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[Logo]
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
MFS(R) WORLD
GROWTH FUND
SEMIANNUAL REPORT O APRIL 30, 1998
Now two MFS(R) IRA choices (see page 43)
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IN MEMORIAM
A. KEITH BRODKIN
1935 - 1998
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT(SM)
[Photo of A. Keith Brodkin] On February 2, 1998, Keith Brodkin, a friend
and leader to everyone at MFS, died
unexpectedly at age 62. His thoughtful
letters to shareholders on the markets and
economy have been an integral part of
MFS shareholder reports like this one for
many years.
Keith joined MFS in 1970 as the firm's first fixed-income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and four
years later became Chairman and Chief Executive Officer. During his stewardship,
MFS has achieved significant growth in total assets under management, rising
from some $25 billion in 1991 to the over $80 billion today entrusted to us by
three million individual and institutional investors worldwide. Under Keith's
leadership, MFS has carefully but steadily built its domestic and international
investment capabilities through the introduction of a range of new products and
a still-growing staff that now numbers over 100 equity and fixed-income
professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
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TABLE OF CONTENTS
Letter from the Chairman .................................................. 2
A Discussion with the Portfolio Managers .................................. 4
Portfolio Managers' Profiles .............................................. 9
Fund Facts ................................................................ 10
Performance Summary ....................................................... 10
Portfolio Concentration ................................................... 12
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 28
Notes to Financial Statements ............................................. 35
Independent Auditors' Report .............................................. 42
Now two MFS(R) IRA choices ................................................ 43
The MFS Family of Funds(R) ................................................ 44
Trustees and Officers ..................................................... 45
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HIGHLIGHTS
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o FOR THE SIX MONTHS ENDED APRIL 30, 1998, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 16.80%, CLASS B SHARES
16.38%, CLASS C SHARES 16.37%, AND CLASS I SHARES 17.05%. (SEE PERFORMANCE
SUMMARY FOR MORE INFORMATION.)
o THE FUND'S PERFORMANCE HAS BEEN HELPED BY ITS OVERWEIGHTING IN U.S.
TECHNOLOGY AND EUROPEAN STOCKS AND AN UNDERWEIGHTING IN JAPANESE AND OTHER
SOUTHEAST ASIAN COMPANIES.
o IN GENERAL, THE INVESTMENT ENVIRONMENT HAS FEATURED STRONG MARKETS IN MANY
PARTS OF THE WORLD, DRIVEN IN PART BY LOW OR DECLINING INTEREST RATES,
VERY LOW INFLATION, AND STRONGER-THAN- EXPECTED ECONOMIC GROWTH.
o THE FUND'S MAJOR DEVELOPED-MARKET FOCUS HAS BEEN ON EUROPE, WHERE
INFLATION IS LOW, INTEREST RATES CONTINUE TO DECLINE, AND ECONOMIC GROWTH
IS ACCELERATING, ALL OF WHICH ARE LEADING TO GENERALLY POSITIVE EARNINGS
SURPRISES.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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LETTER FROM THE CHAIRMAN
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[Photo of Jeffrey L. Shames]
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Jeffrey L. Shames
Dear Shareholders:
With the U.S. stock market well into its fourth year of record-breaking
advances, it is necessary to take a cautious outlook. By most commonly accepted
measures, equity valuations appear to have risen to a point at which the stock
market has become more vulnerable to changes in the investment environment such
as rising inflation and interest rates or a slowing economy. As a result, while
we continue to hold a favorable long-term outlook for the equity markets, we
also believe that a market correction is possible in the near term. In such a
correction, equity prices would remain relatively flat or decline, possibly for
an extended period.
Currently, equity investors seem to be primarily focused on interest rates,
which have been relatively stable for several months as inflation has remained
low. In an environment of low interest rates, stocks become more attractive
than most fixed-income investments, while low inflation helps control
companies' costs, such as for raw materials, wages, and benefits. The near-
term outlook for a continuation of this environment appears relatively
favorable. However, this year has seen a marked slowdown in corporate
earnings. This means that as equity prices continue to rise, price-to-earnings
(P/E) ratios, or the amount an investor pays for a stock in relation to the
company's earnings per share, also go up. A year ago, the average P/E ratio
for stocks in the unmanaged Standard & Poor's 500 Composite Index stood at
approximately 21; this spring, the average P/E was 33% higher, at about 28. In
some cases, such as with some of the newer companies associated with the
Internet, P/Es have soared to levels that are unlikely to be sustained.
As long as interest rates remain low and the economy continues to grow,
it is possible that some of these valuations can be supported. We expect
corporate earnings to grow 8% to 10% this year. However, just as no one can
predict market cycles, so too no one can predict economic cycles -- except to
say that these cycles do exist and that an economic slowdown at some point is
inevitable.
Given this reality, we believe it is prudent to remind investors of the need
to take a long-term view and to diversify their investments across a range of
asset classes, including mutual funds that focus on bonds and international
investments as well as on the U.S. stock market. The likelihood of an eventual
market correction also makes it important for us to use original, bottom-up
research to find companies that we think can keep growing or gain market share
in the face of the occasional downturn. To help achieve this, and to provide
the broadest possible coverage of industry sectors and individual companies,
MFS continues to increase its number of full-time research analysts. These
analysts thoroughly investigate each company's earnings potential and position
in its industry as well as the overall prospects for that industry.
MFS also uses active portfolio management on the fixed-income side, taking
advantage of our extensive research and credit analysis to help reduce the
potential for price declines and enhance the opportunity for appreciation.
Every year, both fixed-income and equity managers meet with thousands of
credit issuers and companies. They also attend many presentations, closely
follow sources of industry research, and keep track of competitors.
We believe that applying this discipline of thorough, bottom-up research
to both the equity and fixed-income markets is the best way to provide
favorable long-term performance for our shareholders -- regardless of changes
in the overall market environment.
We appreciate your support 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
May 14, 1998
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JEFFREY L. SHAMES, A GRADUATE OF WESLEYAN UNIVERSITY AND THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT, JOINED
MFS IN 1983. AFTER FOUR YEARS AS AN INDUSTRY ANALYST AND PORTFOLIO
MANAGER, HE WAS NAMED CHIEF EQUITY OFFICER IN 1987 AND PRESIDENT AND A
MEMBER OF THE BOARD OF DIRECTORS IN 1993. MR. SHAMES WAS APPOINTED
CHAIRMAN AND CHIEF EXECUTIVE OFFICER IN FEBRUARY 1998.
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<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGERS
For the six months ended April 30, 1998, Class A shares of the Fund provided a
total return of 16.80%, Class B shares 16.38%, Class C shares 16.37%, and
Class I shares 17.05%. These returns assume the reinvestment of distributions
but exclude the effects of any sales charges and compare to
an 18.06% return for the Morgan Stanley Capital International (MCSI) All
Country World Index, an unmanaged index of developed-country and emerging
market equities.
Q. WHAT DO YOU SEE AS SOME OF THE REASONS FOR THE FUND'S PERFORMANCE OVER THE
PAST SIX MONTHS?
A. From a big-picture standpoint, the Fund's performance has been helped by
its overweighting in U.S. technology and European stocks and an
underweighting in Japanese and other Southeast Asian companies. Overall,
we've had strong markets in many parts of the world, driven in part by low
or declining interest rates, very low inflation, and stronger-than-expected
economic growth.
Q. IN GENERAL, HOW WOULD YOU CHARACTERIZE THE INVESTMENT ENVIRONMENT OF THE PAST
SEVERAL MONTHS, PARTICULARLY AS IT RELATES TO THE FUND?
A. The past six months have been a volatile period, but one that has created
opportunities. The economic problems in Asia were probably the most important
factor affecting the markets during this period. Concerns relating to Asia
drove liquidity premiums to very high levels -- in other words, investors
were willing to pay much higher valuations for the liquidity offered by the
largest-capitalization stocks. So the large-cap stocks in our Fund tended to
outperform the small and mid-cap stocks. Also, concerns about Asia affected
companies with significant exposure to the region, such as technology stocks,
many of which experienced a roller-coaster ride. Fortunately, the Fund's
technology weightings were primarily in software rather than the more
volatile semiconductor stocks, which have a lot of business in Asia. Issues
surrounding Asia also dampened investors' enthusiasm for other non-Asian
emerging markets, which made the emerging markets portion of the Fund
contribute less to overall performance. On a positive note, however, slowing
demand from Asia and much lower prices for Asian goods have helped maintain
inflation at unexpectedly low levels in all of the developed markets, which
has helped many of our holdings.
Q. LET'S LOOK AT EACH OF THE THREE MAJOR MARKETS IN WHICH THE FUND HAS
INVESTMENTS, STARTING WITH THE UNITED STATES. WHAT INDUSTRIES AND STOCKS ARE
YOU EMPHASIZING THERE, AND WHY?
A. The United States remains one of our favorite major markets because
of low inflation, low interest rates, and a robust economy. Among all
industries, technology continues to be an area of emphasis since these
companies are generating some of the strongest earnings growth we've been
able to identify. Our holdings are primarily in software, a sector in which
we own the leading database, design automation, and mainframe software
companies such as Cadence Design Systems, BMC Software, Compuware, and
Microsoft. These companies have strong new product cycles, dominant
positions, and products that are helping companies around the world become
more productive. Another area that we believe offers great potential is the
business and computer services market. We own, for example, information
technology and outsourcing firms that help other companies focus on their
core businesses. We also see many opportunities in telecommunications, a
sector in which WorldCom and Intermedia Communications are poised to
benefit from increased competition and consolidation. We continue to have a
small holding in the oil services and exploration industry, which we would
like to increase since prices in this industry seem poised to move up from
currently depressed levels.
Q. NOW, WHAT ABOUT THE DEVELOPED FOREIGN MARKETS? WHAT COUNTRIES AND WHAT KINDS
OF INDUSTRIES DO YOU LIKE THERE?
A. Here, our focus is on Europe, where inflation is low, interest rates
continue to decline, and economic growth is accelerating, factors which
are leading to generally positive earnings surprises. Among companies
that we think will benefit from this type of environment are financial
services companies in Europe that have consolidation and cost-cutting
opportunities similar to those U.S. banks enjoyed in the 1980s. Some
of our favorite companies are Banco Espirito Santo and Banco Totta E Acores
in Portugal and Irish banks such as Anglo Irish and Allied Irish Bank.
These financial services companies are also benefiting from the higher
valuations of their counterparts in the United States, where merger and
acquisition activity has been intense. We also like a number of the
consumer staples companies in Europe, where stronger-than-expected consumer
demand is leading to positive earnings surprises. In Japan, we continue to
like the blue-chip exporters such as Sony, TDK, and Kirin Beverages, all of
which have been helped by the weak yen.
Q. FINALLY, WHAT ABOUT THE EMERGING MARKETS?
A. Our favorite regions are Eastern Europe, the Middle East, and Africa,
collectively known as EMEA. For example, we're focusing on South Africa,
where valuations are attractive, interest rates are declining,
and companies are beginning to undertake Western-style corporate
restructuring. Another country we think offers opportunity is Egypt, a
market with 16% earnings growth and a 4.5% dividend yield, yet one that is
selling only at 11 times next year's earnings. Morocco is another
interesting, surprisingly high-growth market that we view as being full of
many well-managed companies. From an industry perspective, our holdings
tend to be in telecommunications and banking. Growth is
still quite healthy for most telecommunications companies and their
valuations are also quite attractive, while banks are appealing because
they are generally growing faster than the local economy and are selling at
below-average valuations.
Q. COULD YOU TALK ABOUT THE FUND'S POSITION IN SOUTHEAST ASIA AND WHAT YOU SEE
FOR THAT REGION GOING FORWARD?
A. We are happy to say that, prior to the Asian crisis, we had very little
invested in Southeast Asia. Currently, the only markets that we think are
interesting are South Korea, Malaysia, and, to a lesser extent, Hong
Kong/China. In South Korea, government authorities have undertaken structural
reforms, while Malaysia has managed to avoid having significant foreign debt.
In general, though, we still are underweighted in the region because we think
the problems there could last for a while. Although currencies have
depreciated quite significantly, as much as 60% to 70% in some cases,
companies are still overleveraged with foreign debt and many of them are
going bankrupt. As a result, we are being very selective and are looking for
companies with strong balance sheets and good underlying asset quality.
Q. HAVE THERE BEEN ANY SIGNIFICANT CHANGES IN THE FUND'S HOLDINGS OR ALLOCATIONS
OVER THE PAST YEAR?
A. Asset allocations across our three target markets have changed only modestly
since last year, with the United States representing about 39% of the
portfolio, developed foreign markets such as Europe and Japan 41%, and
emerging markets 17%. The most significant changes that helped performance
were an increase in our holdings in Europe and a further reduction in Japan,
where the economy seems to be sinking even further into recession. We also
added more to Latin America, a move that didn't really help us because of the
psychology surrounding the difficulties in Asian emerging markets. In the
emerging markets, we doubled our exposure to South Africa, where we think
companies offer much promise.
Q. COULD YOU TALK ABOUT SOME STOCKS OR COUNTRIES THAT PERFORMED BETTER THAN YOU
EXPECTED, AND WHY YOU THINK THEY DID WELL?
A. Software companies in the United States did better than expected because
earnings were surprisingly robust, despite problems in Asia. Stocks that
contributed to performance included BMC Software, Compuware, Microsoft, and
SAP in Germany, all of whose products were in strong demand by companies
seeking increasing productivity. Radio and television broadcasting stocks
such as Clear Channel and Cox Radio also helped performance, as they were
buoyed by positive advertising trends and continued consolidation within
their markets. Health maintenance organizations did much better than expected
because they finally were able to meet investors' earnings expectations. In
Europe, financial services companies did much better than expected, driven by
the sharp declines in interest rates in markets such as Italy and Spain and
also by the higher values placed on U.S. financials during the recent flurry
of merger and acquisition activity. In emerging markets, Asia did better than
expected in the early part of 1998 as investors looked for bargains, but we
think that many of those gains will be given back in the coming months.
Q. NOW, WHAT ABOUT SOME STOCKS OR COUNTRIES THAT DID NOT PERFORM AS WELL AS YOU
WOULD HAVE LIKED?
A. Cendant, the company created out of the merger of HFS and CUC
International, did poorly because of accounting problems at CUC. We think
the stock will recover as those issues are resolved and the company starts
to surprise positively on the earnings front. Japanese stocks with a lot of
exposure to the domestic economy, such as Nippon Broadcasting and Secom,
did not perform as well as expected because the Japanese economy continued
to be in the doldrums. In emerging markets, Egypt and Russia did not fare
as well as we had hoped. Egypt suffered as a result of the massacre in
Luxor, while Russia underperformed because of political infighting over the
appointment of a new prime minister. We believe both problems will heal
over time.
Q. WHAT RISKS DO YOU SEE GOING FORWARD FOR YOUR INVESTMENT MARKETS, AND HOW CAN
YOU POSITION THE FUND FOR THEM?
A. The potential for rising interest rates in the United States is something
we're always on the lookout for, given the continued strength of the
economy and the tight labor market. If interest rates rise, interest-
sensitive stocks in sectors such as financial services and television and
radio broadcasting could see their valuations come under pressure. So, to
be on the cautious side, we've trimmed back some of our holdings in these
areas. In developed foreign markets, rising interest rates are also a major
risk, especially since valuations are at higher levels than a year ago. As
a result, we are focusing our efforts on finding solid growth at less
expensive valuations in all of our markets. For emerging markets,
a significant setback in the U.S. market is always a risk. In this regard,
our strategy is to concentrate on countries that we feel are less
correlated with the United States, in particular the markets of Eastern
Europe, the Middle East, and Africa.
/s/ John W. Ballen /s/ David R. Mannheim
John W. Ballen David R. Mannheim
Portfolio Manager Portfolio Manager
/s/ Toni Y. Shimura
Toni Y. Shimura
Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are only through the end of the period of the report as stated on the cover.
The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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JOHN W. BALLEN IS AN EXECUTIVE VICE PRESIDENT, CHIEF EQUITY OFFICER, AND A
MEMBER OF THE BOARD OF DIRECTORS OF MFS INVESTMENT MANAGEMENT. HE ALSO IS
PORTFOLIO MANAGER OF MFS(R) EMERGING GROWTH FUND, MFS(R) WORLD GROWTH
FUND, MFS(R) MERIDIAN(SM) WORLD GROWTH FUND, MFS(R) WORLD ASSET
ALLOCATION(SM) FUND AND THE EMERGING GROWTH SERIES OFFERED THROUGH MFS/SUN
LIFE ANNUITY PRODUCTS. MR. BALLEN JOINED THE MFS RESEARCH DEPARTMENT IN
1984 AS AN INDUSTRY SPECIALIST. HE WAS NAMED AN INVESTMENT OFFICER IN
1986, A VICE PRESIDENT -- INVESTMENTS IN 1987, DIRECTOR OF RESEARCH IN
1988, SENIOR VICE PRESIDENT IN 1990, DIRECTOR OF EQUITY PORTFOLIO
MANAGEMENT IN 1993, CHIEF EQUITY OFFICER IN 1995, EXECUTIVE VICE PRESIDENT
IN 1997 AND A MEMBER OF THE BOARD IN 1998. MR. BALLEN IS A GRADUATE OF
HARVARD COLLEGE AND EARNED A MASTER OF COMMERCE DEGREE FROM THE UNIVERSITY
OF NEW SOUTH WALES IN AUSTRALIA AND A MASTER IN BUSINESS ADMINISTRATION
DEGREE FROM STANFORD UNIVERSITY.
DAVID R. MANNHEIM IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT
AND PORTFOLIO MANAGER OF MFS(R) WORLD EQUITY FUND, MFS(R) INTERNATIONAL
GROWTH FUND, MFS(R) WORLD ASSET ALLOCATION FUND, MFS(R) MERIDIAN(SM)
GLOBAL EQUITY FUND, MFS(R) WORLD GROWTH FUND, AND THE INTERNATIONAL
SERIES, THE WORLD GROWTH SERIES, AND THE WORLD ASSET ALLOCATION(SM) SERIES
OFFERED THROUGH MFS/SUN LIFE ANNUITY PRODUCTS. MR. MANNHEIM JOINED MFS IN
1988 AND WAS NAMED AN INVESTMENT OFFICER IN 1990, ASSISTANT VICE PRESIDENT
IN 1991, VICE PRESIDENT AND PORTFOLIO MANAGER OF MFS WORLD EQUITY FUND IN
1992 AND SENIOR VICE PRESIDENT IN 1997. HE IS A GRADUATE OF AMHERST
COLLEGE AND MASSACHUSETTS INSTITUTE OF TECHNOLOGY'S SLOAN SCHOOL OF
MANAGEMENT.
TONI Y. SHIMURA IS A VICE PRESIDENT -- INVESTMENTS OF MFS INVESTMENT
MANAGEMENT AND A PORTFOLIO MANAGER OF MFS WORLD GROWTH FUND AND THE
WORLD GROWTH SERIES OFFERED THROUGH MFS/SUN LIFE ANNUITY PRODUCTS. MS.
SHIMURA JOINED MFS IN 1987 AS A MEMBER OF THE RESEARCH DEPARTMENT. SHE
WAS NAMED AN INVESTMENT OFFICER IN 1990; AN ASSISTANT VICE PRESIDENT --
INVESTMENTS IN 1991; A VICE PRESIDENT -- INVESTMENTS IN 1992 AND A
PORTFOLIO MANAGER IN 1993. MS. SHIMURA IS A GRADUATE OF WELLESLEY
COLLEGE AND THE SLOAN SCHOOL OF MANAGEMENT AT THE MASSACHUSETTS
INSTITUTE OF TECHNOLOGY.
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This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS CAPITAL APPRECIATION BY INVESTING IN
SECURITIES OF COMPANIES WORLDWIDE GROWING AT
RATES MANAGERS EXPECT TO BE WELL ABOVE THE GROWTH
RATE OF THE U.S. ECONOMY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: NOVEMBER 18, 1993
CLASS INCEPTION: CLASS A NOVEMBER 18, 1993
CLASS B NOVEMBER 18, 1993
CLASS C JANUARY 3, 1994
CLASS I
JANUARY 2, 1997
SIZE: $602.9 MILLION NET ASSETS AS OF APRIL 30, 1998
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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.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH APRIL 30, 1998
<TABLE>
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 10 Years/Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return +16.80% +30.83% +70.82% +91.11%
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Average Annual Total Return -- +30.83% +19.54% +15.67%
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SEC Results -- +23.31% +17.21% +14.14%
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</TABLE>
<TABLE>
CLASS B
<CAPTION>
6 Months 1 Year 3 Years 10 Years/Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return +16.38% +29.91% +66.86% +84.44%
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Average Annual Total Return -- +29.91% +18.61% +14.75%
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SEC Results -- +25.91% +17.90% +14.47%
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*For the period from the commencement of the Fund's investment operations,
November 18, 1993, through April 30, 1998.
</TABLE>
<PAGE>
PERFORMANCE SUMMARY -- continued
<TABLE>
CLASS C
<CAPTION>
6 Months 1 Year 3 Years 10 Years/Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return +16.37% +29.88% +66.99% +83.80%
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Average Annual Total Return -- +29.88% +18.64% +14.66%
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SEC Results -- +28.88% +18.64% +14.66%
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</TABLE>
<TABLE>
CLASS I
<CAPTION>
6 Months 1 Year 3 Years 10 Years/Life*
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<S> <C> <C> <C> <C>
Cumulative Total Return +17.05% +31.30% +71.55% +89.72%
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Average Annual Total Return -- +31.30% +19.71% +15.48%
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*For the period from the commencement of the Fund's investment operations,
November 18, 1993, through April 30, 1998.
</TABLE>
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
C results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of B for periods prior to the inception of C. Operating expenses of C
are not significantly different than those of B. The B performance included in
the C SEC performance has been adjusted to reflect the CDSC generally
applicable to C rather than the CDSC generally applicable to B.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been
higher than A performance. The A performance included in the I performance has
been adjusted to reflect the fact that I have no initial sales charge.
Peformance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and capital
gains.
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.
<PAGE>
PORTFOLIO CONCENTRATION AS OF APRIL 30, 1998
LARGEST STOCK SECTORS
Technology ......................................................... 23.5%
Other Sectors ...................................................... 16.2%
Financial Services ................................................. 13.5%
Utilities & Communications ......................................... 10.9%
Miscellaneous (Conglomerates, special products/services) ........... 9.3%
Leisure ............................................................ 8.7%
Retailing .......................................................... 6.6%
Health Care ........................................................ 6.0%
Consumer Staples ................................................... 5.3%
For a more complete breakdown, refer to the Portfolio of Investments.
<TABLE>
TOP 10 STOCK HOLDINGS
<S> <C>
TYCO INTERNATIONAL LTD. 3.2% ORACLE CORP. 1.8%
Fire protection, packaging, and electronic Database software developer and manufacturer
equipment manufacturer
COMPUWARE CORP. 1.8%
COMPUTER ASSOCIATES INTERNATIONAL, INC. 2.4% Computer software company
Computer software company
MICROSOFT CORP. 1.7%
CENDANT CORP. 2.4% Computer software and systems company
Hotel, real estate, and consumer services
companies franchiser SAP AG 1.7%
German computer software company
CISCO SYSTEMS, INC. 2.3%
Computer network developer CADENCE DESIGN SYSTEMS, INC. 1.6%
Computer software and systems company
BMC SOFTWARE, INC. 1.9%
Computer software company
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS -- April 30, 1998
Stocks - 95.3%
<CAPTION>
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ISSUER SHARES VALUE
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<S> <C> <C>
Foreign Stocks - 56.5%
Argentina - 0.7%
Banco de Galicia y Buenos Aires S.A. de C.V., ADR
(Banks and Credit Cos.) 15,714 $ 384,993
Banco Rio de La Plata S.A., ADR (Banks and Credit
Cos.)* 10,600 145,750
Perez Companc S.A. (Oils) 106,076 637,580
Siderar S.A., ADR (Steel)## 4,780 184,030
Siderca S.A. (Steel) 82,100 197,881
Telecom S.A., ADR (Telecommunications) 5,600 201,600
Telefonica de Argentina, ADR (Utilities - Telephone) 25,600 987,200
YPF Sociedad Anonima, ADR (Oils) 47,200 1,646,100
------------
$ 4,385,134
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Australia - 0.4%
QBE Insurance Group Ltd. (Insurance) 519,120 $ 2,379,148
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Brazil - 3.0%
CEMIG (Utilities - Electric) 9,589,000 $ 465,404
Centrais Eletricas Brasileiras S.A., Preferred, "B"
(Utilities - Electric)* 18,000,000 802,956
Centrais Eletricas Brasileiras, S.A. ADR (Utilities -
Electric) 50,600 1,090,936
Companhia Cervejaria Brahma, ADR (Beverages) 127,300 1,678,769
Companhia Cervejaria Brahma, Preferred (Beverages) 380,433 247,855
Companhia Energetica de Sao Paulo, Preferred
(Utilities - Electric) 4,721,000 229,135
Companhia Paranaense de Energia, Preferred "B"
(Utilities - Electric)* 33,685 471,325
Companhia Paranaense de Energia, ADR (Utilities -
Electric) 241,300 3,438,525
Companhia Vale do Rio Doce, Preferred (Mining) 24,053 567,933
Itausa Investimentos Itau S.A., Preferred
(Conglomerate) 319,000 270,599
Petroleo Brasileiro S.A., Preferred (Oils) 5,414,000 1,373,030
Telecomunicacoes Brasileiras S.A., ADR
(Telecommunications) 55,970 6,817,845
Telecomunicacoes do Rio de Janero, S.A
(Telecommunications) 4,141,000 651,841
Unibanco (Banks and Credit Cos.) 3,600,000 277,075
------------
$ 18,383,228
- ------------------------------------------------------------------------------------------------------
Canada - 0.9%
Canadian National Railway Co. (Railroads) 65,420 $ 4,256,389
Legacy Hotel Real Estate Investment Trust (Real
Estate)*## 168,700 1,049,314
Super Sol Ltd. (Supermarkets) 58,674 184,912
------------
$ 5,490,615
- ------------------------------------------------------------------------------------------------------
Chile - 0.3%
Chilectra S.A., ADR (Utilities - Electric) 72,925 $ 2,005,438
- ------------------------------------------------------------------------------------------------------
China - 0.2%
Huaneng Power International, Inc., ADR (Utilities -
Electric)* 48,180 $ 1,059,960
Qingling Motors Co. (Automotive) 584,000 252,520
------------
$ 1,312,480
- ------------------------------------------------------------------------------------------------------
Colombia - 0.1%
Cementos Diamante S.A., ADR (Construction)## 58,938 $ 522,780
- ------------------------------------------------------------------------------------------------------
Denmark
Vesta Wind Systems (Electronics) 5,400 $ 213,033
- ------------------------------------------------------------------------------------------------------
Egypt - 0.9%
Ahram Beverage Co., GDR (Beverages)*## 20,218 $ 641,922
Commercial International Bank of Egypt
(Banks and Credit Cos.) 14,000 236,600
Commercial International Bank of Egypt, GDR
(Banks and Credit Cos.)## 56,667 949,172
Egypt Gas (Utilities - Gas) 4,100 409,699
Egyptian International Pharmaceutical Industries Co.
(Pharmaceuticals) 8,700 621,337
Madinet Nasar City (Housing) 9,250 568,158
Misr Elgadida for Housing & Recreation (Housing) 3,120 403,468
North Cairo Mills (Food Products) 7,790 180,320
South Cairo Flour Mills (Food Products) 14,355 138,382
Suez Cement Co., GDR (Construction)## 44,035 896,112
Torra for Cement (Construction) 9,962 211,244
------------
$ 5,256,414
- ------------------------------------------------------------------------------------------------------
Finland - 0.8%
Huhtamaki Oy Group (Conglomerate) 23,400 $ 1,353,421
Pohjola Insurance Group (Insurance) 21,000 1,164,481
TT Tieto Oy (Computer Software - Systems) 12,830 2,355,771
------------
$ 4,873,673
- ------------------------------------------------------------------------------------------------------
France - 3.4%
Alcatel Alsthom Compagnie (Telecommunications) 15,900 $ 2,946,647
Compagnie Generale de Geophysique S.A., ADR
Oil Services)* 160,500 4,614,375
Dassault Systemes S.A. (Computer Software - Systems) 67,000 2,628,106
Dassault Systemes S.A., ADR (Computer Software -
Systems) 2,000 77,250
Renault S.A. (Automobiles) 44,100 2,045,026
Sanofi S.A. (Medical and Health Products) 20,900 2,532,386
TOTAL S.A., "B" (Oils) 19,600 2,329,261
Television Francaise (Broadcasting) 15,500 2,176,930
Union des Assurances Federales S.A. (Insurance) 8,200 1,282,507
------------
$ 20,632,488
- ------------------------------------------------------------------------------------------------------
Germany - 3.6%
Adidas-Salomon AG (Apparel and Textiles) 9,306 $ 1,542,789
Henkel KGaA (Chemicals)* 68,600 5,351,909
Phoenix AG (Auto Parts) 40,565 817,177
SAP AG, Preferred (Computer Software - Systems) 19,179 9,565,453
Wella AG, Preferred (Cosmetics) 4,700 4,282,251
------------
$ 21,559,579
- ------------------------------------------------------------------------------------------------------
Greece - 0.9%
National Bank of Greece, GDR (Bank and Credit Cos.)* 2,330 $ 410,295
Athens Medic Center, GDR (Medical and Health
Technology and Services) 115,200 2,274,360
Hellenic Bottling (Beverages) 4,000 149,026
Hellenic Telecommunication Organization S.A., GDR
(Telecommunications) 97,560 2,795,949
------------
$ 5,629,630
- ------------------------------------------------------------------------------------------------------
Hong Kong - 1.5%
Cheung Kong Holdings Ltd. (Real Estate) 100,000 $ 664,731
China Resources Enterprises (Real Estate Investment
Trusts) 170,000 291,836
Citic Pacific Ltd. (Conglomerate) 123,000 377,851
Guangdong Kelon Electric Holdings (Consumer Goods and
Services) 222,000 227,803
Hong Kong Telecommunications (Telecommunications)* 275,800 516,179
Hutchison Whampoa Ltd. (Conglomerate) 432,000 2,670,900
Li & Fung Ltd. (Wholesale) 725,000 1,216,521
New World Development Co. (Real Estate)* 184,000 523,679
Wharf Holdings Ltd. (Real Estate) 180,000 288,093
Wing Hang Bank Ltd. (Banks and Credit Cos.) 694,400 1,953,910
Zhenhai Refining and Chemical Co., Ltd. (Oils) 846,000 232,043
------------
$ 8,963,546
- ------------------------------------------------------------------------------------------------------
Hungary - 0.5%
Gedeon Richter Ltd. (Pharmaceuticals)## 1,000 $ 106,500
Magyar Olaj Es Gazipari KT, GDR (Gas)## 9,000 273,600
Magyar Olaj Es Gazipari KT (Gas) 13,500 410,138
Magyar Tavkozlesi Rt. (Telecommunications)* 39,050 1,151,975
Otp Bank (Banks and Credit Cos.) 8,000 379,165
Richter Gedeon Rt. (Pharmaceuticals) 6,700 717,664
------------
$ 3,039,042
- ------------------------------------------------------------------------------------------------------
India - 1.5%
Bajaj Auto Ltd. (Automotive) 52,500 $ 788,029
EIH Ltd. (Restaurants and Lodging) 76,050 714,705
Formula System (1985) Ltd. (Computer Software -
Systems)* 9,808 378,821
Hindustan Lever Ltd. (Consumer Goods and Services) 25,000 993,323
Hindustan Petroleum Corp. Ltd. (Oil and Gas) 50,000 508,629
ICL Israel Chemical (Chemicals) 193,066 232,735
Industrial Development Bank of India Ltd.
(Banks and Credit Cos.) 280,000 718,166
ITC Ltd. (Conglomerate) 29,000 575,945
Mahanagar Telephone Nigam Ltd. (Telecommunications) 100,000 634,921
Mahanagar Telephone Nigam Ltd., GDR
(Telecommunications)*## 46,000 741,750
State Bank Of India (Banks and Credit Cos.) 224,000 1,625,397
Tata Engineering and Locomotive Co. Ltd. (Automotive) 470 3,290
Tata Steel Co. (Steel) 24,050 91,558
Videsh Sanchar Nigam Ltd., GDR (Telecommunications)## 63,235 765,144
------------
$ 8,772,413
- ------------------------------------------------------------------------------------------------------
Ireland - 1.5%
Allied Irish Banks PLC (Banks and Credit Cos.)* 313,015 $ 4,359,235
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.)* 1,698,986 4,543,495
------------
$ 8,902,730
- ------------------------------------------------------------------------------------------------------
Israel - 0.3%
Bank Hapoalim (Banks and Credit Cos.) 195,818 $ 525,562
ECI Telecom Ltd. (Telecommunications) 14,976 456,768
Makhteshim Chemical Works Ltd. (Chemicals)* 63,500 538,921
------------
$ 1,521,251
- ------------------------------------------------------------------------------------------------------
Italy - 2.1%
Banca Carige S.p.A. (Banks and Credit Cos.) 124,200 $ 1,177,683
Banca Nazionale del Lavoro (Banks and Credit Cos.) 88,300 2,616,481
ERG S.p.A. (Oils)* 318,200 1,373,913
Industrie Natuzzi S.p.A., ADR (Consumer Goods and
Services) 97,000 2,491,687
Telecom Italia S.p.A. (Telecommunications)* 447,700 3,348,116
Telecom Italia S.p.A., Saving Shares
(Telecommunications) 427,500 1,551,475
------------
$ 12,559,355
- ------------------------------------------------------------------------------------------------------
Japan - 6.7%
Aeon Credit Service Co. Ltd. (Financial Services) 32,400 $ 1,514,704
Bridgestone Corp. (Tire and Rubber) 78,000 1,776,203
Canon, Inc. (Office Equipment) 78,000 1,840,899
Fujimi, Inc. (Electronics) 37,730 1,510,679
Keyence Corp. (Electronics) 18,930 2,543,603
Kinki Coca-Cola Bottling Co. (Beverages) 90,000 1,058,664
Kirin Beverage Corp. (Beverages) 124,000 2,421,656
Meitec Corp. (Computer Software - Systems) 74,800 2,453,476
Nippon Broadcasting System (Broadcasting) 21,000 962,751
Nippon Telephone & Telegraph Co. (Utilities -
Telephone) 156 1,364,500
NTT Data Corp. (Telecommunications) 44 1,897,753
Osaka Sanso Kogyo Ltd. (Chemicals) 397,000 823,217
Rohm Co. (Electronics) 22,000 2,478,359
Secom Co. (Consumer Goods and Services)* 49,000 2,881,918
Sony Corp. (Electronics) 34,800 2,889,066
Sony Corp., ADR (Electronics) 10,200 866,362
Takeda Chemical Industries (Pharmaceuticals) 111,000 3,163,776
TDK Corp. (Special Products and Services) 60,000 4,732,318
Terumo Corp. (Pharmaceuticals) 105,000 1,534,384
Ushio, Inc. (Electronics) 214,000 1,950,882
------------
$ 40,665,170
- ------------------------------------------------------------------------------------------------------
Malaysia - 0.6%
Malayan Banking Berhad (Banks and Credit Cos.) 96,000 $ 283,871
Perusahaan Otomobil Berhad (Automotive) 192,000 238,452
Petronas Gas Berhad (Oil and Gas)## 224,000 541,936
Resorts World Berhad (Entertainment) 172,000 332,903
Tanjong PLC (Entertainment) 513,000 1,172,177
Telekom Malaysia Berhad (Telecommunications) 197,000 593,118
Tenaga Nasional Berhad (Utilities - Electric) 157,000 314,422
------------
$ 3,476,879
- ------------------------------------------------------------------------------------------------------
Mauritius - 0.3%
Mauritius Commercial Bank Ltd. (Banks and Credit
Cos.) 105,000 $ 507,779
New Mauritius Hotels Ltd. (Restaurants and Lodging) 100,860 226,914
Rogers & Co. Ltd. (Conglomerate) 42,840 279,235
State Bank of Mauritius Ltd. (Banks and Credit Cos.) 807,600 550,173
------------
$ 1,564,101
- ------------------------------------------------------------------------------------------------------
Mexico - 1.7%
Cemex S.A. (Construction)* 126,506 $ 631,562
Cifra S.A. De C.V. (Retail)* 475,335 833,921
Corporacion GEO S.A. de C.V. (Housing)*## 16,500 454,707
Desc S.A. de C.V., "B" (Conglomerate) 73,000 507,123
Embotelladora Andina S.A. (Consumer Goods and
Services) 56,600 1,146,150
Fomento Economico Mexicano S.A., "B" (Beverages) 71,200 526,476
Grupo Carso, "A1" (Conglomerate)* 97,300 611,777
Grupo Financiero Banamex, "B" (Finance)* 169,200 527,941
Grupo Modelo S.A. de C.V. (Brewery) 41,000 387,166
Grupo Television S.A. de C.V., GDR (Entertainment)* 22,500 922,500
Hylsamex S.A. de C.V., "B" (Steel) 80,000 367,361
Kimberly-Clark de Mexico S.A. de C.V
(Consumer Goods and Services) 222,000 1,088,696
Organiz Soriana, "B" (Real Estate) 117,000 441,522
Sanluis Corporacion S.A. de C.V. (Conglomerate) 43,700 231,544
Telefonos de Mexico S.A. (Utilities - Telephone) 615,000 1,737,902
------------
$ 10,416,348
- ------------------------------------------------------------------------------------------------------
Morocco - 0.6%
Banque Marocaine Commerce (Banks and Credit Cos.) 11,550 $ 820,887
Brasseries Maroc (Consumer Goods and Services) 2,150 677,661
Credit Eqdom (Financial Institutions) 2,050 300,055
Ona Omnium Nord Africain S.A. (Conglomerate) 5,500 583,515
Societe Nationale d'Investissement (Conglomerate)* 6,435 581,300
Wafabank (Banks and Credit Cos.) 4,300 490,307
------------
$ 3,453,725
- ------------------------------------------------------------------------------------------------------
Netherlands - 4.0%
Akzo Nobel N.V. (Chemicals) 21,900 $ 4,454,127
Benckiser N.V. (Consumer Goods and Services)* 84,300 4,918,334
Brunel International N.V. (Human Resources)* 69,700 2,276,425
Fugro N.V. (Engineering)* 6,100 241,489
Hunter Douglas N.V., ADR (Consumer Goods and
Services)* 51,454 2,508,026
IHC Caland N.V. (Marine Equipment)* 20,400 1,187,173
ING Groep N.V. (Financial Services)* 89,900 5,841,187
Koninklijke Ahrend Groep N.V. (Consumer Goods
and Services)* 85,596 2,965,024
------------
$ 24,391,785
- ------------------------------------------------------------------------------------------------------
New Zealand
Telecom Corp. of New Zealand (Telecommunications)* 97,600 $ 261,110
- ------------------------------------------------------------------------------------------------------
Pakistan - 0.2%
Hub Power Co. Ltd. (Utilities - Electric) 1,040,000 $ 1,060,068
Pakistan Telecom "A" (Telecommunications) 200 140
Sui Northern Gas (Oils)* 1,380 721
------------
$ 1,060,929
- ------------------------------------------------------------------------------------------------------
Peru - 1.0%
Alicorp S.A. (Consumer Goods and Services)* 584,491 $ 194,348
Compania de Minas Buenaventura S.A. (Mining) 104,430 616,902
CPT Telefonica del Peru S.A., "B" (Utilities -
Telephone) 832,954 1,832,675
Credicorp Ltd. Holdings Co. (Banks and Credit Cos.) 55,811 934,834
Telefonica del Peru S.A., ADR (Telecommunications) 115,400 2,553,225
------------
$ 6,131,984
- ------------------------------------------------------------------------------------------------------
Philippines
Alsons Cement Corp. (Building Materials)## 4,302,350 $ 214,849
- ------------------------------------------------------------------------------------------------------
Poland - 0.7%
Bank Handlowy w Warszawie (Banks and Credit Cos.)*+ 16,879 $ 313,311
Bank Handlowy w Warszawie, GDR (Banks and
Credit Cos.)*## 10,030 191,573
Bank Rozwoju Eksportu S.A. (Banks and Credit Cos.) 9,500 272,908
Bydgoska Fabryka Kabli S.A. (Electrical Equipment) 105,000 959,045
Elektrim Spolka Akcyjna S.A. (Electrical Equipment) 105,333 1,505,200
Exbud S.A. (Construction)* 37,600 437,596
KGHM Polska Miedz S.A., GDR (Metals and Minerals)*## 26,080 242,544
Orbis (Restaurants and Lodging)* 9,159 89,863
Polifarb Cieszyn (Consumer Goods and Services)* 83,000 308,132
Zaklady Piwowarske w Zywcu (Beverages) 915 91,123
------------
$ 4,411,295
- ------------------------------------------------------------------------------------------------------
Portugal - 2.0%
Banco Espirito Santo e Comercial de Lisboa S.A
(Banks and Credit Cos.) 83,179 $ 3,979,856
Banco Totta E Acores (Banks and Credit Cos.) 126,300 4,806,295
Cimentos de Portugal S.A. (Building Materials) 6,706 248,048
Mota and Companhia S.A. (Construction) 8,874 145,954
Portugal Telecom S.A. (Utilities - Telephone) 52,246 2,808,024
Sonae Investimentos-Sociedade Gestora de
Participacoes Sociais, S.A. (Conglomerate) 4,441 238,928
------------
$ 12,227,105
- ------------------------------------------------------------------------------------------------------
Russia - 0.9%
Lukoil Oil Co., ADR (Oils) 31,180 $ 2,064,116
Rostelecom, ADR (Telecommunications)* 38,333 821,763
Rostelecom, GDR (Telecommunications)* 15,500 837,000
Unified Energy Systems, GDR (Utilities - Electric)* 46,153 1,519,357
------------
$ 5,242,236
- ------------------------------------------------------------------------------------------------------
Singapore - 0.5%
Hong Leong Finance Ltd. (Finance)+ 136,000 $ 206,191
Mandarin Oriental International Ltd. (Restaurants and
Lodging)* 881,901 626,150
Overseas Union Bank (Finance) 307,000 1,163,613
Singapore Land Ltd. (Conglomerate) 279,000 722,615
------------
$ 2,718,569
- ------------------------------------------------------------------------------------------------------
South Africa - 1.9%
Anglo American Corp. of South Africa Ltd. (Mining) 28,900 $ 1,648,293
DeBeers Centenary AG (Diamonds - Precious Stones) 25,856 663,663
Dimension Data Holdings Ltd. (Financial Institutions) 167,668 1,163,073
Imperial Holdings Ltd. (Conglomerate) 13,510 184,794
JD Group Ltd. (Stores)* 38,844 395,349
Liberty Life Association of Africa Ltd. (Insurance) 50,619 1,710,642
Nedcor Ltd. (Banks and Credit Cos.)* 60,589 1,724,272
Real Africa Holdings Ltd. (Conglomerate) 119,000 456,245
Sasol Ltd. (Oils) 70,080 706,340
South African Breweries Ltd. (Brewery) 75,388 2,526,839
------------
$ 11,179,510
- ------------------------------------------------------------------------------------------------------
South Korea - 0.7%
Korea Electric Power Corp. (Utilities - Electric) 89,870 $ 1,225,194
Pohang Iron & Steel Co. (Construction) 22,550 1,192,954
Samsung Display Devices Co. (Electronics) 9,080 452,300
Samsung Electronic (Electronics) 21,660 1,200,629
SK Telecommunications (Telecommunications) 50 29,489
------------
$ 4,100,566
- ------------------------------------------------------------------------------------------------------
Spain - 0.8%
Abengoa S.A. (Construction) 11,480 $ 967,276
Acerinox S.A. (Iron and Steel) 16,694 2,705,833
Telefonica de Espana (Utilities - Telephone) 28,900 1,206,142
------------
$ 4,879,251
- ------------------------------------------------------------------------------------------------------
Sweden - 1.9%
Securitas AB (Security Services)* 71,400 $ 2,629,070
Skandia Forsakrings AB (Insurance) 51,600 3,593,333
Sparbanken Sverige AB, "A" (Banks and Credit Cos.) 59,900 1,872,843
Volvo AB (Automobiles) 124,800 3,644,031
------------
$ 11,739,277
- ------------------------------------------------------------------------------------------------------
Switzerland - 1.5%
Clariant AG (Chemicals) 1,620 $ 1,744,200
Hiestand Holding AG (Food Products)* 3,200 1,109,333
Julius Baer Holdings (Banks and Credit Cos.) 665 1,835,400
Kuoni Reisen Holdings AG (Transportation) 402 2,157,400
Novartis AG (Pharmaceuticals)* 1,337 2,210,507
------------
$ 9,056,840
- ------------------------------------------------------------------------------------------------------
Taiwan - 0.4%
Taipei Fund (Finance)* 238 $ 2,356,200
- ------------------------------------------------------------------------------------------------------
Thailand - 0.2%
Thai Farmers Bank (Banks and Credit Cos.) 400,000 $ 917,099
- ------------------------------------------------------------------------------------------------------
Turkey - 0.9%
Akbank (Banks and Credit Cos.)* 10,879,586 $ 925,505
Arcelik A.S. (Consumer Goods and Services) 2,979,430 333,963
Ardem Pisirici ve Isitici Cihazlar Sanayii A.S
(Conglomerate) 2,417,578 234,693
Cimsa Cimento Sanayi Ve Ticaret A.S. (Construction
Services) 8,936,100 554,482
Haci Omer Sabanci Holdings A.S., ADR
(Conglomerate)*## 29,136 528,090
Trakya Cam Sanayii (Housewares) 8,703,282 435,513
Vestel Electronic (Electronics) 6,361,300 853,097
Yapi ve Kredi Bankasi (Banks and Credit Cos.) 27,322,114 1,339,855
------------
$ 5,205,198
- ------------------------------------------------------------------------------------------------------
United Kingdom - 6.2%
Aegis Group PLC (Advertising) 44,400 $ 68,273
ARM Holdings PLC, ADR (Electronics)* 10,200 411,825
ARM Holdings PLC (Electronics)* 14,600 202,540
Bank of Scotland (Banks and Credit Cos.)* 143,600 1,764,095
Booker PLC (Food - Wholesale) 380,900 1,674,353
British Aerospace PLC (Aerospace and Defense)* 80,610 2,691,936
British Petroleum PLC (Oils)* 315,039 4,975,955
Danka Business Systems, ADR (Business Services) 89,600 1,792,000
HSBC Holdings PLC (Financial Services)* 22,914 653,629
Jarvis Hotels PLC (Restaurants and Lodging)+ 1,245,100 3,308,885
Kwik-Fit Holdings PLC (Automotive Repair Centers) 353,400 3,071,498
Lloyds TSB Group PLC (Banks and Credit Cos.)* 240,809 3,604,280
LucasVarity PLC (Automotive) 1,190,500 5,317,744
PowerGen PLC (Utilities - Electric)* 75,930 1,025,428
Sema Group PLC (Computer Software - Systems) 28,450 1,028,535
Taylor Nelson AGB (Advertising) 999,100 1,803,484
Tomkins PLC (Conglomerate) 309,700 1,822,066
Williams PLC (Diversified Manufacturing Operations) 302,400 2,319,929
------------
$ 37,536,455
- ------------------------------------------------------------------------------------------------------
Venezuela - 0.2%
Compania Anonima Nacional Telefonos de Venezuela, ADR
(Telecommunications) 30,300 $ 1,015,050
- ------------------------------------------------------------------------------------------------------
Total Foreign Stocks $340,623,508
- ------------------------------------------------------------------------------------------------------
U.S. Stocks - 38.8%
Advertising
Doubleclick, Inc.* 400 16,675
- ------------------------------------------------------------------------------------------------------
Aerospace
Thiokol Corp. 3,800 $ 204,725
- ------------------------------------------------------------------------------------------------------
Auto Parts
Hayes Lemmerz International, Inc.* 100 $ 3,844
- ------------------------------------------------------------------------------------------------------
Banks and Credit Companies
United States Trust Corp. 3,000 $ 213,000
- ------------------------------------------------------------------------------------------------------
Business Machines - 0.2%
Affiliated Computer Services, Inc., "A"* 23,500 $ 825,437
Sun Microsystems, Inc.* 6,100 251,244
------------
$ 1,076,681
- ------------------------------------------------------------------------------------------------------
Business Services - 2.1%
AccuStaff, Inc.* 121,700 $ 4,365,987
BISYS Group, Inc.* 18,200 718,900
Ceridian Corp.* 9,500 $ 537,344
Computer Sciences Corp.* 15,200 801,800
DST Systems, Inc.* 4,700 259,087
First Data Corp. 7,300 247,288
Ikon Office Solutions, Inc. 21,300 515,194
Ivex Packaging Corp.* 1,500 36,375
Learning Tree International, Inc.* 73,100 1,749,831
Metamor Worldwide, Inc.* 14,900 569,925
NOVA Corp.* 6,800 231,200
Policy Management Systems Corp.* 8,200 661,125
Provant, Inc.* 300 5,588
Technology Solutions Co.* 50,500 1,622,312
------------
$ 12,321,956
- ------------------------------------------------------------------------------------------------------
Cellular Telephones
AirTouch Communications, Inc.* 2,700 $ 143,438
- ------------------------------------------------------------------------------------------------------
Chemicals
Sigma-Aldrich Corp. 3,000 $ 119,625
- ------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.7%
Autodesk, Inc. 7,500 $ 352,500
Compaq Computer Corp. 5,000 140,313
Microsoft Corp.* 110,700 9,976,837
------------
$ 10,469,650
- ------------------------------------------------------------------------------------------------------
Computer Software - Services - 0.1%
Mobius Management Systems, Inc.* 16,200 $ 299,700
Tecnomatix Technologies Ltd.* 4,800 121,800
------------
$ 421,500
- ------------------------------------------------------------------------------------------------------
Computer Software - Systems - 9.4%
Aspec Technology, Inc.* 500 $ 6,938
BMC Software, Inc.* 113,600 10,628,700
Brio Technology, Inc. 400 4,400
Cadence Design Systems, Inc.* 245,500 8,914,719
Computer Associates International, Inc. 237,075 13,883,705
Computer Learning Centers, Inc.* 20,400 244,800
Compuware Corp.* 206,400 10,087,800
D A Consulting Group, Inc.* 2,500 44,062
Oracle Corp.* 393,040 10,169,910
Peoplesoft, Inc.* 2,700 125,550
Simulation Sciences, Inc.*## 6,000 59,812
SunGard Data Systems, Inc.* 5,900 210,187
Synopsys, Inc.* 46,500 1,999,500
------------
$ 56,380,083
- ------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 3.1%
Carson, Inc., "A"* 72,900 $ 592,312
CD Now, Inc.* 700 22,400
Tyco International Ltd. 334,600 18,235,700
------------
$ 18,850,412
- ------------------------------------------------------------------------------------------------------
Defense Electronics - 0.1%
Loral Space & Communications Corp.* 23,700 $ 742,106
- ------------------------------------------------------------------------------------------------------
Electrical Equipment
Cable Design Technologies Corp.* 2,900 $ 77,213
- ------------------------------------------------------------------------------------------------------
Electronics - 1.1%
Altera Corp.* 48,600 $ 1,968,300
Analog Devices, Inc.* 31,300 1,218,744
Intel Corp. 21,900 1,769,794
Lam Research Corp.* 18,100 561,100
Lattice Semiconductor Corp.* 6,500 296,562
Microchip Technology, Inc. 4,400 124,850
Novellus Systems, Inc.* 4,300 205,863
Xilinx, Inc.* 13,000 594,750
------------
$ 6,739,963
- ------------------------------------------------------------------------------------------------------
Entertainment - 3.4%
American Radio Systems Corp., "A"* 16,100 $ 1,067,631
CBS Corp. 49,900 1,777,687
Clear Channel Communications, Inc.* 35,100 3,308,175
Cox Radio, Inc., "A"* 59,300 2,868,637
Emmis Broadcasting Corp., "A"* 13,500 698,625
Gemstar International Group Ltd.* 7,700 297,413
Harrah's Entertainment, Inc.* 36,600 953,887
Hearst-Argyle Television, Inc.* 12,900 459,563
Heftel Broadcasting Corp.* 12,300 539,663
Jacor Communications, Inc.* 46,200 2,627,625
SFX Broadcasting, Inc., "A"* 16,500 1,215,844
SFX Entertainment, Inc.* 16,500 569,250
Univision Communications, Inc., "A"* 39,400 1,509,512
Viacom, Inc., "B"* 45,491 2,638,478
------------
$ 20,531,990
- ------------------------------------------------------------------------------------------------------
Financial Institutions - 0.7%
Associates First Capital Corp., "A" 11,300 $ 844,675
Consolidated Capital Corp.* 38,900 858,231
Donaldson Lufkin & Jenrette, Inc. 5,600 530,950
Franklin Resources, Inc. 17,400 930,900
Heller Financial, Inc. 3,700 99,438
Morgan Stanley, Dean Witter, Discover & Co. 13,500 1,064,812
------------
$ 4,329,006
- ------------------------------------------------------------------------------------------------------
Food and Beverage Products
Corn Products International, Inc.* 4,500 $ 160,313
- ------------------------------------------------------------------------------------------------------
Insurance - 0.2%
Annuity and Life Re Holdings Ltd.* 14,900 $ 355,738
Conseco, Inc. 9,300 461,512
Life Re Corp. 3,500 252,000
------------
$ 1,069,250
- ------------------------------------------------------------------------------------------------------
Machinery - 0.1%
SI Handling Systems, Inc. 31,850 $ 433,956
- ------------------------------------------------------------------------------------------------------
Medical and Health Products - 0.3%
Boston Scientific Corp.* 20,700 $ 1,496,869
Datascope Corp.* 1,900 53,438
McKesson Corp.## 6,300 445,331
------------
$ 1,995,638
- ------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 3.1%
American Dental Partners, Inc.* 400 $ 7,050
Cardinal Health, Inc. 7,200 693,000
Columbia/HCA Healthcare Corp. 1,100 36,231
Cyberonics, Inc.* 20,800 499,200
Foundation Health Systems, Inc.* 610 17,652
Guidant Corp. 14,100 942,937
HBO & Co. 19,800 1,184,287
Health Management Associates, Inc., "A"* 4,600 144,900
HealthSouth Corp.* 74,500 2,248,969
Integrated Health Services, Inc. 7,800 300,788
Mariner Health Group, Inc.* 1,500 27,188
Medtronic, Inc. 4,600 242,075
Orthodontic Centers of America, Inc.* 34,900 745,988
PacifiCare Health Systems, Inc., "B"* 12,100 866,662
Province Healthcare Co.* 500 13,813
Total Renal Care Holdings, Inc.* 36,767 1,217,907
United Healthcare Corp. 124,700 8,760,175
Wellpoint Health Networks, Inc.* 11,900 858,287
------------
$ 18,807,109
- ------------------------------------------------------------------------------------------------------
Oil Services - 0.3%
Camco International, Inc. 3,800 $ 257,925
Cooper Cameron Corp.* 3,700 245,819
Diamond Offshore Drilling, Inc. 11,200 567,000
Weatherford Enterra, Inc.* 7,900 395,494
------------
$ 1,466,238
- ------------------------------------------------------------------------------------------------------
Oils - 0.1%
Evi, Inc.* 7,900 $ 420,675
- ------------------------------------------------------------------------------------------------------
Restaurants and Lodging - 2.7%
Applebee's International, Inc. 12,000 $ 298,500
Cendant Corp.* 552,254 13,806,350
Promus Hotel Corp.* 40,061 1,810,256
------------
$ 15,915,106
- ------------------------------------------------------------------------------------------------------
Special Products and Services - 0.2%
Central Parking Corp. 2,700 $ 126,563
Newport News Shipbuilding, Inc. 47,000 1,277,812
------------
$ 1,404,375
- ------------------------------------------------------------------------------------------------------
Stores - 4.1%
Consolidated Stores Corp.* 11,525 $ 461,000
Corporate Express, Inc.* 72,650 731,041
CVS Corp. 34,000 2,507,500
Dollar General Corp. 3,575 135,403
Duane Reade, Inc.* 700 16,625
General Nutrition Cos., Inc.* 20,800 746,200
Home Depot, Inc. 40,350 2,809,369
Linens 'N Things, Inc.* 3,500 210,875
Lowes Co., Inc. 3,500 244,781
Micro Warehouse, Inc.* 38,900 607,812
Office Depot, Inc.* 149,400 4,948,875
Pier 1 Imports, Inc. 3,300 87,038
Republic Industries, Inc.* 147,300 4,096,781
Rite Aid Corp. 124,500 3,999,562
Staples, Inc.* 33,700 831,969
U.S. Office Products Co.* 132,300 2,340,056
------------
$ 24,774,887
- ------------------------------------------------------------------------------------------------------
Supermarkets - 0.8%
Kroger Co.* 4,100 $ 171,688
Meyer (Fred), Inc.* 95,750 4,296,781
Safeway, Inc.* 700 26,775
------------
$ 4,495,244
- ------------------------------------------------------------------------------------------------------
Telecommunications - 4.9%
Aspect Telecommunications Corp.* 6,000 $ 172,500
Century Telephone Enterprises, Inc. 18,250 776,766
Cisco Systems, Inc.* 179,500 13,148,375
Global TeleSystems Group, Inc.* 75,000 3,525,000
Intermedia Communications, Inc.* 46,300 3,379,177
International Business Communications Systems, Inc.*+ 40,300 --
IXC Communications, Inc.* 2,500 124,687
MCI Communications Corp. 67,800 3,411,187
Tel-Save Holdings, Inc.* 37,400 853,187
WorldCom, Inc.* 93,720 4,009,459
------------
$ 29,400,338
- ------------------------------------------------------------------------------------------------------
Transportation - 0.1%
Coach USA, Inc.* 13,100 $ 621,431
- ------------------------------------------------------------------------------------------------------
Total U.S. Stocks $233,606,427
- ------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $443,524,576) $574,229,935
- ------------------------------------------------------------------------------------------------------
Bond
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED)
- ------------------------------------------------------------------------------------------------------
Brazil
Companhia Vale Rio Doce (Mining)(S)(S) (Identified
Cost, $0)
BRL 29 $ --
- ------------------------------------------------------------------------------------------------------
Rights
- ------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------------------------------
South Africa
Real Africa Holdings Ltd. (Conglomerate)* 34,041 $ --
South Korea
Samsung Display Devices (Electronics)* 9,080 22,671
Samsung Electronic (Electronics)* 1,723 --
Sweden
Mandamus AB (Real Estate)* 59,900 65,008
- ------------------------------------------------------------------------------------------------------
Total Rights (Identified Cost, $0) $ 87,679
- ------------------------------------------------------------------------------------------------------
Warrants
- ------------------------------------------------------------------------------------------------------
Hong Kong
Hong Kong & China Gas (Gas)* 16,700 $ --
Hysan Development (Real Estate)* 12,900 17
- ------------------------------------------------------------------------------------------------------
Total Warrants (Identified Cost, $0) $ $ 17
- ------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.7%
- ------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 5/01/98,
at Amortized Cost $ 22,500 $ 22,500,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $466,024,576) $596,817,631
Other Assets, Less Liabilities - 1.0% 6,122,878
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $602,940,509
- ------------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
+ Restricted security.
(S)(S) When-issued security. At April 30, 1998, the Fund had sufficient cash and/or securities at least
equal to the value of the when-issued security.
</TABLE>
Abbreviations have been used throughout this report to indicate amounts shown
in currencies other than the U.S. Dollar. A list of abbreviations is shown
below:
BRL=Brazil Real
MYR=Malaysian Ringgit
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
APRIL 30, 1998
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $466,024,576) $596,817,631
Foreign currency, at value (identified cost, $355,140) 355,835
Receivable for investments sold 14,847,500
Receivable for Fund shares sold 2,510,648
Dividends receivable 1,082,897
Deferred organization expenses 4,110
Other assets 12,825
------------
Total assets $615,631,446
------------
Liabilities:
Cash overdraft $ 469,955
Payable for investments purchased 9,058,878
Payable for Fund shares reacquired 2,740,099
Net payable for forward foreign currency exchange
contracts sold 23,840
Payable to affiliates -
Management fee 14,386
Shareholder servicing agent fee 1,798
Distribution and service fee 157,112
Administrative fee 240
Accrued expenses and other liabilities 224,629
------------
Total liabilities $ 12,690,937
------------
Net assets $602,940,509
============
Net assets consist of:
Paid-in capital $446,991,165
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 130,759,662
Accumulated undistributed net realized gain on
investments and foreign currency transactions 27,257,393
Accumulated net investment loss (2,067,711)
------------
Total $602,940,509
============
Shares of beneficial interest outstanding 27,832,919
==========
Class A shares:
Net asset value per share
(net assets of $238,990,588 / 10,979,746 shares of
beneficial interest outstanding) $21.77
======
Offering price per share (100 / 94.25) $23.10
======
Class B shares:
Net asset value and offering price per share
(net assets of $332,351,186 / 15,388,529 shares of
beneficial interest outstanding) $21.60
======
Class C shares:
Net asset value and offering price per share
(net assets of $24,767,875 / 1,151,242 shares of
beneficial interest outstanding) $21.51
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $6,830,860 / 313,402 shares of
beneficial interest outstanding) $21.80
======
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, 1998
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 3,059,576
Interest 373,909
Foreign taxes withheld (194,811)
-----------
Total investment income $ 3,238,674
-----------
Expenses -
Management fee $ 2,478,319
Trustees' compensation 19,943
Shareholder servicing agent fee 325,143
Distribution and service fee (Class A) 367,252
Distribution and service fee (Class B) 1,554,321
Distribution and service fee (Class C) 116,926
Administrative fee 36,694
Interest expense 21,579
Custodian fee 176,692
Printing 66,533
Postage 43,694
Auditing fees 40,628
Legal fees 313
Amortization of organization expenses 3,350
Miscellaneous 221,673
-----------
Total expenses $ 5,473,060
Reduction of expenses by distributor (104,699)
Fees paid indirectly (86,719)
-----------
Net expenses $ 5,281,642
-----------
Net investment loss $(2,042,968)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $29,778,147
Foreign currency transactions (206,084)
-----------
Net realized gain on investments and foriegn currency
transactions $29,572,063
-----------
Change in unrealized appreciation (depreciation) -
Investments $60,931,468
Translation of assets and liabilities in foreign
currencies (24,465)
-----------
Net unrealized gain on investments and foreign currency
translation $60,907,003
-----------
Net realized and unrealized gain on investments and
foreign currency $90,479,066
-----------
Increase in net assets from operations $88,436,098
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (2,042,968) $ (3,010,335)
Net realized gain on investments and foreign currency
transactions 29,572,063 54,087,549
Net unrealized gain on investments and foreign currency
translation 60,907,003 21,042,586
------------ ------------
Increase in net assets from operations $ 88,436,098 $ 72,119,800
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $(20,053,104) $ (9,634,864)
From net realized gain on investments and foreign
currency transactions (Class B) (28,720,424) (13,421,222)
From net realized gain on investments and foreign
currency transactions (Class C) (2,097,140) (1,004,314)
From net realized gain on investments and foreign
currency transactions (Class I) (638,217) --
------------ ------------
Total distributions declared to shareholders $(51,508,885) $(24,060,400)
------------ ------------
Net increase in net assets from Fund share transactions $ 21,191,017 $ 21,994,786
------------ ------------
Total increase in net assets $ 58,118,230 $ 70,054,186
Net assets:
At beginning of period 544,822,279 474,768,093
------------ ------------
At end of period (including accumulated net investment loss
of $2,067,711 and $24,743, respectively) $602,940,509 $544,822,279
============ ============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED -------------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $20.79 $19.09 $18.16 $17.45 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.03) $(0.02) $(0.07) $ -- $(0.02)
Net realized and unrealized gain on
investments and foreign currency
transactions 3.11 2.77 2.73 0.93 2.47
------ ------ ------ ------ ------
Total from investment operations $ 3.08 $ 2.75 $ 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 (2.10) (1.05) (1.72) (0.22) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders
$(2.10) $(1.05) $(1.73) $(0.22) $ --
------ ------ ------ ------ ------
Net asset value - end of period $21.77 $20.79 $19.09 $18.16 $17.45
====== ====== ====== ====== ======
Total return(+) 16.80%++ 15.17% 15.73% 5.47% 16.33%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.51%+ 1.52% 1.58% 1.63% 1.57%+
Net investment income (loss) (0.29)%+ (0.10)% (0.35)% 0.02% (0.14)%+
Portfolio turnover 44% 133% 95% 149% 100%
Net assets at end of period (000 omitted) $238,991 $204,918 $172,106 $143,543 $131,503
* For the period from the commencement of the Fund's investment operations, November 18, 1993, through October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are 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.
(+) 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 voluntarily waived a portion of its distribution fee for the periods indicated.
If the fee had been incurred by the Fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.04) $(0.04) $(0.09) $ -- $(0.04)
Ratios (to average net assets):
Expenses## 1.61% 1.62% 1.68% 1.73% 1.67%+
Net investment loss (0.39)% (0.20)% (0.45)% (0.08)% (0.24)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED -------------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994*
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $20.56 $18.87 $17.97 $17.32 $15.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.10) $(0.17) $(0.21) $(0.14) $(0.15)
Net realized and unrealized gain on
investments and foreign currency
transactions 3.08 2.76 2.70 0.92 2.47
------ ------ ------ ------ ------
Total from investment operations $ 2.98 $ 2.59 $ 2.49 $ 0.78 $ 2.32
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net realized gain on investments and
foreign currency transactions $(1.94) $(0.90) $(1.59) $(0.13) $ --
------ ------ ------ ------ ------
Net asset value - end of period $21.60 $20.56 $18.87 $17.97 $17.32
====== ====== ====== ====== ======
Total return 16.38%++ 14.30% 14.77% 4.61% 15.47%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.25%+ 2.28% 2.39% 2.45% 2.39%+
Net investment loss (1.04)%+ (0.87)% (1.16)% (0.80)% (0.95)%+
Portfolio turnover 44% 133% 95% 149% 100%
Net assets at end of period (000 omitted) $332,351 $308,692 $282,668 $247,437 $236,971
* For the period from the commencement of the Fund's investment operations, November 18, 1993, through October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are 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.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
SIX MONTHS ENDED -------------------------------------------------------------
APRIL 30, 1998 1997 1996 1995 1994**
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $20.49 $18.85 $17.96 $17.34 $16.04
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.10) $(0.17) $(0.20) $(0.13) $(0.13)
Net realized and unrealized gain on
investments and foreign currency
transactions 3.06 2.75 2.70 0.92 1.43
------ ------ ------ ------ ------
Total from investment operations $ 2.96 $ 2.58 $ 2.50 $ 0.79 $ 1.30
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net realized gain on investments and
foreign currency transactions $(1.94) $(0.94) $(1.61) $(0.17) $ --
------ ------ ------ ------ ------
Net asset value - end of period $21.51 $20.49 $18.85 $17.96 $17.34
====== ====== ====== ====== ======
Total return 16.37%++ 14.27% 14.88% 4.68% 8.10%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 2.25%+ 2.25% 2.32% 2.38% 2.31%+
Net investment loss (1.06)%+ (0.85)% (1.10)% (0.72)% (0.83)%+
Portfolio turnover 44% 133% 95% 149% 100%
Net assets at end of period (000 omitted) $24,768 $24,662 $19,994 $13,349 $11,872
** For the period from the inception of Class C, January 3, 1994, through October 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are 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.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1998 OCTOBER 31, 1997***
- ----------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $20.84 $18.34
------ ------
Income from investment operations# -
Net investment income (loss) $(0.00)+++ $ 0.04
Net realized and unrealized gain on investments and foreign
currency transactions 3.12 2.46
------ ------
Total from investment operations $ 3.12 $ 2.50
------ ------
Less distributions declared to shareholders from net realized
gain on investments and foreign currency transactions $(2.16) $ --
------ ------
Net asset value -- end of period $21.80 $20.84
====== ======
Total return 17.05%++ 13.58%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.25%+ 1.21%+
Net investment income (loss) (0.04)%+ 0.20%+
Portfolio turnover 44% 133%
Net assets at end of period (000 omitted) $6,831 $6,550
*** For the period from the inception of Class I, January 2, 1997, through October 31, 1997.
+ Annualized.
++ Not annualized.
+++ Per share amount is less than $(0.01).
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Non-U.S. dollar
denominated short-term obligations are valued at amortized cost as calculated
in the foreign currency and translated into U.S. dollars at the closing daily
exchange rate. Securities for which there are no such quotations or valuations
are valued at fair value as determined in good faith by or at the direction of
the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of Fund
operations.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund 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 gains or
losses on foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
discount is amortized or accreted for financial statement and tax reporting
purposes as required by federal income tax regulations. Dividends received in
cash are recorded on the ex-dividend date. Dividend payments received in
additional securities are recorded on the ex-dividend date in an amount equal to
the value of the security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. 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. 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 are reported in the financial statements as a tax return
of 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.
Capital gains taxes have been provided on unrealized and realized gains from
securities transactions in countries where such a capital gains tax is
applicable. Realized and unrealized gain is reported net of any capital gains
tax in the Statement of Operations.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual
rates:
First $1 billion of average net assets 0.90%
Average net assets in excess of $1 billion 0.75%
The advisory agreement permits the adviser to engage one or more sub-advisers
and the adviser has engaged Foreign & Colonial Management Ltd. and Foreign &
Colonial Emerging Markets Ltd., each an England and Wales Company, to assist
in the performance of its services.
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%
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 $4,143
for the six months ended April 30, 1998.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$31,375 for the six months ended April 30, 1998, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class
C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% 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. The Class A distribution fee is currently being waived on a
voluntary basis, and may be imposed at the discretion of MFD. MFD retains the
service fee for accounts not attributable to a securities dealer, which amounted
to $48,166 for the six months ended April 30, 1998. Fees incurred under the
distribution plan during the six months ended April 30, 1998, were 0.25% of
average daily net assets attributable to Class A shares on an annualized basis.
The Trustees have adopted a distribution plan relating solely to Class B and C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $69,992 and $27,940 for Class B and Class C shares, respectively,
for the six months ended April 30, 1998. Fees incurred under the distribution
plan during the six months ended April 30, 1998, were 1.00% of average daily net
assets attributable to both 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 April
30, 1998, were $2,527, $163,399, and $1,833 for Class A, Class B, and Class C
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the Fund's average daily net assets at an effective annual
rate of 0.1125%. Prior to January 1, 1998, the fee was calculated as a
percentage of the average daily net assets at an effective annual rate of
0.13%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$237,558,087 and $277,730,415, 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 $466,024,576
------------
Gross unrealized appreciation $146,302,233
Gross unrealized depreciation (15,509,178)
------------
Net unrealized appreciation $130,793,055
============
(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>
<CAPTION>
Class A Shares
SIX MONTHS ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 23,283,329 $ 475,599,375 28,172,048 $ 562,208,269
Shares issued to shareholders
in reinvestment of
distributions 953,062 17,268,162 449,325 8,218,149
Shares transferred to Class I -- -- (373,008) (6,841,795)
Shares reacquired (23,112,314) (474,916,664) (27,406,795) (549,595,449)
----------- ------------- ----------- -------------
Net increase 1,124,077 $ 17,950,873 841,570 $ 13,989,174
=========== ============= =========== =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,297,770 $ 25,619,875 3,233,868 $ 64,511,271
Shares issued to shareholders
in reinvestment of
distributions 1,230,287 22,182,352 561,080 10,209,856
Shares reacquired (2,157,002) (43,123,696) (3,754,830) (75,204,244)
----------- ------------- ----------- -------------
Net increase (decrease) 371,055 $ 4,678,531 40,118 $ (483,117)
=========== ============= =========== =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED APRIL 30, 1998 YEAR ENDED OCTOBER 31, 1997
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 954,786 $ 19,145,116 480,867 $ 9,630,276
Shares issued to shareholders
in reinvestment of
distributions 78,016 1,401,164 36,836 667,838
Shares reacquired (1,085,449) (21,873,123) (374,659) (7,546,094)
----------- ------------- ----------- -------------
Net increase (decrease) (52,647) $ (1,326,843) 143,044 $ 2,752,020
=========== ============= =========== =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED APRIL 30, 1998 PERIOD ENDED OCTOBER 31, 1997*
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 25,517 $ 519,304 38,825 $ 786,858
Shares issued to shareholders
in reinvestment of
distributions 35,223 638,252 -- --
Shares transferred from Class
A -- -- 373,008 6,841,795
Shares reacquired (61,694) (1,269,100) (97,477) (1,891,944)
----------- ------------- ----------- -------------
Net increase (decrease) (954) $ (111,544) 314,356 $ 5,736,709
=========== ============= =========== =============
*For the period from the inception of Class I, January 2, 1997, through October 31, 1997.
</TABLE>
(6) Lines of Credit
The Fund and other affiliated funds participate in an $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
the Fund for the six months ended April 30, 1998, was $245.
The Fund and other affiliated funds also participate in a $20 million
uncommitted, unsecured line of credit provided by State Street Bank and Trust
Company under a line of credit agreement. Borrowing may be made to temporarily
finance the repurchase of Fund shares. During the period, the average daily
borrowings outstanding were $315,606, the maximum amount outstanding was
$16,642,596, and $0 was outstanding at April 30, 1998. Interest expense incurred
on the borrowings amounted to $21,579 for the six months ended April 30, 1998,
and the weighted average interest rate on borrowings was 6.8%.
(7) Financial Instruments
The Fund trades financial instruments with off-balance-sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include 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.
Forward Foreign Currency Exchange Contracts
<TABLE>
<CAPTION>
CONTRACTS TO IN CONTRACTS NET UNREALIZED
SETTLEMENT DATE DELIVER EXCHANGE FOR AT VALUE DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 5/15/98 MYR 4,297,709 $1,128,600 $1,152,440 $23,840
</TABLE>
At April 30, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
(8) 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, 1998, the
Fund owned the following restricted securities (constituting 0.6% of net assets)
which may not be publicly sold without registration under the Securities Act of
1933. The Fund does not have the right to demand that such securities be
registered. The value of these securities is determined by valuations furnished
by dealers or by a pricing service, or if not available, are valued at fair
value as determined in good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
DESCRIPTION DATE OF ACQUISITION SHARE AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank Handlowy w Warszawie 6/18/97 - 9/04/97 16,879 $ 210,558 $ 313,311
Hong Leong Finance Ltd. 11/01/96 - 3/25/97 136,000 423,822 206,191
International Business Communications
Systems, Inc. 8/29/95 40,300 399,776 --
Jarvis Hotels PLC 11/01/96 - 10/27/97 1,245,100 3,302,353 3,308,885
----------
$3,828,387
==========
</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, 1998, 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, 1998, and the year ended October 31,
1997, and the financial highlights for the six months ended April 30, 1998,
and for each of the years in the four-year period ended October 31, 1997.
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 securities owned at April
30, 1998, 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, 1998, 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
June 5, 1998
<PAGE>
<TABLE>
MFS(R) World Growth Fund
<S> <C>
Trustees Secretary
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management Assistant Secretary
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
Auditors
Lawrence H. Cohn, M.D. - Chief of Cardiac Deloitte & Touche LLP
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School Custodian
State Street Bank and Trust Company
The Hon. Sir J. David Gibbons, KBE - Chief
Executive Officer, Edmund Gibbons Ltd. Investor Information
For MFS stock and bond market outlooks,
Abby M. O'Neill - Private Investor call toll free: 1-800-637-4458 anytime
from a touch-tone telephone.
Walter E. Robb, III - President and
Treasurer, Benchmark Advisors, Inc. For information on MFS mutual funds, call
(corporate financial consultants); your financial adviser or, for an
President, Benchmark Consulting Group, Inc. information kit, call toll free:
(office services) 1-800-637-2929 any business day from 9 a.m.
to 5 p.m. Eastern time (or leave a message
Arnold D. Scott* - Senior Executive anytime).
Vice President, Director, and Secretary,
MFS Investment Management Investor Service
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman, Chief P.O. Box 2281
Executive Officer, and Director, Boston, MA 02107-9906
MFS Investment Management
For general information, call toll free:
J. Dale Sherratt - President, Insight 1-800-225-2606 any business day from
Resources, Inc. (acquisition planning 8 a.m. to 8 p.m. Eastern time.
specialists)
For service to speech- or hearing-impaired,
Ward Smith - Former Chairman call toll free: 1-800-637-6576 any business
(until 1994), NACCO Industries (holding day from 9 a.m. to 5 p.m. Eastern time. (To
company) use this service, your phone must be
equipped with a Telecommunications Device
Investment Adviser for the Deaf.) For share prices, account
Massachusetts Financial Services Company balances, and exchanges, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255) anytime from
Boston, MA 02116-3741 a touch-tone telephone.
Distributor World Wide Web
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741 For the fourth year in a row,
MFS earned a #1 ranking in the
Portfolio Managers [Dalbar Logo] DALBAR, Inc. Broker/Dealer
John W. Ballen* Survey, Main Office Operations
David R. Mannheim* Service Quality Category. The
Toni Y. Shimura* firm achieved a 3.42 overall score on a
scale of 1 to 4 in the 1997 survey. A total
Treasurer of 111 firms responded, offering input on
W. Thomas London* the quality of service they received from 29
mutual fund companies nationwide. The survey
Assistant Treasurers contained questions about service quality in
Mark E. Bradley* 11 categories, including "knowledge of
Ellen Moynihan* operations contact," "keeping you informed,"
James O. Yost* and "ease of doing business" with the firm.
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
-----------------
MFS(R) World Growth Fund Bulk Rate
U.S. Postage
Paid
[Logo] MFS
INVESTMENT MANAGEMENT -----------------
We invented the mutual fund(SM)
500 Boylston Street
Boston, MA 02116-3741
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(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MWF-3 6/98 81M 09/209/309/809
