336
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (29,205) $ (5,023)
From net investment income (Class B) -- (630)
From net investment income (Class C) -- (186)
From net investment income (Class I) (4,468) (1,934)
From net realized gain on investments and foreign currency
transactions (Class A) (622,589) (103,796)
From net realized gain on investments and foreign currency
transactions (Class B) (413,053) (70,643)
From net realized gain on investments and foreign currency
transactions (Class C) (144,208) (19,022)
From net realized gain on investments and foreign currency
transactions (Class I) (36,231) (17,130)
----------- -----------
Total distributions declared to shareholders $(1,249,754) $ (218,364)
----------- -----------
Net increase in net assets from Fund share transactions $45,285,739 $19,419,365
----------- -----------
Total increase in net assets $60,534,428 $23,562,337
Net assets:
At beginning of period 32,372,130 8,809,793
----------- -----------
At end of period (including accumulated net investment
loss of $253,999 and accumulated undistributed net
investment income of $31,465, respectively) $92,906,558 $32,372,130
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------
PERIOD
YEAR ENDED AUGUST 31, ENDED
SIX MONTHS ENDED ---------------------- AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $12.47 $10.24 $10.95 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.05) $ 0.03 $ 0.03 $ 0.06
Net realized and unrealized gain
on investments and foreign currency 4.57 2.36 0.35 0.89
------ ------ ------ ------
Total from investment operations $ 4.52 $ 2.39 $ 0.38 $ 0.95
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.02) $(0.01) $(0.05) --
From net realized gain on investments
and foreign currency transactions (0.34) (0.15) (1.04) --
------ ------ ------ ------
Total distributions declared to
shareholders $(0.36) $(0.16) $(1.09) --
------ ------ ------ ------
Net asset value - end of period $16.63 $12.47 $10.24 $10.95
====== ====== ====== ======
Total return(+) 36.53%++ 23.53% 3.92% 9.60%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.75%+ 1.72% 1.76% 1.68%+
Net investment income (loss) (0.67)%+ 0.27% 0.28% 0.71%+
Portfolio turnover 76% 136% 89% 137%
Net assets at end of period (000 omitted) $47,063 $16,839 $3,741 $1,314
(S)Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary
expense reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management
and distribution and service fees. In consideration, the Fund pays the investment adviser a
reimbursement fee not greater than 0.40% of average daily net assets. For the period ended August 31,
1997, the investment adviser agreed to maintain the expenses of the Fund at not more than 1.75% of
the Fund's average daily net assets. In addition, the investment adviser, distributor, and
shareholder servicing agent voluntarily waived a portion of their fees for the period ended August
31, 1997. To the extent actual expenses were over this limitation and the waiver had not been in
place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.06) $(0.05) $(0.19) $(0.01)
Ratios (to average net assets):
Expenses## 1.92%+ 2.45% 3.99% 3.31%+
Net investment loss (0.84)%+ (0.46)% (1.94)% (0.91)%+
*For the period from the commencement of the Fund's investment operations, January 2, 1997,
through August 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.
(+)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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SIX MONTHS ENDED AUGUST 31, AUGUST 31,
FEBRUARY 29, 2000 1999 1998*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $12.37 $10.21 $ 9.93
------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.09) $(0.04) $(0.03)
Net realized and unrealized gain on investments and
foreign currency 4.53 2.35 0.31
------ ------ ------
Total from investment operations $ 4.44 $ 2.31 $ 0.28
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.00)+++ --
From net realized gain on investments and foreign
currency transactions (0.34) (0.15) --
------ ------ ------
Total distributions declared to shareholders $(0.34) $(0.15) --
------ ------ ------
Net asset value - end of period $16.47 $12.37 $10.21
====== ====== ======
Total return 36.20%++ 22.84% 2.82%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.40%+ 2.37% 2.41%+
Net investment loss (1.32)%+ (0.36)% (0.29)%+
Portfolio turnover 76% 136% 89%
Net assets at end of period (000 omitted) $31,336 $10,683 $3,141
(S)Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary
expense reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management
and distribution and service fees. In consideration, the Fund pays the investment adviser a
reimbursement fee not greater than 0.40% of average daily net assets. To the extent actual expenses
were over this limitation, the net investment loss per share and the ratios would have been:
Net investment loss $(0.10) $(0.12) $(0.24)
Ratios (to average net assets):
Expenses## 2.57%+ 3.10% 4.56%+
Net investment loss (1.49)%+ (1.09)% (2.43)%+
*For the period from the inception of Class B, January 2, 1998, through August 31, 1998.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SIX MONTHS ENDED AUGUST 31, AUGUST 31,
FEBRUARY 29, 2000 1999 1998*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $12.36 $10.21 $ 9.93
------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.09) $(0.04) $(0.01)
Net realized and unrealized gain on investments and
foreign currency 4.52 2.34 0.29
------ ------ ------
Total from investment operations $ 4.43 $ 2.30 $ 0.28
------ ------ ------
Less distributions declared to shareholders -
From net investment income -- $(0.00)+++ --
From net realized gain on investments and foreign
currency transactions (0.34) (0.15) --
------ ------ ------
Total distributions declared to shareholders $(0.34) $(0.15) --
------ ------ ------
Net asset value - end of period $16.45 $12.36 $10.21
====== ====== ======
Total return 36.14%++ 22.74% 2.82%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.40%+ 2.37% 2.40%+
Net investment loss (1.32)%+ (0.33)% (0.10)%+
Portfolio turnover 76% 136% 89%
Net assets at end of period (000 omitted) $12,393 $3,802 $729
(S)Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary
expense reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management
and distribution and service fees. In consideration, the Fund pays the investment adviser a
reimbursement fee not greater than 0.40% of average daily net assets. To the extent actual expenses
were over this limitation, the net investment loss per share and the ratios would have been:
Net investment loss $(0.10) $(0.12) $(0.22)
Ratios (to average net assets):
Expenses## 2.57%+ 3.10% 4.55%+
Net investment loss (1.49)%+ (1.06)% (2.24)%+
*For the period from the inception of Class C, January 2, 1998, through August 31, 1998.
+Annualized.
++Not annualized.
+++Per share amount was less than $0.01.
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------
PERIOD
YEAR ENDED AUGUST 31, ENDED
SIX MONTHS ENDED ---------------------- AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $12.55 $10.26 $10.95 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.02) $ 0.05 $ 0.06 $ 0.07
Net realized and unrealized gain on
investments and foreign currency 4.60 2.42 0.34 0.88
------ ------ ------ ------
Total from investment operations $ 4.58 $ 2.47 $ 0.40 $ 0.95
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $(0.02) $(0.05) --
From net realized gain on investments
and foreign currency transactions (0.34) (0.16) (1.04) --
------ ------ ------ ------
Total distributions declared
to shareholders $(0.38) $(0.18) $(1.09) --
------ ------ ------ ------
Net asset value - end of period $16.75 $12.55 $10.26 $10.95
====== ====== ====== ======
Total return 36.96%++ 24.08% 4.13% 9.60%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.40%+ 1.37% 1.40% 1.68%+
Net investment income (loss) (0.31)%+ 0.47% 0.53% 0.85%+
Portfolio turnover 76% 136% 89% 137%
Net assets at end of period (000 omitted) $2,115 $1,047 $1,199 $1,022
(S)Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed under a temporary
expense reimbursement agreement to pay all of the Fund's operating expenses, exclusive of management
fees. In consideration, the Fund pays the investment adviser a reimbursement fee not greater than
0.40% of average daily net assets. For the period ended August 31, 1997, the investment adviser
agreed to maintain the expenses of the Fund at not more than 1.75% of the Fund's average daily net
assets. In addition, the investment adviser voluntarily waived a portion of its fee for the period
ended August 31, 1997. To the extent actual expenses were over this limitation and the waiver had not
been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.03) $(0.03) $(0.15) --
Ratios (to average net assets):
Expenses## 1.57%+ 2.10% 3.55% 2.81%+
Net investment loss (0.48)%+ (0.26)% (1.61)% (0.28)%+
*For the period from the commencement of the Fund's investment operations, January 2, 1997,
through August 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.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Research International Fund (the Fund) is a diversified series of MFS Series
Trust I (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. Securities for which there are
no such quotations or valuations are valued in good faith, at fair value, 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.
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 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 February 29, 2000, the value of securities loaned was $9,655,520. These loans
were collateralized by U.S. Treasury securities of $757,489 and cash of
$9,335,140 which was invested in the following short-term obligations:
IDENTIFIED COST
SHARES AND VALUE
- -------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 9,335,140 $9,335,140
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 net 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 1.00% of
the Fund's average daily net assets.
The Fund has a temporary expense reimbursement agreement whereby MFS has
voluntarily agreed to pay all of the Fund's operating expenses, exclusive of
management, distribution, and service fees. The Fund in turn will pay MFS an
expense reimbursement fee not greater than 0.40% of average daily net assets. To
the extent that the expense reimbursement fee exceeds the Fund's actual
expenses, the excess will be applied to amounts paid by MFS in prior years. At
February 29, 2000, aggregate unreimbursed expenses amounted to $266,520.
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 Trustees are currently not receiving any
payments for their services to the Fund.
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
$32,192 for the six months ended February 29, 2000, 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 0.35% 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 0.10% 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 $1,441 for the six months ended February
29, 2000. Fees incurred under the distribution plan during the six months ended
February 29, 2000, were 0.35% 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 $15 and $101 for Class B and Class C shares, respectively, for the
six months ended February 29, 2000. Fees incurred under the distribution plan
during the six months ended February 29, 2000, 1.00% of average daily net assets
attributable to Class B and Class C shares, on an annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
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 February
29, 2000, were $2,610, $5,855, and $654 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
$81,413,310 and $40,196,571, 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 $79,686,819
-----------
Gross unrealized appreciation $17,548,290
Gross unrealized depreciation (3,553,168)
-----------
Net unrealized appreciation $13,995,122
===========
(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 FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,916,656 $ 28,735,842 1,418,503 $ 15,861,961
Shares issued to shareholders in
reinvestment of distributions 38,587 583,443 9,757 104,402
Shares reacquired (476,369) (7,020,795) (443,305) (5,020,037)
--------- ------------- --------- -------------
Net increase 1,478,874 $ 22,298,490 984,955 $ 10,946,326
========= ============= ========= =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,277,298 $ 19,156,522 802,162 $ 8,858,974
Shares issued to shareholders in
reinvestment of distributions 25,644 384,413 6,545 69,831
Shares reacquired (263,664) (3,931,613) (252,900) (2,765,499)
--------- ------------- --------- -------------
Net increase 1,039,278 $ 15,609,322 555,807 $ 6,163,306
========= ============= ========= =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold 617,290 $ 9,140,679 293,111 $ 3,297,967
Shares issued to shareholders in
reinvestment of distributions 9,297 139,176 1,735 18,473
Shares reacquired (181,036) (2,553,449) (58,626) (642,674)
--------- ------------- --------- -------------
Net increase 445,551 $ 6,726,406 236,220 $ 2,673,766
========= ============= ========= =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold 44,474 $ 680,129 20,210 $ 228,697
Shares issued to shareholders in
reinvestment of distributions 2,676 40,695 1,775 19,062
Shares reacquired (4,358) (69,303) (55,359) (611,792)
--------- ------------- --------- -------------
Net increase (decrease) 42,792 $ 651,521 (33,374) $ (364,033)
========= ============= ========= =============
</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 February 29, 2000, was $215. The Fund had no
significant borrowings during the period.
--------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
<TABLE>
MFS(R) RESEARCH INTERNATIONAL FUND
<S> <C>
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey+ - Private Investor; Former Mark E. Bradley*
Chairman and Director (until 1991), MFS Investment Ellen Moynihan*
Management(R) James O. Yost*
Marshall N. Cohan+ - Private Investor SECRETARY
Stephen E. Cavan*
Lawrence H. Cohn, M.D.+ - Chief of Cardiac
Surgery, Brigham and Women's Hospital; Professor ASSISTANT SECRETARY
of Surgery, Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE+ - Chief CUSTODIAN
Executive Officer, Edmund Gibbons Ltd.; Chairman, State Street Bank and Trust Company
Colonial Insurance Company, Ltd.
INVESTOR INFORMATION
Abby M. O'Neill+ - Private Investor For information on MFS mutual funds, call your
investment professional or, for an information
Walter E. Robb, III+ - President and Treasurer, kit, call toll free: 1-800-637-2929 any business
Benchmark Advisors, Inc. (corporate financial day from 9 a.m. to 5 p.m. Eastern time (or leave a
consultants); President, Benchmark Consulting message anytime).
Group, Inc. (office services)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive MFS Service Center, Inc.
Vice President, Director, and Secretary, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman and Chief For general information, call toll free:
Executive Officer, MFS Investment Management 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
J. Dale Sherratt+ - President, Insight Resources,
Inc. (acquisition planning specialists) For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from 9
Ward Smith+ - Former Chairman (until 1994), NACCO a.m. to 5 p.m. Eastern time. (To use this service,
Industries (holding company) your phone must be equipped with a
Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, exchanges, or
500 Boylston Street stock and bond outlooks, call toll free:
Boston, MA 02116-3741 1-800-MFS-TALK (1-800-637-8255) anytime from a
touch-tone telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
DIRECTOR OF INTERNATIONAL
EQUITY RESEARCH
David A. Antonelli*
TREASURER
W. Thomas London*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) RESEARCH INTERNATIONAL FUND ------------
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[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.
MRI-3 4/00 11M 99/299/399/899
