<PAGE>
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
SEMIANNUAL REPORT
MARCH 31, 1995
MFS(R) RESEARCH FUND
[GRAPHIC OMITTED: art work:
Silhouette of two men talking
in front of a large window.]
<PAGE>
<TABLE>
<S> <C>
MFS(R) RESEARCH FUND
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President Investors Bank & Trust Company
Richard B. Bailey* - Private Investor; INVESTOR INFORMATION
Former Chairman and Director (until 1991), For MFS stock and bond market outlooks,
Massachusetts Financial Services Company call toll free: 1-800-637-4458 anytime from
a touch-tone telephone.
Peter G. Harwood - Former Financial Vice
President, Treasurer and Director (until 1988), For information on MFS mutual funds,
Loomis, Sayles & Co., Inc. call your financial adviser or, for an
information kit, call toll free:
J. Atwood Ives - Chairman and Chief Executive 1-800-637-2929 any business day from
Officer, Eastern Enterprises 9 a.m. to 5 p.m. Eastern time (or leave
a message anytime).
Lawrence T. Perera - Partner, Hemenway & Barnes
INVESTOR SERVICE
William J. Poorvu - Adjunct Professor, Harvard MFS Service Center, Inc.
University Graduate School of Business P.O. Box 2281
Administration Boston, MA 02107-9906
Charles W. Schmidt - Private Investor; For current account service, call toll free:
Former Senior Vice President and Group Executive 1-800-225-2606 any business day from
(until 1990), Raytheon Company 8 a.m. to 8 p.m. Eastern time.
Arnold D. Scott* - Senior Executive Vice President For service to speech- or hearing-impaired,
and Secretary, Massachusetts Financial Services Company call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time. (To use this
Jeffrey L. Shames* - President and Chief Equity service, your phone must be equipped with a
Officer, Massachusetts Financial Services Company Telecommunications Device for the Deaf.)
Elaine R. Smith - Independent Consultant For share prices, account balances and
exchanges, call toll free: 1-800-MFS-TALK
David B. Stone - Chairman, North American (1-800-637-8255) anytime from a touch-tone
Management Corp. (Investment Advisers) telephone.
INVESTMENT ADVISER
Massachusetts Financial Services Company TOP-RATED SERVICE
500 Boylston Street NUMBER MFS was rated first when
Boston, Massachusetts 02116-3741 1 securities firms evaluated the
TOP-RATED SERVICE quality of service they receive
TREASURER from 40 mutual fund companies.
W. Thomas London* MFS got high marks for answering calls quickly,
processing transactions accurately and sending
ASSISTANT TREASURER statements out on time.
James O. Yost* (Source: 1994 DALBAR Survey)
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the past six months, the Fund's investments in the technology sector, its
largest weighting, contributed positively to performance. However, the Fund
underperformed the broader market averages because this strength was offset by
weakness in the leisure and cellular groups, and by an underweighting in the
strong energy and consumer staples sectors. For the six months ended March 31,
1995, Class A shares of the Fund experienced a total return of +3.44%, Class B
shares +3.01%, and Class C shares +2.98%. All of these returns assume the
reinvestment of distributions but exclude the effects of any sales charges. A
further discussion of factors contributing to the Fund's results may be found in
the Portfolio Performance and Strategy section below.
Economic Environment
The economic expansion, entering its fifth year, gained firmer underpinnings in
1994 as employers significantly stepped up hiring levels. Increased employment,
stronger capital spending by businesses, and strengthening overseas economies
resulted in 4.1% real (adjusted for inflation) gross domestic product growth
last year. Interest rates rose substantially over the past year, which should
help restrain, but not curtail, the economic expansion. Based on sound economic
fundamentals both here and abroad, we expect the business expansion to continue
well into 1995. However, recent data, including a March rise in the unemployment
rate and the first decline in industrial production in six months, indicate the
increased likelihood of a deceleration in the economy.
Stock Market
The stock market has rebounded from its uninspiring performance during 1994,
posting its strongest quarterly results in four years. Recently, prices have
responded to growing confidence that the Federal Reserve Board is nearing the
end of its tightening initiatives and that gains in corporate earnings may be
substantial. Although we expect the economy to slow in 1995, our outlook for
corporate earnings growth remains favorable. We have been de-emphasizing many
cyclical areas such as autos and basic materials because of their less
attractive earnings outlook, and we have been emphasizing growth areas such as
consumer and household products. Despite the potential impact on corporate
profits from a slowing economy, we believe stock prices will respond to
continued growth in profitability.
Portfolio Performance and Strategy
As mentioned earlier, during the past six months the Fund benefited from an
overweighting in the technology sector, particularly in software companies with
a demonstrated ability to gain market share. Specifically, Cadence Design and
Microsoft, two of the Fund's larger holdings in this sector, were both up over
25% over the six-month period ended March 31, 1995.
Excellent stock picking again contributed positively to performance. Because
our analysts are in close contact with the companies they follow, they often are
able to identify changes in the fundamentals of an industry or a particular
company before the change is widely apparent. Over the past six months, this
skill was exemplified by the addition of several stocks to the portfolio,
including W.R. Grace, a specialty chemical and health care company, and Boston
Scientific, a medical-device company. The investments which were made in these
stocks during the past six months already have appreciated more than 20%.
The Fund's underweightings in energy and consumer staples hurt performance
during the past six months. We continue to underweight energy because we believe
the fundamentals in this sector remain uncertain. However, we have built up our
consumer staples holdings because we believe these stocks will continue to
perform well in a slowing economic environment. The Fund was also negatively
impacted by its exposure to leisure and cellular telephone stocks. While we have
sold some of our holdings in these areas, we continue to own stocks in companies
like Promus, a gaming company, and Cellular Communications of Puerto Rico, a
cellular telephone provider, because we believe their fundamentals and
valuations remain attractive.
Currently, the Fund is overweighted in the technology, health care, leisure
and retail sectors, and underweighted in energy, utilities, and autos and
housing.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[GRAPHICS OMITTED:
A 1 1/2" x 1 5/8" photo of A. Keith Brodkin, Chairman and President.
A 1 1/2" x 1 5/8" photo of Kevin P. Parke, Director of Research.]
/s/ A. Keith Brodkin /s/ Kevin R. Parke
A. Keith Brodkin Kevin R. Parke
Chairman and President Director of Research
April 17, 1995
The MFS Research Analysts are responsible for the day-to-day management of the
Fund under the general supervision of Mr. Parke.
OBJECTIVE AND POLICIES
The Fund's investment objective is to provide long-term growth of capital and
future income.
The Fund's policy is to invest a substantial proportion of its assets in common
stocks, or securities convertible into common stocks, of companies believed to
possess better-than-average prospects for long-term growth. A smaller proportion
of the assets may be invested in bonds, short-term obligations, preferred stocks
or common stocks whose principal characteristic is income production rather than
growth. The Fund may also invest in foreign securities.
<TABLE>
<CAPTION>
Percent of Percent of
Five Largest Industries Net Assets Ten Largest Holdings Net Assets
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Goods and Services 10.5% Grace (W.R.) & Co. 2.1%
- ----------------------------------------------------- -------------------------------------------------
Insurance 5.7% RJR Nabisco Holdings 1.9%
- ----------------------------------------------------- -------------------------------------------------
Computer Software - Systems 5.6% Duracell International, Inc. 1.7%
- ----------------------------------------------------- -------------------------------------------------
Medical and Health Technology and Services 5.1% Oracle Systems Corp. 1.6%
- ----------------------------------------------------- -------------------------------------------------
Stores 4.7% Intel Corp. 1.5%
- ----------------------------------------------------- -------------------------------------------------
McDonnell Douglas Corp. 1.5%
-------------------------------------------------
United Healthcare Corp. 1.4%
-------------------------------------------------
Loral Corp. 1.4%
-------------------------------------------------
Rogers Communications, Inc. 1.4%
-------------------------------------------------
Procter & Gamble Co. 1.4%
-------------------------------------------------
</TABLE>
<PAGE>
PERFORMANCE SUMMARY
Because mutual funds like MFS Research Fund are designed for investors with
long-term goals, we have provided cumulative results as well as the average
annual total returns for Class A shares for the past 6-month, 1-, 5- and 10-
year periods ended March 31, 1995.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------
Cumulative Total Return* +3.44% +10.23% +83.55% +263.96%
- ------------------------------------------------------------------------------
Average Annual Total Return* -- +10.23% +12.91% + 13.79%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the Securities and Exchange Commission
(the SEC), with all distributions reinvested and reflecting the maximum sales
charge of 5.75% for the 1-, 5- and 10-year periods ended March 31, 1995, were
+3.91%, +11.58% and +13.12%, respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
9/07/93+ -
6 Months 1 Year 3/31/95
- ------------------------------------------------------------------------------
Cumulative Total Return++ +3.01% +9.30% +14.24%
- ------------------------------------------------------------------------------
Average Annual Total Return++ -- +9.30% + 8.90%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, for the 1-year period ended
March 31, 1995 and for the period from September 7, 1993+ to March 31, 1995,
reflecting the current maximum contingent deferred sales charge (CDSC) of 4%,
were +5.34% and +6.64%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions)
1/03/94+ -
6 Months 1 Year 3/31/95
------------------------------------------------------------------------------
Cumulative Total Return(S) +2.98% +9.37% +7.54%
- ------------------------------------------------------------------------------
Average Annual Total Return(S) -- +9.37% +6.05%
- ------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, for the 1-year period ended
March 31, 1995 and for the period from January 3, 1994+ to March 31, 1995, were
+9.37% and +6.05%, respectively.
All results represent past performance and are not necessarily an indication of
future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost. All
Class A share results reflect the applicable expense subsidy which is explained
in the Notes to Financial Statements. Had the subsidy not been in effect, the
results would have been less favorable. The subsidy may be rescinded by MFS at
any time.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ These results do not include any CDSC. If the charge had been included, the
results would have been lower.
+ Commencement of offering of this class of shares.
(S)Class C shares have no initial sales charge or CDSC but, along with Class B
shares, have higher annual fees and expenses than Class A shares.
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - March 31, 1995
Common Stocks - 85.7%
- ------------------------------------------------------------------------------
Issuer Shares Value
- ------------------------------------------------------------------------------
U.S. Common Stocks
Aerospace - 3.3%
Loral Corp. 141,000 $ 5,992,500
McDonnell Douglas Corp. 120,050 6,692,788
United Technologies 24,600 1,700,475
------------
$ 14,385,763
- ------------------------------------------------------------------------------
Agricultural Products - 0.6%
ConAgra, Inc. 82,216 $ 2,723,405
- ------------------------------------------------------------------------------
Apparel and Textiles - 2.2%
Deckers Outdoor Corp.* 113,300 $ 1,692,419
Donnkenny, Inc.* 32,500 532,188
Nine West Group, Inc.* 128,500 3,790,750
V.F. Corp. 70,900 3,766,562
------------
$ 9,781,919
- ------------------------------------------------------------------------------
Automotive - 0.4%
Hayes Wheels International, Inc. 14,300 $ 289,575
Jason, Inc.+ ** 187,500 1,390,781
------------
$ 1,680,356
- ------------------------------------------------------------------------------
Banks and Credit Companies - 1.9%
Capital One Financial Corp.* 145,800 $ 2,788,425
Chemical Banking Corp. 85,000 3,208,750
Northern Trust Co. 70,000 2,458,750
------------
$ 8,455,925
- ------------------------------------------------------------------------------
Business Machines - 2.6%
Affiliated Computer Co., "A"* 61,500 $ 1,798,875
International Business Machines Corp. 53,000 4,339,375
Motorola, Inc. 35,000 1,911,875
Xerox Corp. 27,600 3,239,550
------------
$ 11,289,675
- ------------------------------------------------------------------------------
Business Services - 2.6%
Careline, Inc.* 452,500 $ 2,941,250
Ceridian Corp.* 140,600 4,692,525
Interim Services, Inc.* 123,900 3,686,025
-------
$ 11,319,800
- ------------------------------------------------------------------------------
Cellular Phones - 1.7%
AirTouch Communications, Inc.* 147,500 $ 4,019,375
Cellular Communications of Puerto Rico, Inc.* 119,916 3,657,438
------------
$ 7,676,813
- ------------------------------------------------------------------------------
Chemicals - 4.7%
Air Products & Chemicals, Inc. 49,200 $ 2,564,550
du Pont (E. I.) de Nemours & Co. 77,000 4,658,500
Grace (W.R.) & Co. 175,200 9,329,400
Hanna (M.A.) Co. 58,050 1,458,506
Sterling Chemicals 37,400 434,775
Uniroyal Chemical Corp.* 189,800 2,158,975
------------
$ 20,604,706
- ------------------------------------------------------------------------------
Computer Software - Personal Computers - 2.3%
Electronic Arts, Inc.* 119,000 $ 2,692,375
Learning Co.* 67,000 2,001,625
Microsoft Corp.* 75,000 5,334,375
------------
$ 10,028,375
- ------------------------------------------------------------------------------
Computer Software - Systems - 5.6%
Cadence Design Systems, Inc.* 200,000 $ 5,300,000
Compaq Computer Corp.* 85,000 2,932,500
Compuware Corp.* 130,800 4,839,600
Informix Corp.* 88,600 3,042,261
Oracle Systems Corp.* 219,050 6,845,312
Sybase, Inc.* 46,100 1,844,000
------------
$ 24,803,673
- ------------------------------------------------------------------------------
Consumer Goods and Services - 10.5%
Bush Industries, Inc., "A" 87,500 $ 1,093,750
Callaway Golf Co. 47,800 682,360
Colgate Palmolive Co. 79,500 5,247,000
Duracell International, Inc. 168,800 7,553,800
Gillette Co. 66,100 5,395,413
Leggett & Platt, Inc. 111,500 4,683,000
Perrigo Co.* 130,590 1,518,109
Philip Morris Co. 85,700 5,591,925
Procter & Gamble Co. 89,900 5,955,875
RJR Nabisco Holdings 1,448,200 8,508,175
------------
$ 46,229,407
- ------------------------------------------------------------------------------
Electronics - 4.3%
Intel Corp. 79,100 $ 6,713,612
Linear Technology Corp. 36,450 2,041,200
S3, Inc.* 255,000 5,721,562
Xilinx, Inc.* 67,800 4,593,450
------------
$ 19,069,824
- ------------------------------------------------------------------------------
Entertainment - 4.2%
Bally Gaming International* 139,500 $ 1,098,563
Grand Casinos, Inc.* 113,500 2,596,313
Promus Cos., Inc.* 156,800 5,880,000
Showboat, Inc. 281,500 4,222,500
StarSight Telecast* 150,000 1,012,500
Tele-Communications, "A"* 171,000 3,591,000
------------
$ 18,400,876
- ------------------------------------------------------------------------------
Financial Institutions - 2.1%
Advanta Corp., "B" 110,300 $ 3,446,875
Beneficial Corp. 76,000 2,983,000
Federal Home Loan Mortgage Corp. 45,000 2,722,500
------------
$ 9,152,375
- ------------------------------------------------------------------------------
Food and Beverage Products - 2.8%
CPC International, Inc. 79,300 $ 4,292,113
PepsiCo, Inc. 118,600 4,625,400
Pioneer Hi-Bred International, Inc. 102,000 3,672,000
------------
$ 12,589,513
- ------------------------------------------------------------------------------
Forest and Paper Products - 0.5%
Kimberly Clark Corp. 40,400 $ 2,100,800
- ------------------------------------------------------------------------------
Insurance - 5.7%
AFLAC, Inc. 74,200 $ 2,995,825
American Re Corp.* 114,200 3,997,000
Equitable of Iowa Cos. 109,700 3,716,088
Mid Ocean Ltd. 100,000 2,725,000
PennCorp Financial Group, Inc. 311,000 5,481,375
Torchmark Corp. 73,700 $ 3,058,550
Travelers, Inc. 81,800 3,159,525
------------
$ 25,133,363
- ------------------------------------------------------------------------------
Machinery - 2.7%
Caterpillar, Inc. 68,000 $ 3,782,500
Deere & Co. 55,000 4,468,750
IDEX Corp.* 120,000 3,585,000
------------
$ 11,836,250
- ------------------------------------------------------------------------------
Medical and Health Products - 4.1%
Boston Scientific Corp.* 125,000 $ 3,078,125
Johnson & Johnson 6,000 357,000
Pfizer, Inc. 18,500 1,586,375
Sofamor/Danek Group* 113,200 2,773,400
U.S. Healthcare, Inc. 51,100 2,261,175
Uromed Corp.* 454,000 3,121,250
Ventritex, Inc.* 94,800 1,807,125
Zoll Medical Corp.* 212,000 3,180,000
------------
$ 18,164,450
- ------------------------------------------------------------------------------
Medical and Health Technology and Services - 5.1%
Columbia Healthcare 105,900 $ 4,553,700
Living Centers of America* 8,600 323,575
Mariner Health Group* 76,200 1,476,375
Mid-Atlantic Medical Services* 68,700 1,519,988
Pacificare Health Systems, Inc., "B"* 63,100 4,558,975
Renal Treatment Centers* 100,000 2,550,000
St. Jude Medical, Inc. 33,800 1,461,850
United Healthcare Corp. 131,000 6,124,250
------------
$ 22,568,713
- ------------------------------------------------------------------------------
Precious Metals and Minerals
Santa Fe Pacific Corp. 4,712 $ 108,357
- ------------------------------------------------------------------------------
Oil Services - 2.0%
BJ Services Co.* 236,000 $ 4,838,000
Western Atlas, Inc.* 91,000 3,924,375
------------
$ 8,762,375
- ------------------------------------------------------------------------------
Oils - 1.5%
Mitchell Energy & Development Corp., "B" 11,600 $ 204,450
Newfield Exploration Co. 78,600 1,689,900
Noble Affiliates, Inc.* 83,000 2,272,125
Pogo Producing Co. 110,000 2,241,250
Snyder Oil Corp. 10,900 386,619
------------
$ 6,794,344
- ------------------------------------------------------------------------------
Pollution Control - 1.4%
WMX Technologies, Inc. 210,600 $ 5,791,500
Western Waste Industries* 29,100 469,237
------------
$ 6,260,737
- ------------------------------------------------------------------------------
Printing and Publishing - 0.2%
American Media Operations, "A" 98,600 $ 702,525
- ------------------------------------------------------------------------------
Railroads - 1.3%
CSX Corp. 43,000 $ 3,386,250
Wisconsin Central Transportation Corp.* 53,600 2,552,700
------------
$ 5,938,950
- ------------------------------------------------------------------------------
Restaurants and Lodging - 1.8%
Applebees International, Inc. 77,000 $ 1,703,625
Brinker International, Inc.* 134,000 2,227,750
Buffets, Inc.* 58,000 551,000
Hammons (John Q) Hotels, Inc., "A"* 1,700 22,950
Lone Star Steakhouse* 72,400 1,963,850
Sonic Corp.* 50,000 1,312,500
------------
$ 7,781,675
- ------------------------------------------------------------------------------
Special Products and Services - 0.4%
Intertape Polymer Group, Inc. 46,000 $ 943,000
Sphere Drake Holdings Ltd. 42,000 635,250
------------
$ 1,578,250
- ------------------------------------------------------------------------------
Stores - 4.7%
AutoZone, Inc.* 16,600 $ 412,925
Bed Bath & Beyond* 160,000 3,960,000
Dayton-Hudson Corp. 76,300 5,455,450
Dollar General Corp. 36,500 958,125
Federated Department Stores, Inc.* 215,000 4,756,875
General Nutrition* 55,800 1,548,450
Hechinger Co., "A" 196,000 2,180,500
Office Depot* 65,000 1,584,375
------------
$ 20,856,700
- ------------------------------------------------------------------------------
Telecommunications - 0.8%
Cabletron Systems, Inc.* 75,300 $ 3,379,087
- ------------------------------------------------------------------------------
Utilities - Electric - 0.2%
Sithe Energies, Inc.* 100,000 $ 925,000
- ------------------------------------------------------------------------------
Utilities - Gas - 0.5%
Pacific Enterprises 87,000 $ 2,153,250
- ------------------------------------------------------------------------------
Utilities - Telephone - 1.0%
MCI Communications Corp. 204,000 $ 4,207,500
- ------------------------------------------------------------------------------
Total U.S. Common Stocks $377,444,731
- ------------------------------------------------------------------------------
Foreign Common Stocks - 6.1%
Canada - 1.3%
Rogers Communications, Inc., "B"
(Telecommunications)* 456,400 $ 5,961,406
- ------------------------------------------------------------------------------
Denmark - 0.5%
Tele Danmark, ADR, "B" (Utilities - Telephone) 82,400 $ 2,183,600
- ------------------------------------------------------------------------------
France - 0.5%
Coflexip, ADR (Oils) 80,000 $ 2,190,000
- ------------------------------------------------------------------------------
Italy - 0.7%
Telecom Italia (Telecommunications) 1,574,000 $ 2,926,381
- ------------------------------------------------------------------------------
Sweden - 2.6%
Astra, "B", Free Shares (Medical and
Health Products) 190,160 $ 4,926,475
Hennes & Mauritz AB, "B" (Retail) 62,000 3,740,900
Svenska Handelsbank S.A. (Banks and
Credit Companies) 233,400 2,747,048
------------
$ 11,414,423
- ------------------------------------------------------------------------------
Switzerland - 0.5%
Publicitas (Advertising) 2,650 $ 2,279,444
- ------------------------------------------------------------------------------
Total Foreign Common Stocks $ 26,955,254
- ------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $340,521,499) $404,399,985
- ------------------------------------------------------------------------------
Preferred Stocks - 0.5%
- ------------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
Cellular Communications, Inc., $0.01** 44,000 $ 2,101,000
Times Mirror Co. 676 14,534
- ------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $1,239,471) $ 2,115,534
- ------------------------------------------------------------------------------
Bond
- -----------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- ------------------------------------------------------------------------------
Foreign - Non-U.S. Dollar Denominated
Kredietbank NPV, 5.75s, due 11/30/03
(Identified Cost, $88,468) BEF 3,247 $ 97,050
- ------------------------------------------------------------------------------
Short-Term Obligations - 6.3%
- ------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 4/04/95 $4,800 $ 4,797,640
Federal Home Loan Mortgage Corp., due 4/05/95 4,875 4,871,809
Federal Home Loan Mortgage Corp., due 4/05/95 3,980 3,978,693
Federal Home Loan Mortgage Corp., due 4/25/95 7,600 7,569,958
GTE South, Inc., due 4/10/95 1,400 1,397,865
Tennessee Valley Authority, due 4/26/95 4,990 4,969,347
- ------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 27,585,312
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $369,434,750) $434,197,881
Other Assets, Less Liabilities - 1.4% 6,159,868
- ------------------------------------------------------------------------------
Net Assets - 100.0% $440,357,749
- ------------------------------------------------------------------------------
* Non-income producing security.
** Security valued by or at the direction of the Trustees.
+ Restricted security.
BEF = Belgian Francs.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
March 31, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $369,434,750) $434,197,881
Cash 45,574
Receivable for investments sold 11,708,044
Receivable for Fund shares sold 3,159,274
Dividends and interest receivable 410,120
Other assets 7,154
------------
Total assets $449,528,047
------------
Liabilities:
Payable for investments purchased $ 8,264,730
Payable for Fund shares reacquired 671,930
Payable to affiliates -
Management fee 4,297
Shareholder servicing agent fee 1,936
Distribution fee 118,404
Accrued expenses and other liabilities 109,001
------------
Total liabilities $ 9,170,298
------------
Net assets $440,357,749
------------
Net assets consist of:
Paid-in capital $368,539,714
Unrealized appreciation on investments and translation of
assets and liabilities
in foreign currencies 64,763,541
Accumulated undistributed net realized gain on investments
and foreign currency
transactions 6,377,304
Accumulated undistributed net investment income 677,190
------------
Total $440,357,749
------------
Shares of beneficial interest outstanding 33,995,286
------------
Class A shares:
Net asset value and redemption price per share
(net assets of $361,668,388 / 27,872,275 shares of
beneficial interest outstanding) $12.98
-----
Offering price per share (100/94.25) $13.77
-----
Class B shares:
Net asset value, offering price, and redemption price per share
(net assets of $69,367,570 / 5,398,081 shares of beneficial
interest outstanding) $12.85
-----
Class C shares:
Net asset value, offering price, and redemption price per share
(net assets of $9,321,791 / 724,930 shares of beneficial
interest outstanding) $12.86
-----
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 and
Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended March 31, 1995
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 2,348,666
Interest 805,195
Foreign taxes withheld (667)
-----------
Total investment income $ 3,153,194
-----------
Expenses -
Management fee $ 799,641
Trustees' compensation 16,832
Shareholder servicing agent fee (Class A) 246,650
Shareholder servicing agent fee (Class B) 50,575
Shareholder servicing agent fee (Class C) 4,839
Distribution and service fee (Class A) 479,460
Distribution and service fee (Class B) 229,883
Distribution and service fee (Class C) 32,260
Custodian fee 83,993
Postage 21,002
Printing 13,325
Auditing fees 8,850
Legal fees 3,448
Miscellaneous 80,034
-----------
Total expenses $ 2,070,792
Preliminary reduction of expenses by distributor (163,950)
-----------
Net expenses $ 1,906,842
-----------
Net investment income $ 1,246,352
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 6,995,947
Foreign currency transactions (8,997)
-----------
Net realized gain on investments and foreign currency
transactions $ 6,986,950
-----------
Change in unrealized appreciation (depreciation) -
Investments $ 7,927,808
Translation of assets and liabilities in foreign currencies (180)
-----------
Net unrealized gain on investments $ 7,927,628
-----------
Net realized and unrealized gain on investments
and foreign currency $14,914,578
-----------
Increase in net assets from operations $16,160,930
-----------
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Six Months Ended
March 31, 1995 Year Ended
(Unaudited) September 30, 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,246,352 $ 341,364
Net realized gain on investments and foreign currency transactions 6,986,950 34,277,386
Net unrealized gain (loss) on investments and foreign currency transactions 7,927,628 (11,035,216)
------------ ------------
Increase in net assets from operations $ 16,160,930 $ 23,583,534
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ (481,281) $ (700,869)
From net investment income (Class B) (15,253) (1,857)
From net realized gain on investments and foreign currency transactions (955,086) (64,363,852)
In excess of net investment income (Class A) -- (72,504)
In excess of net investment income (Class B) -- (192)
------------ ------------
Total distributions declared to shareholders $ (1,451,620) $(65,139,274)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $124,280,755 $ 89,603,156
Net asset value of shares issued to shareholders in reinvestment of distributions 1,570,183 54,945,985
Cost of shares reacquired (48,864,800) (48,796,609)
------------- -------------
Increase in net assets from Fund share transactions $ 76,986,138 $ 95,752,532
------------- -------------
Total increase in net assets $ 91,695,448 $ 54,196,792
Net assets:
At beginning of period 348,662,301 294,465,509
------------ -------------
At end of period (including accumulated undistributed (distributions in
excess of) net investment income of $677,190 and $(72,628), respectively) $440,357,749 $348,662,301
------------ -------------
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
1995 --------------------------------------------
(Unaudited) 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $12.59 $14.47 $12.18 $11.84 $ 9.62
-------- -------- -------- -------- --------
Income from investment operations<F3> -
Net investment income<F4> $ 0.05 $ 0.02 $ 0.11 $ 0.07 $ 0.27
Net realized and unrealized gain on investments 0.39 1.01 3.15 1.27 2.21
-------- -------- -------- -------- --------
Total from investment operations $ 0.44 $ 1.03 $ 3.26 $ 1.34 $ 2.48
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $(0.02) $(0.03) $(0.07) -- $(0.26)
In excess of net investment income -- (0.01) -- -- --
From net realized gain on investments (0.03) (2.87) (0.90) (1.00) --
-------- -------- -------- -------- --------
Total distributions declared to shareholders $(0.05) $(2.91) $(0.97) $(1.00) $(0.26)
-------- -------- -------- -------- --------
Net asset value - end of period $12.98 $12.59 $14.47 $12.18 $11.84
-------- -------- -------- -------- --------
Total return<F1> 3.44% 7.72% 28.27% 11.79% 25.87%
Ratios (to average net assets)/Supplemental data<F4>:
Expenses 0.89%<F2> 0.91% 0.90% 0.84% 0.95%
Net investment income 0.77%<F2> 0.14% 0.36% 0.59% 2.48%
Portfolio turnover 53% 79% 93% 74% 177%
Net assets at end of period (000 omitted) $361,668 $318,170 $294,019 $240,366 $231,316
<FN>
<F1> Total returns for Class A shares do not include the applicable sales charge
(except for reinvestment dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
<F2> Annualized.
<F3> Per share data for the periods subsequent to September 30, 1993 are based
on average shares outstanding.
<F4> The distributor did not impose a portion of its distribution fee for the
periods indicated. If this fee had been incurred by the Fund, the net
investment income per share and the ratios would have been:
</FN>
Net investment income $ 0.04 $ 0.01 -- -- --
Ratios (to average net assets):
Expenses 0.99%+ 1.01% -- -- --
Net investment income 0.67%+ 0.04% -- -- --
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended September 30,
----------------------------------------------
1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $11.49 $10.20 $12.54 $10.42
-------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.36 $ 0.39 $ 0.23 $ 0.19
Net realized and unrealized gain on investments (1.52) 2.30 (2.19) 4.43
-------- -------- -------- --------
Total from investment operations $(1.16) $ 2.69 $(1.96) $ 4.62
-------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $(0.36) $(0.39) $(0.24) $(0.19)
In excess of net investment income -- -- -- --
From net realized gain on investments (0.35)<F1> (1.01) (0.14) (2.31)
-------- -------- -------- --------
Total distributions declared to shareholders $(0.71) $(1.40) $(0.38) $(2.50)
-------- -------- -------- --------
Net asset value - end of period $ 9.62 $11.49 $10.20 $12.54
-------- -------- -------- --------
Total return<F2> (12.73)% 26.91% (15.60)% 44.80%
Ratios (to average net assets)/Supplemental data:
Expenses 0.83% 0.88% 0.86% 0.73%
Net investment income 3.21% 3.48% 2.36% 1.51%
Portfolio turnover 79% 99% 116% 101%
Net assets at end of period (000 omitted) $202,377 $251,857 $239,616 $321,050
<FN>
<F1> For the year ended September 30, 1990, the per share distribution from
paid-in capital was $0.0009.
<F2> Total returns for Class A shares do not include the applicable sales charge
(except for reinvestment dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
See notes to financial statements
</FN>
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Year Ended Ended Year Ended Ended
September 30, March 31, September 30, March 31, Period Ended
-------------------- 1995 ----------------- 1995 September 30,
1986 1985 (Unaudited) 1994 1993<F1> (Unaudited) 1994<F2>
- -------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
- -------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $10.36 $10.40 $12.50 $14.47 $13.95 $12.51 $13.18
-------- -------- ------- ------- ------ ------- -------
Income from investment
operations<F7> -
Net investment income
(loss) $0.25 $0.31 $ -- <F3> $(0.08) $(0.04) $ -- <F3> $(0.04)
Net realized and unrealized
gain on investments 2.50 0.94 0.38 1.00 0.56 0.38 0.62
-------- -------- ------- ------- ------ ------- -------
Total from investment
operations $2.75 $1.25 $0.38 $0.92 $0.52 $0.38 $0.58
-------- -------- ------- ------- ------ ------- -------
Less distributions declared
to shareholders -
From net investment income $(0.24) $(0.31) $ -- <F4> $(0.02) -- -- --
From net realized gain
on investments (2.45) (0.98) (0.03) (2.87) -- (0.03) (1.25)
-------- -------- ------- ------- ------ ------- -------
Total distributions
declared to shareholders $(2.69) $(1.29) $(0.03) $(2.89) $ -- $(0.03) $(1.25)
-------- -------- ------- ------- ------ ------- -------
Net asset value - end of period $10.42 $10.36 $12.85 $12.50 $14.47 $12.86 $12.51
-------- -------- ------- ------- ------ ------- -------
Total return<F6> 26.65% 11.98% 3.01% 6.91% 3.73% 2.98% 4.43%
Ratios (to average net assets)/
Supplemental data:
Expenses 0.77% 0.86% 1.78%<F5> 1.82% 2.33%<F5> 1.71%<F5> 1.74%<F5>
Net investment income (loss) 1.88% 2.74% (0.05)%<F5> (0.65)% (0.89)%<F5> (0.01)%<F5> (0.54)%<F5>
Portfolio turnover 102% 75% 53% 79% 93% 53% 79%
Net assets at end of
period (000 omitted) $234,804 $207,819 $69,368 $25,672 $447 $9,322 $4,821
-------- -------- ------- ------- ------ ------- -------
<FN>
<F1> For the period from the commencement of offering of Class B shares,
September 7, 1993 to September 30, 1993.
<F2> For the period from the commencement of offering of Class C shares, January
3, 1994 to September 30, 1994.
<F3> For the six months ended March 31, 1995, the per share net investment
losses for Class B and Class C shares were $0.0028 and $0.0008,
respectively.
<F4> For the six months ended March 31, 1995, the per share distribution from
net investment income was $0.00263.
<F5> Annualized.
<F6> Total returns for Class A shares do not include the applicable sales charge
(except for reinvestment dividends prior to October 1, 1989). If the charge
had been included, the results would have been lower.
<F7> Per share data for the periods subsequent to September 30, 1993 are based
on average shares outstanding.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Research Fund (the Fund) is a diversified series of MFS Series Trust V (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
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed
issues, are valued on the basis of valuations furnished by dealers or by a
pricing service with consideration to factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive reliance
upon exchange or over-the-counter prices. Short- term obligations, which mature
in 60 days or less, are valued at amortized cost, which approximates value.
Non-U.S. dollar denominated short-term obligations are valued at amortized cost
as calculated in the base currency and translated into U.S. dollars at the
closing daily exchange rate. Securities for which there are no such quotations
or valuations are valued at fair value as determined in good faith by or at the
direction of the Trustees.
Repurchase Agreements - The Fund may enter into repurchase agreements with
institutions that the Fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The Fund requires that the
securities purchased in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable the Fund to obtain those securities in the
event of a default under the repurchase agreement. The Fund monitors, on a daily
basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each such repurchase agreement.
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 and income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Security Loans - The Fund may lend its securities to member banks of the Federal
Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. The loans are collateralized at all times by cash or
securities with a market value at least equal to the market value of securities
loaned. As with other extensions of credit, the Fund may bear the risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Fund receives compensation for lending its
securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Fund would also continue to earn income on the
securities loaned. At March 31, 1995, the Fund had no securities on loan.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for both financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend and interest payments received in additional securities are
recorded on the ex-dividend or ex-interest date in an amount equal to the value
of the security on such date.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The Fund files a tax return annually
using tax accounting methods required under provisions of the Code which may
differ from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net investment
income and net realized gain reported on these financial statements may differ
from that reported on the Fund's tax return and, consequently, the character of
distributions to shareholders reported in the financial highlights may differ
from that reported to shareholders on Form 1099-DIV. Foreign taxes have been
provided for on interest and dividend income earned on foreign investments in
accordance with the applicable country's tax rates and to the extent
unrecoverable are recorded as a reduction of investment income. Distributions to
shareholders are recorded on the ex-dividend date.
The Fund 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 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 accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A,
Class B and Class C shares. The three classes of shares differ in their
respective shareholder servicing agent, distribution and service fees.
Shareholders of each class also bear certain expenses that pertain only to that
particular class. All shareholders bear the common expenses of the Fund pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses, including distribution
and shareholder service fees.
(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, computed daily and paid monthly at an effective annual rate of
0.34% of average daily net assets and 4.61% of investment income, amounted to
$799,641.
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 of the 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 its independent Trustees. Included in Trustees' compensation is a net
periodic pension expense of $5,992 for the six months ended March 31, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$50,538 as its portion of the sales charge on sales of Class A shares of the
Fund.
The Trustees have adopted separate distribution plans for Class A, Class B and
Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A Distribution Plan provides that the Fund will pay MFD up to 0.35% of
its average daily net assets attributable to Class A shares annually in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee to each securities
dealer that enters into a sales agreement with MFD of up to 0.25% per annum of
the Fund's average daily net assets attributable to Class A shares which are
attributable to that securities dealer, a distribution fee to MFD of up to 0.10%
per annum of the Fund's average daily net assets attributable to Class A shares,
commissions to dealers and payments to MFD wholesalers for sales at or above a
certain dollar level, and other such distribution-related expenses that are
approved by the Fund. MFD is waiving the 0.10% distribution fee (amounting to
$163,950) for an indefinite period. Fees incurred under the distribution plan
during the six months ended March 31, 1995 were 0.35% of average daily net
assets attributable to Class A shares on an annualized basis and amounted to
$479,460 (of which MFD retained $84,420).
The Class B and Class C Distribution Plans provide that the Fund will pay MFD a
monthly distribution fee, equal to 0.75% per annum, and a quarterly service fee
of up to 0.25% per annum, of the Fund's average daily net assets attributable to
Class B and Class C shares. MFD will pay to securities dealers that enter into a
sales agreement with MFD, all or a portion of the service fee attributable to
Class B and Class C shares, and will pay to such securities dealers all of the
distribution fee attributable to Class C shares. The service fee is intended to
be additional consideration for services rendered by the dealer with respect to
Class B and Class C shares. Fees incurred under the distribution plans during
the six months ended March 31, 1995 were 1.00% of average daily net assets
attributable to Class B and Class C shares on an annualized basis and amounted
to $229,883 and $32,260, respectively (of which MFD retained $3,057 and $688,
respectively).
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within twelve months following the share 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 March 31, 1995 were $184 and $32,243
for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$246,650, $50,575 and $4,839 for Class A, Class B and Class C shares,
respectively, for its services as shareholder servicing agent. The fee is
calculated as a percentage of the average daily net assets of each class of
shares at an effective annual rate of up to 0.15%, up to 0.22% and up to 0.15%
attributable to Class A, Class B and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities and
short-term obligations, aggregated $217,903,727 and $153,465,140, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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 $ 369,434,750
-------------
Gross unrealized appreciation $ 73,631,959
Gross unrealized depreciation 8,868,818
-------------
Net unrealized appreciation $ 64,763,141
-------------
(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 Year Ended
March 31, 1995 September 30, 1994
--------------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 5,522,804 $67,973,402 3,839,136 $51,599,673
Shares issued to shareholders in
reinvestment of distributions 119,156 1,423,642 4,069,118 52,350,489
Shares reacquired (3,046,414) (37,551,219) (2,955,596) (40,221,505)
---------- ----------- ---------- -----------
Net increase 2,595,546 $31,845,825 4,952,658 $63,728,657
---------- ----------- ---------- -----------
<CAPTION>
Class B Shares Six Months Ended Year Ended
March 31, 1995 September 30, 1994
--------------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,113,183 $50,403,501 2,171,868 $29,076,136
Shares issued to shareholders in
reinvestment of distributions 11,257 134,369 183,200 2,292,393
Shares reacquired (780,092) (9,583,788) (332,192) (4,402,426)
---------- ----------- ---------- -----------
Net increase 3,344,348 $40,954,082 2,022,876 $26,966,103
---------- ----------- ---------- -----------
<CAPTION>
Class C Shares Six Months Ended Year Ended
March 31, 1995 September 30, 1994*
--------------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 408,058 $5,903,852 673,209 $8,927,347
Shares issued to shareholders in
reinvestment of distributions 1,023 12,172 24,307 303,103
Shares reacquired (141,625) (1,729,793) (312,042) (4,172,678)
---------- ----------- ---------- -----------
Net increase 267,456 $4,186,231 385,474 $5,057,772
---------- ----------- ---------- -----------
* For the period from the commencement of offering of Class C shares, January 3, 1994 to September 30, 1994.
</TABLE>
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS, or an affiliate of MFS, in an unsecured line of credit
with a bank which permits borrowings up to $350 million, collectively.
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 March 31, 1995 was $2,607.
(7) Restricted Securities The Fund may invest not more than 10% of its total
assets in securities which are subject to legal or contractual restrictions on
resale. At March 31, 1995, the Fund owned the following restricted security
(constituting 0.32% 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 security be registered. The value of this security is
determined by valuations supplied by a pricing service or brokers or, if not
available, in good faith by or at the direction of the Trustees.
Date of Share
Description Acquisition Amount Cost Value
- ---------------------------------------------------------------------------
Jason, Inc. 1/21/94 187,500 $1,650,000 $1,390,781
---------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or, leave a message any
time). This material should be read carefully before investing or sending money.
STOCK
- --------------------------------------------
Massachusetts Investors Trust
- --------------------------------------------
Massachusetts Investors Growth Stock Fund
- --------------------------------------------
MFS(R) Capital Growth Fund
- --------------------------------------------
MFS(R) Emerging Growth Fund
- --------------------------------------------
MFS(R) Gold & Natural Resources Fund
- --------------------------------------------
MFS(R) Growth Opportunities Fund
- --------------------------------------------
MFS(R) Managed Sectors Fund
- --------------------------------------------
MFS(R) OTC Fund
- --------------------------------------------
MFS(R) Research Fund
- --------------------------------------------
MFS(R) Value Fund
- --------------------------------------------
STOCK AND BOND
- --------------------------------------------
MFS(R) Total Return Fund
- --------------------------------------------
MFS(R) Utilities Fund
- --------------------------------------------
BOND
- --------------------------------------------
MFS(R) Bond Fund
- --------------------------------------------
MFS(R) Government Mortgage Fund
- --------------------------------------------
MFS(R) Government Securities Fund
- --------------------------------------------
MFS(R) High Income Fund
- --------------------------------------------
MFS(R) Intermediate Income Fund
- --------------------------------------------
MFS(R) Strategic Income Fund
(formerly MFS(R) Income & Opportunity Fund)
- --------------------------------------------
LIMITED MATURITY BOND
- --------------------------------------------
MFS(R) Government Limited Maturity Fund
- --------------------------------------------
MFS(R) Limited Maturity Fund
- --------------------------------------------
MFS(R) Municipal Limited Maturity Fund
- --------------------------------------------
WORLD
- --------------------------------------------
MFS(R) World Asset Allocation Fund
- --------------------------------------------
MFS(R) World Equity Fund
- --------------------------------------------
MFS(R) World Governments Fund
- --------------------------------------------
MFS(R) World Growth Fund
- --------------------------------------------
MFS(R) World Total Return Fund
- --------------------------------------------
NATIONAL TAX-FREE BOND
- --------------------------------------------
MFS(R) Municipal Bond Fund
- --------------------------------------------
MFS(R) Municipal High Income Fund
(closed to new investors)
- --------------------------------------------
MFS(R) Municipal Income Fund
- --------------------------------------------
STATE TAX-FREE BOND
- --------------------------------------------
Alabama, Arkansas, California, Florida,
Georgia, Louisiana, Maryland, Massachusetts,
Mississippi, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, Washington, West Virginia
- --------------------------------------------
MONEY MARKET
- --------------------------------------------
MFS(R) Cash Reserve Fund
- --------------------------------------------
MFS(R) Government Money Market Fund
- --------------------------------------------
MFS(R) Money Market Fund
- --------------------------------------------
<PAGE>
MFS(R) RESEARCH
FUND
NUMBER
1
DALBAR
TOP-RATED SERVICE
500 Boylston Street
Boston, MA 02116
-------------
Bulk Rate
U.S. Postage
PAID
Permit #55638
Boston, MA
-------------
[Logo] MFS
THE FIRST NAME IN MUTUAL FUNDS
MFR-3 5/95/39M 14/214/314
