<PAGE>
[MFS Logo] Semiannual Report
INVESTMENT MANAGMENT April 30, 1997
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MFS(R) WORLD GROWTH FUND
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[graphic omitted]
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TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
Portfolio Managers' Overview ............................................... 3
Portfolio Managers' Profiles ............................................... 5
Fund Facts ................................................................. 6
Performance Summary ........................................................ 6
Portfolio Concentration .................................................... 8
Portfolio of Investments ................................................... 9
Financial Statements .......................................................21
Notes to Financial Statements ..............................................28
Independent Auditors' Report ...............................................35
The MFS Family of Funds(R) .................................................36
Trustees and Officers ......................................................37
HIGHLIGHTS
o FOR THE SIX MONTHS ENDED APRIL 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 2.82%, CLASS B SHARES 2.40%,
CLASS C SHARES 2.38%, AND CLASS I SHARES 2.88%.
o THE U.S. SECTOR OF THE PORTFOLIO FOCUSES ON COMPANIES IN THE TECHNOLOGY,
LEISURE, AND BUSINESS SERVICES INDUSTRIES WITH DYNAMIC EARNINGS GROWTH
THAT WE BELIEVE CAN ACHIEVE SIGNIFICANT MARKET SHARE GAINS IN RAPIDLY
GROWING MARKETS.
o PERFORMANCE WAS HINDERED BY AN UNDERWEIGHTING IN GERMANY, WHERE THE WEAK
MARK RESULTED IN BIG GAINS IN THE AUTO AND CAPITAL GOODS SECTORS.
o THE FUND DID BENEFIT FROM CONTINUED STRONG PERFORMANCE IN EMERGING MARKETS
SUCH AS BRAZIL, RUSSIA, THE MIDDLE EAST, AND HONG KONG/CHINA, ALL OF WHICH
EXPERIENCED MODERATE INFLATION AND STRONG INVESTMENT FLOWS.
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
A. Keith Brodkin
Dear Shareholders:
After more than six years of expansion, the U.S. economy is experiencing another
year of growth in 1997, although a few signs point to the possibility of a
modest rise in inflation during the year. On the positive side, the pattern of
moderate growth and inflation set over the past few years now seems fairly well
entrenched in the economy and, short of a major international or domestic
crisis, appears to have enough momentum to remain on track for some time. Also,
gains in such important sectors as housing, automobiles, industrial production,
and exports indicate a fair amount of underlying strength in the economy. Some
of that strength was seen in the first quarter, when the U.S. economy grew at an
annualized rate of 5.6% (based on preliminary estimates), a pace that would be
inflationary in the unlikely event that it were to continue. The ongoing
tightness in the labor market could also add some inflationary pressures to the
economy. At the same time, there is some reason for caution as a result of the
continuing high level of consumer debt and rising personal bankruptcies. Given
these somewhat conflicting indicators, we expect real (inflation-adjusted)
growth to revolve around 2% in 1997, with the strength of the first quarter
moderating as we move through the balance of the year.
We continue to urge U.S. equity investors to remain cautious for 1997. Just as
the slowdown in corporate earnings growth and increases in interest rates in
1996 raised some near-term concerns, further interest-rate increases and the
fear of an acceleration of inflation have created extreme volatility in the
stock market in 1997. However, while the U.S. equity market enjoyed several
years without a major correction, we would like to point out that such downturns
are a natural part of the investment environment and, when they end, they often
result in more attractive valuations for stocks.
Overseas, the overall economic environment has remained favorable for
investing in equities. Global economic growth has remained moderate, with
subdued inflation. While the United States has experienced rising interest rates
over the past six months, continental Europe has seen improving economic
conditions, falling inflation and interest rates, and weaker currencies. This
has helped give Europe the best-performing equity markets. In Japan, meanwhile,
interest rates have remained low, but a tepid economic recovery has left that
market stalled. At the same time, a number of the emerging markets have become
increasingly attractive, thanks in part to rapidly expanding economies and
growth in earnings.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
May 14, 1997
<PAGE>
PORTFOLIO MANAGERS' OVERVIEW
Dear Shareholders:
For the six months ended April 30, 1997, Class A shares of the Fund provided a
total return of 2.82%, Class B shares 2.40%, Class C shares 2.38%, and Class I
shares 2.88%. These returns assume the reinvestment of distributions but exclude
the effects of any sales charges and compare to a 7.79% return for the Morgan
Stanley Capital International (MSCI) World Index, a broad, unmanaged index of
global equities, and to a 7.22% return for the Morgan Stanley All Country World
Index, an unmanaged index of developed-country and emerging market equities. MFS
believes that this index is more representative of the countries in which the
Fund invests than the MSCI World Index, which the Fund has used as a benchmark
in previous reports.
The Fund continues to focus on what we believe are the fastest-growing
companies in the world, in what we consider to be the three most attractive
markets with the best long-term growth potential. These three markets are: U.S.
small-capitalization and emerging growth stocks, which represent 36% of Fund
assets; growth stocks in mature foreign markets, primarily in Europe and Japan,
representing 38%; and stocks in emerging markets, representing 20%. The Fund's
performance over the past six months was helped by its U.S. investments and by
overweightings in software and electronic stocks. The U.S. sector of the
portfolio focuses on companies with dynamic earnings growth that we believe can
achieve significant market share gains in rapidly growing markets. Our holdings
continue to be in the technology, leisure, and business services sectors and
include BMC Software, a leading mainframe software company; HFS, a leading
hotel, real estate, and rental car franchiser; and Learning Tree International,
a leading provider of information technology training to corporations.
Performance was hindered by an underweighting in Germany, where the weak mark
resulted in big gains in the auto and capital goods sectors, as well as by a
broad sell-off in smaller-company and emerging growth stocks. However, weaker
local currencies across Europe benefited the Fund by helping export- oriented
companies. Performance was also helped by the Fund's holdings in
dollar-sensitive exporters such as Canon, Sony, and TDK in Japan, and by
telecommunications companies such as Telefonica, the Spanish phone company, and
Telecom Italia Mobile, a leading cellular phone company, whose earnings growth
exceeded expectations. Our focus in these developed foreign markets continues to
be on what we regard as "world class" companies with significant earnings
leverage resulting from recovering domestic and export economies and new
products.
The Fund also benefited from continued strong performance in emerging markets
such as Brazil, Russia, the Middle East, and Hong Kong/China, all of which
experienced moderate inflation and strong investment flows. Telebras, the
leading Brazilian phone company, Lukoil, a Russian oil company, and Mosenergo,
the Moscow electric utility, were among companies that contributed to
performance. Our emphasis in this part of the portfolio continues to be on
companies that we see as global low-cost producers or as beneficiaries of
government privatization, increasing consumer demand, or growing
infrastructures.
Our recent outlook for our three target markets remains optimistic. In the
United States, we believe that emerging growth companies that can deliver strong
relative earnings growth will continue to be rewarded by the market. In Europe
and Japan, valuations are still at attractive levels, and local economies appear
poised to show improvement after several years of sluggishness. Markets in Latin
America appear to be on a solid growth trajectory as a result of major
structural reforms combined with lower-than- expected inflation. We continue to
be less enthused about most of emerging Asia due to slowing growth rates, but we
believe Hong Kong offers opportunity because of the handover to China.
Respectfully,
/s/ John W. Ballen /s/ Toni Y. Shimura
John W. Ballen Toni Y. Shimura
Portfolio Manager Portfolio Manager
/s/ David Mannheim
David Mannheim
Portfolio Manager
<PAGE>
PORTFOLIO MANAGERS' PROFILES
JOHN W. BALLEN BEGAN HIS CAREER AT MFS AS AN INDUSTRY SPECIALIST IN 1984. A
GRADUATE OF HARVARD COLLEGE, THE UNIVERSITY OF NEW SOUTH WALES, AND THE
STANFORD UNIVERSITY GRADUATE SCHOOL OF BUSINESS ADMINISTRATION, HE WAS
PROMOTED TO INVESTMENT OFFICER IN 1986, VICE PRESIDENT INVESTMENTS IN 1987,
DIRECTOR OF RESEARCH IN 1988, AND SENIOR VICE PRESIDENT IN 1990. IN 1993, HE
BECAME DIRECTOR OF EQUITY PORTFOLIO MANAGEMENT, AND ON MAY 1, 1995, HE BECAME
CHIEF EQUITY OFFICER. HE HAS BEEN A PORTFOLIO MANAGER OF MFS(R) WORLD GROWTH
FUND SINCE 1993.
DAVID MANNHEIM BEGAN HIS CAREER AT MFS IN 1988 AS A RESEARCH SPECIALIST AND
WAS PROMOTED TO ASSISTANT VICE PRESIDENT - INVESTMENTS IN 1991, VICE
PRESIDENT - INVESTMENTS IN 1992, AND SENIOR VICE PRESIDENT IN 1997. IN 1993,
HE WAS NAMED A PORTFOLIO MANAGER OF MFS WORLD GROWTH FUND. MR. MANNHEIM IS A
GRADUATE OF AMHERST COLLEGE AND OF MASSACHUSETTS INSTITUTE OF TECHNOLOGY'S
SLOAN SCHOOL OF MANAGEMENT.
TONI Y. SHIMURA JOINED THE MFS RESEARCH DEPARTMENT IN 1987. A GRADUATE OF
WELLESLEY COLLEGE AND OF MASSACHUSETTS INSTITUTE OF TECHNOLOGY'S SLOAN SCHOOL
OF MANAGEMENT, SHE WAS PROMOTED TO INVESTMENT OFFICER IN 1990, ASSISTANT VICE
PRESIDENT - INVESTMENTS IN 1991, AND VICE PRESIDENT - INVESTMENTS IN 1992. IN
1993, SHE WAS NAMED A PORTFOLIO MANAGER OF MFS WORLD GROWTH FUND.
FUND FACTS
STRATEGY: THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL
APPRECIATION BY INVESTING IN SECURITIES OF
COMPANIES WORLDWIDE THAT ARE GROWING AT RATES
EXPECTED TO BE WELL ABOVE THE GROWTH RATE OF THE
OVERALL U.S. ECONOMY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: NOVEMBER 18, 1993
CLASS B: NOVEMBER 18, 1993
CLASS C: JANUARY 3, 1994
CLASS I: JANUARY 2, 1997
SIZE: $494.4 MILLION NET ASSETS AS OF APRIL 30, 1997
PERFORMANCE SUMMARY
Because mutual funds like MFS World Growth Fund are designed for investors with
long-term goals, we have provided cumulative results as well as the average
annual total returns for Class A, Class B, Class C, and Class I shares for the
applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
AS OF APRIL 30, 1997
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year Fund*
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Cumulative Total Return +2.82% +1.44% +46.02%
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Average Annual Total Return -- +1.44% +11.60%
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SEC Results -- -4.39% + 9.69%
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CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year Fund*
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Cumulative Total Return +2.40% +0.58% +41.95%
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Average Annual Total Return -- +0.58% +10.69%
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SEC Results -- -3.25% +10.01%
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*For the period from the commencement of the Fund's investment operations,
November 18, 1993, through April 30, 1997.
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year Fund*
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Cumulative Total Return +2.38% +0.62% +42.35%
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Average Annual Total Return -- +0.62% +10.78%
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SEC Results -- -0.33% +10.78%
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CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
Life of
6 Months 1 Year Fund*
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Cumulative Total Return +2.88% +1.50% +46.06%
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Average Annual Total Return -- +1.50% +11.61%
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SEC Results -- +1.50% +11.61%
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*For the period from the commencement of the Fund's investment operations,
November 18, 1993, through April 30, 1997.
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 5.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase. Class I shares,
which became available on January 2, 1997, have no sales charge or Rule 12b-1
fees and are only available to certain institutional investors.
Class C share results include the performance and operating expenses (e.g., Rule
12b-1 fees) of the Fund's Class B shares for periods prior to the commencement
of offering of Class C shares. Operating expenses attributable to Class C shares
are not significantly different than those of Class B shares. The Class B share
performance included in the Class C share SEC performance has been adjusted to
reflect the CDSC generally applicable to Class C shares rather than the CDSC
generally applicable to Class B shares.
Class I share results include the performance and operating expenses (e.g., Rule
12b-1 fees) of the Fund's Class A shares for periods prior to the commencement
of offering of Class I shares. Because operating expenses attributable to Class
A shares are greater than those of Class I shares, Class I share performance
generally would have been higher than Class A share performance. The Class A
share performance included in the Class I share SEC performance has been
adjusted to reflect the fact that Class I shares have no initial sales charge.
These results represent the percentage change in net asset value.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1997
TOP 10 EQUITY HOLDINGS
COMPUTER ASSOCIATES INTERNATIONAL, INC. ADT LTD.
Computer software company Commercial and residential security
company
HFS, INC.
Franchiser of hotels and real estate UNITED HEALTHCARE CORP.
companies Health maintenance organization
ORACLE SYSTEMS CORP. LEARNING TREE INTERNATIONAL, INC.
Developer and manufacturer of database Educational training and technology
software company
TELECOMMUNICACOES BRASILEIRAS S.A., ADR BMC SOFTWARE, INC.
Brazilian telecommunications company Computer software company
CADENCE DESIGN SYSTEMS, INC. WORLDCOM, INC.
Computer software and systems company Long-distance telephone provider
LARGEST EQUITY SECTORS
Miscellaneous 55.6%
Health Care 7.2%
Leisure 7.2%
Utilities & Communications 10.7%
Technology 19.3%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS - April 30, 1997
Stocks - 91.5%
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Issuer Shares Value
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U.S. Stocks - 33.5%
Automotive
Tower Automotive, Inc.* 5,000 $ 185,000
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Agricultural Products - 0.4%
AGCO Corp. 75,100 $ 1,943,212
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Biotechnology - 0.2%
Guidant Corp. 17,900 $ 1,221,675
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Building
Newport News Shipbuilding, Inc. 5,500 $ 82,500
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Business Machines - 0.3%
Affiliated Computer Services, Inc., "A"* 33,800 $ 878,800
Sun Microsystems, Inc.* 12,300 354,394
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$ 1,233,194
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Business Services - 4.1%
AccuStaff, Inc.* 72,700 $ 1,326,775
ADT Ltd.* 231,400 6,334,575
CUC International, Inc.* 112,550 2,377,619
DST Systems, Inc.* 55,000 1,560,625
Employee Solutions, Inc.* 38,400 192,600
Ikon Office Solutions, Inc. 3,100 83,312
Learning Tree International, Inc.* 174,450 5,495,175
SABRE Group Holding, Inc.* 6,400 164,000
Technology Solutions Co.* 95,800 2,526,725
------------
$ 20,061,406
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Chemicals - 0.3%
Betzdearborn, Inc. 22,000 $ 1,408,000
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Computer Software - Personal Computers - 1.2%
Autodesk, Inc. 1,000 $ 35,500
First Data Corp. 5,902 203,619
Microsoft Corp.* 41,700 5,066,550
Transaction System Architects, Inc.* 24,500 735,000
------------
$ 6,040,669
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Computer Software - Systems - 7.6%
Adobe Systems, Inc. 2,300 $ 89,988
BMC Software, Inc.* 125,600 5,432,200
Cadence Design Systems, Inc.* 211,200 6,758,400
Computer Associates International, Inc. 204,250 10,621,000
Compuware Corp.* 119,400 4,507,350
Oracle Systems Corp.* 229,800 9,134,550
Sybase, Inc.* 1,200 17,700
Synopsys, Inc.* 13,600 433,500
USCS International, Inc.* 18,900 311,850
Xionics Document Technologies* 42,100 489,412
------------
$ 37,795,950
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U.S. Stocks - continued
Construction Services
Shaw Group, Inc.* 1,300 $ 17,550
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Consumer Goods and Services - 1.6%
Carson, Inc.* 97,200 $ 729,000
Hertz, Corp.* 1,800 52,200
Service Corp. International 53,100 1,818,675
Silgan Holdings, Inc.* 2,400 63,600
Tyco International Ltd. 86,900 5,300,900
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$ 7,964,375
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Electronics - 3.0%
Altera Corp.* 67,500 $ 3,345,469
Analog Devices, Inc.* 58,433 1,563,083
Atmel Corp.* 25,800 641,775
Intel Corp. 12,400 1,898,750
Kla-Tenor Corp.* 18,000 801,000
Kulicke & Soffa Industries, Inc.* 31,500 880,031
Lattice Semiconductor Corp.* 28,500 1,592,437
Linear Technology Corp. 21,200 1,065,300
LSI Logic Corp.* 7,100 271,575
Sony Corp. 12,600 924,525
Teradyne, Inc.* 17,800 582,950
Xilinx, Inc.* 24,700 1,210,300
------------
$ 14,777,195
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Entertainment - 1.0%
American Radio Systems Corp., "A"* 4,800 $ 140,400
Cox Radio, Inc.* 63,700 1,289,925
Harrah's Entertainment, Inc.* 44,300 708,800
Jacor Communications, Inc.* 14,000 393,750
LIN Television Corp.* 43,800 1,812,225
Univision Communications, Inc., "A"* 13,800 469,200
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$ 4,814,300
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Finance
AmeriTrade Holding Corp.* 17,400 $ 217,500
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Financial Institutions - 0.4%
Franklin Resources, Inc. 30,000 $ 1,773,750
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Food and Beverage Products - 0.3%
Smith's Food & Drug Centers, Inc. 38,700 $ 1,296,450
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Insurance - 0.2%
Nationwide Financial Services, Inc., "A"* 29,100 $ 771,150
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Leisure
Coleman Co., Inc.* 1,100 $ 17,050
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Machinery - 0.1%
SI Handling Systems, Inc. 26,000 $ 468,000
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U.S. Stocks - continued
Medical and Health Technology and Services - 4.1%
AmeriSource Health Corp.* 3,900 $ 174,038
Cardinal Health, Inc. 16,900 899,925
Columbia Healthcare Corp. 10,300 360,500
Foundation Health Systems, Inc.* 910 24,570
Genesis Health Ventures, Inc.* 13,500 403,312
Health Management Associates, Inc.* 15,400 411,950
HealthSource, Inc.* 22,000 462,000
HealthSouth Corp.* 208,100 4,109,975
Medpartners, Inc.* 16,400 299,300
Medtronic Inc. 19,400 1,343,450
Pacificare Health Systems, Inc.* 15,700 1,259,925
Tenet Healthcare Corp.* 104,400 2,714,400
United Healthcare Corp. 122,400 5,951,700
Vencor, Inc.* 38,900 1,619,212
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$ 20,034,257
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Metals and Minerals - 0.2%
Allegheny Teldyne, Inc. 28,000 $ 745,500
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Pollution Control - 0.3%
USA Waste Services, Inc.* 38,100 $ 1,247,775
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Publishing
Gibson Greetings, Inc.* 8,300 $ 170,150
Jostens, Inc. 800 19,100
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$ 189,250
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Railroads - 0.1%
Wisconsin Central Transportation Corp.* 22,300 $ 730,325
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Real Estate Investment Trusts
Claire S Stores, Inc. 7,100 $ 135,788
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Restaurants and Lodging - 2.9%
Applebee's International, Inc. 43,700 $ 1,021,488
HFS, Inc.* 157,100 9,308,175
Hilton Hotels Corp. 21,400 577,800
Promus Hotel Corp.* 93,250 3,287,062
Wyndham Hotel Corp.* 8,600 237,575
------------
$ 14,432,100
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Special Products and Services - 0.1%
Spx Corp. 5,900 $ 322,288
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Stores - 2.7%
American Stores Co. 13,100 $ 596,050
Consolidated Stores Corp.* 20,100 804,000
Corporate Express, Inc.* 105,450 1,054,500
Costco Cos, Inc.* 19,500 563,062
CVS Corp. 32,000 1,588,000
Dillard's Department Stores, Inc., "A" 2,900 89,538
Hollywood Entertainment Corp.* 23,800 508,725
Home Depot, Inc. 22,300 1,293,400
Hot Topic, Inc.* 2,600 66,950
Micro Warehouse, Inc.* 17,200 296,700
Office Depot, Inc.* 29,200 408,800
Rite-Aid Corp. 76,500 3,519,000
Staples, Inc.* 160,300 2,885,400
------------
$ 13,674,125
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Telecommunications - 0.4%
Cisco Systems, Inc.* 4,300 $ 222,525
Heritage Media Corp.* 12,300 224,475
International Business Communications Systems,
Inc.*(+)+ 40,300 282,100
Lucent Technologies, Inc. 19,500 1,152,938
Tel-Save Holdings, Inc.* 1,900 26,600
------------
$ 1,908,638
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Utilities - Telephone - 2.0%
MCI Communications Corp. 114,500 $ 4,365,312
Sprint Corp. 4,500 197,438
WorldCom, Inc.* 223,000 5,352,000
------------
$ 9,914,750
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Total U.S. Stocks $165,423,722
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Foreign Stocks - 58.0%
Argentina - 0.9%
Banco de Galicia y Buenos Aires S.A. de C.V.,
ADR (Banks and Credit Cos.) 16,821 $ 409,223
Perez Companc S.A. (Oils) 106,772 866,008
Siderar S.A.I.C., ADR (Steel)*## 15,200 478,800
Telecom Argentina Stet - France Telecom S.A.
(Telecommunications) 9,300 465,000
Telefonica de Argentina, ADR (Utilities -
Telephone) 13,400 445,550
Transportadora de Gas del Sur, S.A. (TGS)
(Pipelines) 38,900 486,250
YPF Sociedad Anonima, ADR (Oils) 42,000 1,160,250
------------
$ 4,311,081
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Australia - 0.6%
Q.B.E. Insurance Group Ltd. (Insurance) 559,634 $ 3,198,420
- --------------------------------------------------------------------------------
Brazil - 4.0%
Banco Bradesco S.A., Preferred (Banks and
Credit Cos.) 111,171,934 $ 920,246
CEMIG (Utilities - Electric)* 17,500,000 798,208
Centrais Eletricas Brasile, ADR (Utilities -
Electric) 63,200 1,422,000
Centrais Eletricas Brasileiras S.A. - Eletrobras,
Preferred, "B" (Utilities - Electric) 1,800,000 839,808
Cia Cervejaria Brahma, Preferred (Beverages) 1,872,433 1,274,297
Cia Siderurgica de Tubarao, ADR (Steel)## 23,400 394,875
Companhia Paranaense de Energia - COPEL "B",
Preferred (Electrical) 50,800 790,838
Companhia Vale do Rio Doce, Preferred (Mining) 29,553 753,350
Companhia Vale do Rio Doce, Preferred, "B"
(Mining)+ 29,553 --
Itausa Investimentos Itau S.A. (Conglomerate) 750,000 634,936
Petroleo Brasileiro S.A., Preferred (Oils) 16,710,000 3,513,014
Telecomunicacoes Brasileiras SA, ADR
(Utilities - Telephone) 61,490 7,009,860
Telecommunicacoes Sao Paulo
(Telecommunications) 2,500,000 710,187
Usinas Siderurgicas de Minas Gerais SA, ADR
(Steel)## 44,700 525,225
------------
$ 19,586,844
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Canada - 1.0%
BioChem Pharma, Inc. (Biotechnology)* 105,400 $ 1,895,553
Canadian National Railway Co. (Railroads) 70,420 2,711,170
Super Sol Ltd. (Supermarkets) 32,500 96,883
------------
$ 4,703,606
- --------------------------------------------------------------------------------
Chile - 0.3%
Chilectra S.A., ADR (Utilities - Electric) 19,910 $ 1,224,465
Moneda Chile Fund Ltd. (Finance)* 63,000 441,000
------------
$ 1,665,465
- --------------------------------------------------------------------------------
China - 0.4%
Beijing Datang Power Generation Co.
(Electronics)* 540,000 $ 280,593
China Light & Power (Utilities - Electric) 400 1,802
Huaneng Power International, Inc., ADR
(Utilities - Electric)* 48,180 1,168,365
Qingling Motors Co., "H" (Automotive)* 694,000 380,772
Yizheng Chemical Fibre Co. Ltd. (Textiles) 1,476,000 289,632
------------
$ 2,121,164
- --------------------------------------------------------------------------------
Colombia - 0.8%
Banco Ganadero SA, ADR (Banks and Credit Cos.) 22,300 $ 763,775
Banco Industrial Colombiano, ADR (Banks and
Credit Cos.) 108,700 1,970,187
Cementos Diamante SA, ADR (Construction)## 90,700 1,326,488
------------
$ 4,060,450
- --------------------------------------------------------------------------------
Egypt - 0.4%
Commercial International Bank (Banks and Credit
Cos.)*## 10,500 $ 236,250
North Cairo Mills (Food Products) 4,650 260,648
South Cairo Flour Mills (Food Products) 3,250 73,736
Suez Cement Co. S A E, GDR (Building
Materials)##* 67,000 1,246,200
Torra for Cement (Construction) 12,010 340,162
------------
$ 2,156,996
- --------------------------------------------------------------------------------
Finland - 0.9%
Huhtamaki Oy Group (Conglomerate) 74,500 $ 3,232,710
TT Tieto Oy (Computer Software - Systems) 12,830 975,187
------------
$ 4,207,897
- --------------------------------------------------------------------------------
France - 2.1%
Elf Aquitaine S.A. (Oils) 30,400 $ 2,950,596
Rhone-Poulenc S.A. (Pharmaceuticals)* 73,180 2,463,386
TOTAL S.A., "B" (Oils)* 9,700 805,076
TV Francaise (Entertainment) 20,000 1,930,892
Union des Assurances Federales S.A. (Insurance) 18,400 2,192,918
------------
$ 10,342,868
- --------------------------------------------------------------------------------
Germany - 1.7%
Adidas AG (Apparel and Textiles) 9,306 $ 970,944
Henkel KGaA (Consumer Goods and Services) 55,500 3,015,607
Sap AG, Preferred (Computer Software - Systems) 22,979 4,235,840
------------
$ 8,222,391
- --------------------------------------------------------------------------------
Greece - 0.8%
Ergo Bank (Bank and Credit Cos.) 7,300 $ 481,882
Hellenic Telecommunication Organization S.A.
(Telecommunications) 67,880 1,543,458
Intracom S.A. (Telecommunications) 7,700 332,363
Papastratos Cigarettes S.A. (Consumer Goods and
Services) 63,040 1,211,911
Titan Cement Co. (Building Materials) 4,350 349,235
------------
$ 3,918,849
- --------------------------------------------------------------------------------
Hong Kong - 4.5%
Asia Satellite Telecommunications Holdings Ltd.
(Telecommunications)* 1,637,500 $ 4,153,945
Bank of East Asia Ltd. (Banks and Credit Cos.)* 302,832 1,041,876
Cheung Kong Holdings Ltd. (Real Estate) 165,000 1,448,471
Citic Pacific Ltd. (Conglomerate) 50,000 270,459
Dah Sing Financial Group (Banks and
Credit Cos.) 414,800 1,724,295
Hong Kong Electric Holdings Ltd. (Utilities -
Electric) 676,000 2,391,190
Hutchison Whampoa (Real Estate) 91,000 675,501
Hysan Development Co. (Real Estate) 553,000 1,527,762
Li & Fung Ltd. (Stores) 890,000 896,193
Liu Chong Hing Bank (Banks and Credit Cos.) 613,000 1,127,697
New World Development Co. (Real Estate) 160,000 923,303
Peregrine Investment Holdings (Finance) 168,000 258,091
Swire Pacific Air Ltd., "A" (Transportation) 211,000 1,627,561
Wharf Holdings Ltd. (Real Estate) 733,000 2,772,608
Wing Hang Bank Ltd. (Banks and Credit Cos.) 287,400 1,050,002
Zhenhai Refining and Chemical Co., Ltd. (Oils) 1,200,000 511,225
------------
$ 22,400,179
- --------------------------------------------------------------------------------
India - 1.8%
Bajaj Auto Ltd. (Automotive) 45,000 $ 1,148,963
EIH Ltd. (Restaurants and Lodging) 76,050 881,886
Hindustan Lever Ltd. (Consumer Goods and
Services) 25,000 765,835
Hindustan Petroleum Corp. Ltd. (Oil and Gas)* 50,000 585,062
ICL Israel Chemical (Chemicals)* 90,000 108,983
India Gateway Fund Ltd. (Finance)*+ 107,000 483,640
Industrial Development Bank of India Ltd.
(Banks and Credit Cos.) 280,000 706,278
Mahanagar Telephone Nigam Ltd.
(Telecommunications) 100,000 822,590
State Bank Of India (Banks and Credit Cos.) 122,000 1,088,186
Tata Engineering and Locomotive Co. Ltd.
(Automotive) 11,570 130,681
Videsh Sanchar Nigam Ltd., GDR
(Telecommunications)*## 101,730 2,008,659
------------
$ 8,730,763
- --------------------------------------------------------------------------------
Indonesia - 0.2%
Semen Gresik (Building Materials) 402,500 $ 981,808
- --------------------------------------------------------------------------------
Ireland - 0.4%
Allied Irish Banks (Banks and Credit Cos.)* 305,400 $ 2,179,015
- --------------------------------------------------------------------------------
Israel - 0.1%
Makhteshim Chemical Works Ltd. (Chemicals)* 17,000 $ 105,980
NICE Systems Ltd., ADR (Telecommunications)* 2,100 44,625
Tadiran Telecommunications Ltd.
(Telecommunications) 5,000 97,500
Teva Pharmaceutical Industries Ltd., ADR
(Pharmaceuticals) 800 40,600
------------
$ 288,705
- --------------------------------------------------------------------------------
Italy - 1.5%
Gucci Group NV (Apparel and Textiles) 30,370 $ 2,106,919
INA (Instituto Nazionale delle Assicurazioni)
(Insurance) 771,400 1,034,997
Industrie Natuzzi S.p.A., ADR (Consumer Goods
and Services) 92,100 2,049,225
Telecom Italia S.p.A., Saving Shares
(Telecommunications) 1,167,700 2,160,638
------------
$ 7,351,779
- --------------------------------------------------------------------------------
Japan - 9.7%
Bank of Tokyo Mitsubishi (Banks and Credit Cos.) 105,000 $ 1,662,466
Bridgestone Corp. (Tire and Rubber) 124,000 2,637,259
Canon, Inc. (Office Equipment) 190,000 4,504,923
Daikin Industries (Consumer Goods and Services) 214,000 1,680,646
DDI Corp. (Telecommunications) 380 2,523,356
East Japan Railway Co. (Railroads) 414 1,790,358
Fuji Photo Film Co. (Photographic Products) 75,000 2,865,301
Hirose Electric Co. (Electronics) 17,300 945,743
Jusco Co. (Retail) 68,000 2,089,011
Keyence Corp. (Electronics) 18,930 2,311,264
Kinki Coca-Cola Bottling Co. (Beverages) 90,000 1,035,053
Kirin Beverage Corp. (Beverages) 138,000 1,880,583
Mitsubishi Heavy Industries Ltd. (Aerospace) 275,000 1,815,282
Nippon Telephone & Telegraph Co. (Utilities -
Telephone) 181 1,276,054
Nitto Denko Corp. (Industrial Goods and
Services) 142,000 2,058,133
Osaka Sanso Kogyo Ltd. (Chemicals) 397,000 1,047,617
Rohm Co. (Electronics) 22,000 1,705,238
Secom Co. (Consumer Goods and Services) 60,000 3,568,334
Sony Corp. (Electronics) 34,800 2,532,903
Takeda Chemical Industries (Pharmaceuticals) 124,000 2,861,914
TDK Corp. (Special Products and Services) 44,000 3,171,327
Ushio, Inc. (Electronics) 197,000 2,312,170
------------
$ 48,274,935
- --------------------------------------------------------------------------------
Malaysia - 1.2%
DCB Holdings Berhad (Finance) 135,000 $ 438,381
Genting Berhad (Entertainment) 75,000 400,430
Malayan Banking Berhad (Banks and Credit Cos.) 71,000 707,228
Petronas Gas Berhad (Oil and Gas)## 405,000 1,403,897
Resorts World Berhad (Entertainment) 60,000 221,133
Rothmans of Pall Mall (Consumer Goods and
Services) 61,000 563,870
Sime Darby Berhad (Conglomerate) 255,000 787,413
Tenaga Nasional Berhad (Utilities - Electric) 155,000 716,392
UMW Holdings Berhad (Conglomerate) 168,000 883,576
------------
$ 6,122,320
- --------------------------------------------------------------------------------
Mexico - 2.3%
Cemex S.A., "B" (Construction) 291,506 $ 954,313
Cifra S.A de C.V. (Retail) 59,967 90,607
Cifra S.A. de C.V. (Retail) 490,300 753,168
Corporacion GEO SA de C.V. (Housing)##* 45,000 821,250
Empresas ICA Sociedad Controladora SA, ADR
(Engineering/Construction)* 58,500 870,188
Fomento Economico Mexicano SA, "B" (Beverages) 110,000 519,391
Gruma S.A., "B" (Food Products)* 374,000 1,803,601
Grupo Carso SA de C.V. (Conglomerate)* 138,300 430,120
Grupo Carso, "A1" (Conglomerate)* 171,300 990,011
Grupo Financiero Banamex (Finance)*## 11,997 24,018
Grupo Financiero Banamex, "B" (Finance)* 292,200 626,195
Grupo Financiero Inbursa SA de C.V. (Finance) 4,825 16,525
Kimberly-Clark de Mexico SA de C.V.
(Forest and Paper Products) 150,000 557,164
Telefonos de Mexico S.A. (Utilities -
Telephone) 1,021,000 2,116,049
Tubos de Acero de Mexico S.A. (Steel)* 60,000 982,500
------------
$ 11,555,100
- --------------------------------------------------------------------------------
Morocco - 0.5%
Banque Marocaine Commerce (Banks and
Credit Cos.)* 11,550 $ 786,169
Brasserica Du Maroc (Consumer Goods and
Services)* 2,150 423,649
Credit Eqdom (Financial Institutions) 2,050 254,487
Ona Omnium Nord AF (Conglomerate) 5,500 479,096
Societe Nationale Dinvestiss (Conglomerate) 5,850 492,351
------------
$ 2,435,752
- --------------------------------------------------------------------------------
Netherlands - 1.9%
Ahrend Groep N.V. (Furniture and Home
Appliances)* 25,900 $ 1,570,020
Akzo Nobel (Chemicals) 14,100 1,818,093
ASM Lithography Holding NV (Electronics)*## 30,000 2,242,371
Philips Electronics N.V. (Manufacturing) 25,200 1,316,572
Royal Dutch Petroleum Co. (Oils) 12,800 2,289,613
------------
$ 9,236,669
- --------------------------------------------------------------------------------
Pakistan - 0.5%
Hub Power Co. Ltd. (Utilities - Electric) 1,300,000 $ 1,217,543
Pakistan Telecom (Telecommunications) 461,500 284,708
Pakistan Telecom (Telecommunications)* 11,910 734,750
Sui Northern Gas (Oils)* 44,030 32,311
------------
$ 2,269,312
- --------------------------------------------------------------------------------
Peru - 1.3%
Alicorp S.A. (Food Products)* 236,450 $ 337,279
Compania de Minas Buenaventura S.A. (Mining) 104,430 893,770
CPT Telefonica del Peru S.A., "B" (Utilities -
Telephone) 594,954 1,433,786
Credicorp Ltd. (Conglomerate)* 97,538 2,048,306
Telefonica del Peru S.A., ADR (Utilities -
Telephone) 75,400 1,809,600
------------
$ 6,522,741
- --------------------------------------------------------------------------------
Philippines - 0.6%
Alsons Cement Corp. (Building Materials)*## 4,302,350 $ 783,730
Ayala Corp. (Real Estate) 480,200 337,142
Ayala Land, Inc., "B" (Real Estate) 443,375 319,701
Metro Bank & Trust Co. (Banks and Credit Cos.) 36,000 737,761
Pilipino Telegraph & Telephone Corp.
(Telecommunications)* 1,330,000 630,930
------------
$ 2,809,264
- --------------------------------------------------------------------------------
Poland - 0.9%
Agros Holdings S.A., "C" (Food)* 20,000 $ 481,013
Bank Rozwoju Eksportu S.A. (Banks and
Credit Cos.)* 25,000 597,310
Bank Slaski SA w Katowicach (Banks and
Credit Cos.) 10,500 892,168
Bydgoska Fabryka Kabli S.A. (Electrical
Equipment) 105,000 797,468
Elektrim Spolka Akcyjna S.A. (Electrical
Equipment) 126,373 1,135,757
Stomil Olsztyn S.A. (Tires and Rubber)* 39,960 493,177
------------
$ 4,396,893
- --------------------------------------------------------------------------------
Portugal - 1.3%
Banco Espirito Santo e Comercial de Lisboa S.A.
(Banks and Credit Cos.) 33,729 $ 654,046
Banco Totta E Acores (Financial Institutions) 108,400 1,509,454
Cimentos de Portugal S.A. (Building Materials) 34,946 754,258
Engil SGPS (Engineering) 36,079 401,708
Inparsa-Industria e Participacoes, SGPS, S.A.
(Conglomerate)* 17,090 143,080
Portugal Telecom S.A. (Utilities - Telephone) 33,250 1,227,528
Sonae Investimentos-Sociedade Gestora de
Participacoes Sociais, S.A. (Finance)* 34,180 1,125,173
Telecel - Comunicacaoes Pessoais S.A. (Cellular
Telephones)* 8,250 704,946
------------
$ 6,520,193
- --------------------------------------------------------------------------------
Russia - 1.0%
Lukoil Oil Co., ADR (Oils) 33,600 $ 1,915,200
Mosenergo, ADR (Utilities - Electric)## 74,900 2,921,100
------------
$ 4,836,300
- --------------------------------------------------------------------------------
Singapore - 0.9%
City Developments Ltd. (Real Estate) 276,000 $ 2,231,343
Hong Leong Finance Ltd. (Finance)+ 136,000 421,006
Mandarin Oriental International, Ltd.
(Restaurants and Lodgings)* 854,000 990,640
Singapore Land Ltd. (Conglomerate) 182,000 848,881
------------
$ 4,491,870
- --------------------------------------------------------------------------------
South Africa - 0.4%
De Beers Centenary AG (Diamonds -
Precious Stones) 14,150 $ 509,164
Nedcor Ltd. (Financial Services)* 26,600 541,392
Sasol Ltd. (Oils) 48,800 625,571
South African Breweries Ltd. (Brewery) 16,800 494,951
------------
$ 2,171,078
- --------------------------------------------------------------------------------
South Korea - 0.1%
Korea Electric Power Corp., ADR (Utilities -
Electric) 38,100 $ 647,700
- --------------------------------------------------------------------------------
Spain - 1.0%
Abengoa S.A. (Construction)* 7,000 $ 279,194
Acerinox S.A. (Iron and Steel) 7,394 1,082,345
Catalana Occidente (Insurance)*+ 4,700 247,368
Cubiertas y Mzov S.A. (Engineering) 3,560 360,831
Repsol S.A. (Oils) 22,900 962,014
Telefonica de Espana (Utilities - Telephone) 80,200 2,058,313
------------
$ 4,990,065
- --------------------------------------------------------------------------------
Sweden - 1.4%
Astra AB, Free Shares, "B", ADR
(Pharmaceuticals) 39,200 $ 1,603,977
Nobel Biocare AB (Medical and Health Products)* 101,400 1,486,424
Skandia Foersaekrings AB 56,100 1,623,289
Sparbanken Sverige AB, "A" (Banks and Credit
Cos.) 122,100 2,178,968
------------
$ 6,892,658
- --------------------------------------------------------------------------------
Switzerland - 1.5%
Ciba Specialty AG (Medical and Health Products)* 3,920 $ 337,862
Kuoni Reisen Holdings AG (Transportation) 650 1,870,377
Logitech International (Electrical Equipment) 7,300 1,337,631
Novartis AG (Pharmaceuticals) 2,787 3,673,128
------------
$ 7,218,998
- --------------------------------------------------------------------------------
Taiwan - 0.6%
Taipei Fund (Finance)* 130 $ 1,488,500
Yageo Corp. (Electronics)* 73,476 1,249,092
Yageo Corp., GDR (Electronics)*## 1,680 28,560
------------
$ 2,766,152
- --------------------------------------------------------------------------------
Thailand - 0.4%
Bank of Ayudhya Ltd. (Banks and Credit Cos.) 148,000 $ 379,633
Robinson Department Store Public Co. Ltd.
(Retail) 75,000 71,784
Siam City Cement Co. Ltd., Foreign Registered
(Building Materials) 29,600 138,254
TelecomAsia Corp. Ltd (Utilities - Telephone)* 290,000 438,553
Thai Euro Fund (Finance)+ 57,500 1,106,875
------------
$ 2,135,099
- --------------------------------------------------------------------------------
United Kingdom - 7.5%
ASDA Group PLC (Retail) 1,833,600 $ 3,422,322
British Aerospace PLC (Aerospace)* 171,710 3,653,564
British Petroleum PLC (Oils)* 204,172 2,346,108
Capital Radio PLC (Broadcasting) 106,530 937,108
Carlton Communicatons PLC (Broadcasting) 118,700 974,809
Danka Business Systems, ADR (Business Services) 52,500 1,604,531
Grand Metropolitan PLC (Food and Beverage
Products)* 286,200 2,392,188
Inchcape PLC (Automotive) 229,050 1,018,590
Jarvis Hotels PLC (Resturants and Lodgings)*+ 1,245,100 3,132,236
Kwik-Fit Holdings PLC (Automotive) 883,000 3,453,792
Lloyds TSB Group PLC (Banks and Credit Cos.)* 191,100 1,746,174
PowerGen PLC (Utilities - Electric)* 402,300 4,217,946
Reuters Holdings, PLC, ADR (Printing and
Publishing) 17,700 1,090,763
Smith (W.H.) Group PLC (Retail) 173,170 1,292,853
Storehouse PLC (Retail) 721,540 2,588,041
Tomkins PLC (Diversified Operations)* 478,400 2,065,339
Wimpey (George), PLC (Construction) 525,200 1,189,097
------------
$ 37,125,461
- --------------------------------------------------------------------------------
Venezuela - 0.6%
Compania Anonima Nacional Telefonos de
Venezuela, ADR (Telecommunications)* 101,800 $ 3,054,000
- --------------------------------------------------------------------------------
Total Foreign Stocks $286,900,840
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $408,198,733) $452,324,562
- --------------------------------------------------------------------------------
Convertible Bond - 0.1%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Italy
Italy Republic, 5s, 2001
(Identified Cost, $305,000) $ 305 $ 301,950
- --------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------------
India
India Gateway Fund Ltd. (Finance)*+
(Identified Cost, $0) 16,000 $ 0
- --------------------------------------------------------------------------------
Short-Term Obligations - 7.2%
- --------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
Federal Home Loan Bank, due 5/01/97 $6,000 $ 6,000,000
Federal Home Loan Mortgage Corp., due 5/02/97 3,555 3,554,472
Federal Home Loan Mortgage Corp., due 5/02/97 3,000 2,999,552
Federal Home Loan Mortgage Corp., due 5/05/97 7,975 7,970,241
Federal National Mortgage Assn., due 5/01/97 2,000 2,000,000
Federal National Mortgage Assn., due 5/06/97 6,960 6,954,819
Federal National Mortgage Assn., due 5/09/97 2,700 2,696,748
Ford Motor Credit Corp., due 5/01/97 3,565 3,565,000
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 35,740,832
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $444,244,565) $488,367,344
Other Assets, Less Liabilities - 1.2% 5,991,025
- --------------------------------------------------------------------------------
Net Assets - 100.0% $494,358,369
- --------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
(+) Security valued by or at the direction of the Trustees.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
April 30, 1997
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $444,244,565) $488,367,344
Cash 457,236
Foreign currency, at value (identified cost, $1,894,220) 1,895,989
Receivable for investments sold 7,361,966
Receivable for Fund shares sold 1,817,702
Interest and dividends receivable 1,308,131
Deferred organization expenses 11,689
Other assets 3,665
------------
Total assets $501,223,722
------------
Liabilities:
Payable for investments purchased $ 5,648,223
Payable for Fund shares reaquired 724,504
Payable to affiliates -
Management fee 11,942
Administrative fee 199
Shareholder servicing agent fee 1,725
Distribution and service fee 130,081
Accrued expenses and other liabilities 348,679
------------
Total liabilities $ 6,865,353
------------
Net assets $494,358,369
============
Net assets consist of:
Paid-in capital $434,429,368
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 44,101,206
Accumulated undistributed net realized gain on
investments and foreign currency transactions 17,848,429
Accumulated net investment loss (2,020,634)
------------
Total $494,358,369
============
Shares of beneficial interest outstanding 26,768,403
==========
Class A shares:
Net asset value and redemption price per share
(net assets of $184,503,077 / 9,941,487 shares
of beneficial interest outstanding) $18.56
======
Offering price per share (100 / 94.25) $19.69
======
Class B shares:
Net asset value and offering price per share
(net assets of $282,706,328 / 15,351,672 shares of
beneficial interest outstanding) $18.42
======
Class C shares:
Net asset value and offering price
(net assets of $21,054,709 / 1,147,149 shares of
beneficial interest outstanding) $18.35
======
Class I shares:
Net asset value, offering price, and redemption price
per share (net assets of $6,094,255 / 328,095 shares
of beneficial interest outstanding) $18.57
======
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
- -------------------------------------------------------------------------------
Six Months Ended April 30, 1997
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 2,748,746
Interest 712,926
Foreign taxes withheld (224,982)
-----------
Total investment income $ 3,236,690
-----------
Expenses -
Management fee $ 2,190,224
Trustees' compensation 21,656
Shareholder servicing agent fee 210,877
Shareholder servicing agent fee (Class A) 44,744
Shareholder servicing agent fee (Class B) 105,357
Shareholder servicing agent fee (Class C) 5,140
Distribution and service fee (Class A) 309,150
Distribution and service fee (Class B) 1,425,157
Distribution and service fee (Class C) 104,515
Administrative fee 12,325
Custodian fee 210,547
Postage 56,965
Printing 39,298
Auditing fees 19,007
Legal fees 14,731
Amortization of organization expenses 3,195
Miscellaneous 231,684
-----------
Total expenses $ 5,004,572
Reduction of expenses by distributor (88,315)
Fees paid indirectly (34,685)
-----------
Net expenses $ 4,881,572
-----------
Net investment loss $(1,644,882)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $19,453,356
Foreign currency transactions (111,976)
-----------
Net realized gain on investments and foreign currency
transactions $19,341,380
-----------
Change in unrealized appreciation (depreciation) -
Investments $(4,692,385)
Translation of assets and liabilities in foreign currencies (16,482)
-----------
Net unrealized loss on investments and foreign currency
translation $(4,708,867)
-----------
Net realized and unrealized gain on investments and
foreign currency $14,632,513
-----------
Increase in net assets from operations $12,987,631
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,644,882) $ (3,934,625)
Net realized gain on investments and foreign
currency transactions 19,341,380 26,926,412
Net unrealized gain (loss) on investments and
foreign currency translation (4,708,867) 38,287,928
------------ ------------
Increase in net assets from operations $ 12,987,631 $ 61,279,715
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (102,984)
From net realized gain on investments and foreign
currency transactions (Class A) (9,634,864) (13,664,586)
From net realized gain on investments and foreign
currency transactions (Class B) (13,421,222) (21,606,221)
From net realized gain on investments and foreign
currency transactions (Class C) (1,004,313) (1,215,266)
------------ ------------
Total distributions declared to shareholders $(24,060,399) $(36,589,057)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $308,700,492 $332,230,172
Net asset value of shares issued to shareholders
in reinvestment of distributions 19,067,627 28,656,096
Cost of shares reacquired (297,105,075) (315,137,560)
------------ ------------
Increase in net assets from Fund share
transactions $ 30,663,044 $ 45,748,708
------------ ------------
Total increase in net assets $ 19,590,276 $ 70,439,366
Net assets:
At beginning of period 474,768,093 404,328,727
------------ ------------
At end of period (including accumulated net
investment loss of $2,020,634 and $375,752,
respectively) $494,358,369 $474,768,093
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Year Ended October 31,
Six Months Ended ------------------------------------------------
April 30, 1997 1996 1995 1994*
- ------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $19.09 $18.16 $17.45 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.02) $(0.07) $ -- $(0.02)
Net realized and unrealized gain on
investments and foreign currency
transactions 0.54 2.73 0.93 2.47
------ ------ ------ ------
Total from investment operations $ 0.52 $ 2.66 $ 0.93 $ 2.45
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.01) $ -- $ --
From net realized gain on investments and
foreign currency transactions (1.05) (1.72) (0.22) --
------ ------ ------ ------
Total distributions declared to $
shareholders
$(1.05) $(1.73) $(0.22) --
------ ------ ------ ------
Net asset value - end of period $18.56 $19.09 $18.16 $17.45
====== ====== ====== ======
Total return(+) 2.82%++ 15.73% 5.47% 16.33%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.54%+ 1.58% 1.63% 1.57%+
Net investment loss (0.19)%+ (0.35)% 0.02% (0.14)%+
Portfolio turnover 77% 95% 149% 100%
Average commission rate### $0.0542 $0.0130 $ -- $ --
Net assets at end of period (000 omitted) $184,503 $172,106 $143,543 $131,503
* For the period from the commencement of offering of Class A shares, November 18, 1993, to October 31,
1994.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
## For the fiscal years ending after September 1, 1995, the Fund's expenses are calculated without
reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1,
1995.
(+) 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) The distributor waived a portion of its distribution fee for the periods indicated. If this fee had
been incurred by the Fund, the net investment loss per share and the ratios would have been:
Net investment loss $(0.03) $(0.09) $ -- $(0.04)
Ratios (to average net assets):
Expenses## 1.64%+ 1.68% 1.73% 1.67%+
Net investment loss (0.29)%+ (0.45)% (0.08)% (0.24)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended ----------------------------------------------
April 30, 1997 1996 1995 1994**
- ----------------------------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $18.87 $17.97 $17.32 $15.00
------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.09) $(0.21) $(0.14) $(0.15)
Net realized and unrealized gain on
investments and foreign currency
transactions 0.54 2.70 0.92 2.47
------ ------ ------ ------
Total from investment operations $ 0.45 $ 2.49 $ 0.78 $ 2.32
------ ------ ------ ------
Less distributions declared to shareholders $
from net realized gain on investments and
foreign currency transactions $(0.90) $(1.59) $(0.13) --
------ ------ ------ ------
Net asset value - end of period $18.42 $18.87 $17.97 $17.32
====== ====== ====== ======
Total return 2.40%++ 14.77% 4.61% 15.47%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.31%+ 2.39% 2.45% 2.39%+
Net investment loss (0.96)%+ (1.16)% (0.80)% (0.95)%+
Portfolio turnover 77% 95% 149% 100%
Average commission rate### $0.0542 $0.0130 $ -- $ --
Net assets at end of period (000 omitted) $282,706 $282,668 $247,437 $236,971
** For the period from the commencement of offering of Class B shares, November 18, 1993, to October 31,
1994.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1,
1995.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended ----------------------------------------------
April 30, 1997 1996 1995 1994***
- ----------------------------------------------------------------------------------------------------------------
Class C
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $18.85 $17.96 $17.34 $16.04
------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.09) $(0.20) $(0.13) $(0.13)
Net realized and unrealized gain on
investments and foreign currency
transactions 0.53 2.70 0.92 1.43
------ ------ ------ ------
Total from investment operations $ 0.44 $ 2.50 $ 0.79 $ 1.30
------ ------ ------ ------
Less distributions declared to shareholders $
from net realized gain on investments and
foreign currency transactions $(0.94) $(1.61) $(0.17) $ --
------ ------ ------ ------
Net asset value - end of period $18.35 $18.85 $17.96 $17.34
====== ====== ====== ======
Total return 2.38%++ 14.88% 4.68% 8.10%++
Ratios (to average net assets)/Supplemental data:
Expenses## 2.26%+ 2.32% 2.38% 2.31%+
Net investment loss (0.91)%+ (1.10)% (0.72)% (0.83)%+
Portfolio turnover 77% 95% 149% 100%
Average commission rate### $0.0542 $0.0130 $ -- $ --
Net assets at end of period (000 omitted) $21,055 $19,994 $13,349 $11,872
*** For the period from the commencement of offering of Class C shares, January 3, 1994, to October 31,
1994.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction
for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1,
1995.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
Financial Highlights - continued
- --------------------------------------------------------------------------------
Period Ended
April 30, 1997****
- ------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $18.34
------
Income from investment operations# -
Net investment income $ 0.02
Net realized and unrealized gain on investments and
foreign currency transactions 0.21
------
Total from investment operations $ 0.23
------
Net asset value - end of period $18.57
======
Total return 1.26%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.14%+
Net investment income 0.26%+
Portfolio turnover 77%
Average commission rate### $0.0542
Net assets at end of period (000 omitted) $6,094
**** For the period from the commencement of offering of Class I shares, January
2, 1997, to April 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS World Growth Fund (the Fund) is a non-diversified series of MFS Series Trust
VIII (the Trust). The Trust is organized as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues 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 base currency and translated into U.S. dollars at the closing
daily exchange rate. Securities for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that result 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 will 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 foreign
currency translations.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
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 average daily net assets. The fee is reduced according to an
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Foreign taxes
have been provided for on interest and dividend income earned on foreign
investments in accordance with the applicable country's tax rates and to the
extent unrecoverable are recorded as a reduction of investment income.
Distributions to shareholders are recorded on the ex- dividend date. The Fund
expects to pass through to shareholders foreign income taxes paid. The election
increases the taxable distributions of the Fund by the amount of the foreign
taxes paid. An individual shareholder who itemizes deductions, or a corporate
shareholder, will be able to claim an offsetting deduction or a tax credit (but
not both) on their federal income tax returns. Individuals who do not itemize
deductions may claim a foreign tax credit but not a deduction. The foreign
source income is considered passive income for the purpose of computing the
foreign tax credit limitations.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return of
capital. Differences in the recognition or classifications of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statements purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B, Class C, and Class I shares. The four classes of shares differ in their
respective distribution and service fees. All shareholders bear the common
expenses of the Fund pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(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 effective annual rate of
0.90% of average daily net assets. The advisory agreement permits the adviser to
engage one or more sub-advisers, and the adviser has engaged Foreign & Colonial
Management Ltd., an England and Wales Company, and its subsidiary, Foreign &
Colonial Emerging Markets Limited, to assist in the performance of its services.
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 $3,832 for the six months
ended April 30, 1997.
Administrator - Effective March 1, 1997, the Fund has an administrative services
agreement with MFS to provide the Fund with certain financial, legal,
compliance, shareholder communications and other administrative services. As a
partial reimbursement for the cost of providing these services, the Fund pays
MFS an administrative fee up to 0.015% per annum of the Fund's average daily net
assets, provided that the administrative fee is not assessed on Fund assets that
exceed $3 billion.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$268,528 for the six months ended April 30, 1997, as its portion of the sales
charge on sales of Class A shares of the Fund. The Trustees have adopted
separate distribution plans for Class A, Class B, and Class C shares pursuant to
Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Class A 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
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, 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, commissions to dealers and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. MFD retains the service fee for accounts
not attributable to a securities dealer which amounted to $47,077 for the six
months ended April 30, 1997. Payment of the 0.10% per annum Class A distribution
fee is currently being waived on a voluntary basis and may be imposed at the
discretion of MFD. Fees incurred under the distribution plan during the six
months ended April 30, 1997, were 0.25% of average daily net assets attributable
to Class A shares on an annualized basis.
The Class B and Class C distribution plans provide 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 additional
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 $67,544 and $26,673 for Class B and Class C
shares, respectively, for the six months ended April 30, 1997. Fees incurred
under the distribution plans during the six months ended April 30, 1997, were
1.00% of average daily net assets attributable to Class B and Class C shares on
an annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such 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.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class C shares in the event of a shareholder redemption within twelve months of
purchases made on or after April 1, 1996. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the six months
ended April 30, 1997, were $2,880, $285,288, and $2,945 for Class A, Class B,
and Class C shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.13%. Prior to January 1, 1997, the fee was calculated as a percentage of the
average daily net assets of each class of shares at an effective annual rate of
up to 0.15%, up to 0.22%, and up to 0.15% attributable to Class A, Class B, and
Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$386,747,500 and $353,890,407, respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $444,244,565
============
Gross unrealized appreciation $ 67,353,530
Gross unrealized depreciation (23,230,751)
------------
Net unrealized appreciation $ 44,122,779
============
(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 (without par value).
Transactions in Fund shares were as follows:
<TABLE>
Class A Shares
<CAPTION>
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------------ ------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 14,275,030 $ 268,455,526 13,198,505 $ 248,410,300
Shares issued to shareholders
in reinvestment of distributions 449,320 8,218,066 703,305 12,156,888
Shares reacquired (13,423,954) (253,390,284) (12,790,324) (241,363,733)
Shares transferred to Class I (373,008) (6,841,795) -- --
---------- -------------- ---------- --------------
Net increase 927,388 $ 16,441,513 1,111,486 $ 19,203,455
========== ============== ========== ==============
Class B Shares
<CAPTION>
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------------ ------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,538,951 $ 28,741,905 3,986,473 $ 73,258,330
Shares issued to shareholders
in reinvestment of distributions 559,743 10,181,721 923,243 15,760,023
Shares reacquired (1,724,378) (32,309,369) (3,703,963) (68,245,006)
--------- ------------- --------- -------------
Net increase 374,316 $ 6,614,257 1,205,753 $ 20,773,347
========= ============= ========= =============
Class C Shares
<CAPTION>
Six Months Ended April 30, 1997 Year Ended October 31, 1996
------------------------------------ ------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 235,472 $ 4,384,268 574,128 $ 10,561,542
Shares issued to shareholders
in reinvestment of distributions 36,836 667,840 43,379 739,185
Shares reacquired (186,004) (3,464,613) (300,073) (5,528,821)
------- ------------ ------- -------------
Net increase 86,304 $ 1,587,495 317,434 $ 5,771,906
======= ============ ======= =============
</TABLE>
Class I Shares
Period Ended April 30, 1997*
------------------------------------
Shares Amount
- -------------------------------------------------------------------
Shares transferred from Class A 373,008 $ 6,841,795
Shares sold 15,015 276,998
Shares reacquired (59,928) (1,099,014)
------- ------------
Net increase 328,095 $ 6,019,779
======= ============
* For the period from the commencement of offering of Class I shares, January 2,
1997, to April 30, 1997.
(7) Line of Credit
The Fund and other affiliated funds participate in a $400 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 April 30, 1997, was $1,970.
(8) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include forward foreign currency exchange contracts. The notional or
contractual amounts of these instruments represent the investment the Fund has
in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. At April 30, 1997, the Fund did not hold
any of these financial instruments.
(9) 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 April 30, 1997, the
Fund owned the following restricted securities (constituting 1.2% of net assets)
which may not be publicly sold without registration under the Securities Act of
1933 (the 1933 Act). The Fund does not have the right to demand that such
securities be registered. The value of these securities is determined by
valuations supplied by a pricing service or brokers or, if not available, in
good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
Date of
Description Acquisition Shares Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Catalana Occidente 4/22/97 4,700 $ 240,243 $ 247,368
Companhia Vale do Rio Doce,
Preferred, "B" 4/22/97 29,553 -- --
Hong Leong Finance Ltd. 11/01/96 - 3/25/97 136,000 423,822 421,006
India Gateway Fund Ltd. 6/02/94 - 2/02/96 107,000 941,870 483,640
India Gateway Fund Ltd., Warrants 6/02/94 16,000 -- --
International Business Communications
Systems, Inc. 8/29/95 40,300 399,776 282,100
Jarvis Hotels PLC 11/01/96 - 3/25/97 1,245,100 3,302,353 3,132,236
Thai Euro Fund 6/12/96 - 10/25/96 57,500 1,871,625 1,106,875
----------
$5,673,225
==========
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of the MFS Series Trust VIII and the Shareholders of MFS World
Growth Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS World Growth Fund (a series of MFS Series
Trust VIII) as of April 30, 1997, the related statement of operations for the
six months then ended, the statement of changes in net assets for the six months
ended April 30, 1997, and the year ended October 31, 1996, and the financial
highlights for the six months ended April 30, 1997, and for each of the years in
the three-year period ended October 31, 1996. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
April 30, 1997, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS World Growth
Fund at April 30, 1997, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 30, 1997
--------------------------------------------
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) WORLD GROWTH FUND
<S> <C>
TRUSTEES ASSISTANT SECRETARY
A. Keith Brodkin* - Chairman and President James R. Bordewick, Jr.*
Richard B. Bailey* - Private Investor; Former CUSTODIAN
Chairman and Director (until 1991), State Street Bank and Trust Company
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; Director, AUDITORS
Cambridge Trust Company Deloitte & Touche LLP
Marshall N. Cohan - Private Investor INVESTOR INFORMATION
For MFS stock and bond market outlooks, call
Lawrence S. Cohn, M.D. - Chief of Cardiac toll free: 1-800-637-4458 anytime from a
Surgery, Brigham and Women's Hospital; touch-tone telephone.
Professor of Surgery, Harvard Medical School
For information on MFS mutual funds, call your
The Hon. Sir J. David Gibbons, KBE - Chief financial adviser or, for an information kit,
Executive Officer, Edmund Gibbons Ltd.; call toll free: 1-800-637-2929 any business
Chairman, Bank of N.T. Butterfield & Son Ltd. day from 9 a.m. to 5 p.m. Eastern time (or
leave a message anytime).
Abby M. O'Neill - Private Investor; Director,
Rockefeller Financial Services, Inc. INVESTOR SERVICE
(investment advisers) MFS Service Center, Inc.
P.O. Box 2281
Walter E. Robb, III - President and Treasurer, Boston, MA 02107-9906
Benchmark Advisors, Inc. (corporate financial
consultants); President, Benchmark Consulting For general information, call toll free:
Group, Inc. (office services); Trustee, 1-800-225-2606 any business day from
Landmark Funds (mutual funds) 8 a.m. to 8 p.m. Eastern time.
Arnold D. Scott* - Senior Executive Vice For service to speech- or hearing-impaired,
President, Director and Secretary, call toll free: 1-800-637-6576 any business
Massachusetts Financial Services Company day from 9 a.m. to 5 p.m. Eastern time. (To
use this service, your phone must be equipped
Jeffrey L. Shames* - President and Director, with a Telecommunications Device for the
Massachusetts Financial Services Company Deaf.)
J. Dale Sherratt - President, Insight For share prices, account balances, and
Resources, Inc. (acquisition planning exchanges, call toll free: 1-800-MFS-TALK
specialists) (1-800-637-8255) anytime from a touch-tone
telephone.
Ward Smith - Former Chairman (until 1994),
NACCO Industries; Director, Sundstrand World Wide Web
Corporation www.mfs.com
INVESTMENT ADVISER
Massachusetts Financial Services Company [DALBAR Logo] For the third year in a
500 Boylston Street row, MFS earned a #1
Boston, MA 02116-3741 ranking in the DALBAR, Inc. Broker/
Dealer Survey, Main Office Operations
DISTRIBUTOR Service Quality Category. The firm
MFS Fund Distributors, Inc. achieved a 3.48 overall score on a
500 Boylston Street scale of 1 to 4 in the 1996 survey.
Boston, MA 02116-3741 A total of 110 firms responded,
offering input on the quality of
PORTFOLIO MANAGERS service they received from 29 mutual
John W Ballen* fund companies nationwide. The survey
David Mannheim* contained questions about service
Toni Y. Shimura* quality in 15 categories, including
"knowledge of phone service
TREASURER contacts," "accuracy of transaction
W. Thomas London* processing," and "overall ease of
doing business with the firm."
ASSISTANT TREASURER
JAMES O. YOST*
Secretary
STEPHEN E. CAVAN*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
------------
MFS(R) WORLD [DALBAR Logo} Bulk Rate
GROWTH FUND U.S. Postage
500 Boylston Street P A I D
Boston, MA 02116-3741 MFS
------------
[MFS logo]
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(SM)
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MWF-3 6/97 86M 9/209/309/809
