MFS RESEARCH FUND
(A SERIES OF MFS SERIES TRUST V)
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
May 28, 1996
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS Series Trust V (File No. 811-2031), on Behalf of
MFS Research Fund
Ladies and Gentlemen:
Pursuant to the requirements of Section 30(b) of the Investment Company Act
of 1940 and Rule 30b2-1 thereunder, we hereby file a copy of the Semiannual
Report to Shareholders dated March 31, 1996 of MFS Research Fund.
Very truly yours,
JOHN F. MCNAMARA
John F. McNamara
Production Editor
<PAGE>
[MFS Logo] SEMIANNUAL REPORT
MARCH 31, 1996
MFS [Registration Mark] RESEARCH FUND
[A photo of two men in a window]
<PAGE>
MFS [Registration Mark] RESEARCH FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard University Graduate School of
Business Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management Corp. (investment
adviser)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
Investors Bank & Trust Company
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458 anytime
from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances and exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone telephone.
TOP-RATED SERVICE
For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The firm
achieved a 3.49 overall score - on a scale of 1 to 4 - in the 1995 survey. A
total of 71 firms responded, offering input on the quality of service they
receive from 36 mutual fund compa-nies nationwide. The survey contained
questions about service quality in 17 categories, including "knowledge of phone
service contacts," "accuracy of transaction processing," and "overall ease of
doing business with the firm."
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
For the six months ended March 31, 1996, Class A shares of the Fund provided a
total return of 14.39%, while Class B shares returned 13.93% and Class C shares
returned 13.95%. All of the Fund's returns assume the reinvestment of
distributions but exclude the effects of any sales charges. For the same period,
the Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged
index of common stock performance, returned 11.70%. A further discussion of our
strategy for the Fund may be found in the Portfolio Performance and Strategy
section of this letter.
Economic Environment
We believe the U.S. economy will continue to show moderate growth in 1996,
although this growth may be somewhat uneven as we move from quarter to quarter.
Thus, while one quarter may experience an annualized rate of growth in Gross
Domestic Product (GDP) of less than 1%, another quarter may see annualized
growth in excess of 3% -- but, for the year, we believe growth could stay within
our expected range of 2% to 2-1/2%. While some increase in consumer spending has
taken place in the early months of this year, consumers, who represent
two-thirds of the economy, remain in a somewhat weakened position, due in part
to an increase in consumer installment debt in excess of 30% over the past two
years. Meanwhile, growth is also being constrained by ongoing economic doldrums
in Europe and Japan, important markets for U.S. exports. Here again, we are
seeing a few tentative signs, particularly in Japan, of modest recoveries that
could lead to improved prospects for U.S. exporters. Also, the "lag effect" of
increases in short-term interest rates by the Federal Reserve Board in 1994 and
into 1995 is helping to keep growth in check. This lag effect can last up to two
years, and although the Fed did reduce short-term rates late last year and
earlier this year, we expect it to continue its diligent anti-inflationary
policies. At the same time, it appears that inflation is likely to remain under
control this year, due in part to a continued moderation in wage pressures and
the subdued level of economic growth. Finally, we believe the current upward
pressure on energy prices bears close scrutiny, as energy is an important
component of the inflation outlook.
Stock Market
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity markets this
year. Although we believe the equity markets represent fair value at current
levels, the expected slowdown in the growth of corporate earnings and the
increases in interest rates, experienced so far this year raise near-term
concerns. Further increases in interest rates, and an acceleration of inflation
coupled with an additional slowdown in corporate earnings growth, could have a
negative effect on
1
<PAGE>
the stock markets. However, to the extent that some earnings disappointments can
be taken as a sign that the economy is not overheating, this may prove
beneficial for the longer-term health of the equity markets. We continue to
believe that many of the technology-driven productivity gains that U.S.
companies have made in recent years will continue to enhance corporate America's
competitiveness and profitability. Therefore, we remain quite positive on the
long-term viability of the equity markets.
Portfolio Performance and Strategy
The Fund's overperformance relative to the S&P 500 was due to three factors.
First, the Fund benefited from strong stock selection within the technology
sector. In general, technology stocks have been weak for the past six months,
and the Fund has been overweighted in this sector. However, selected stocks in
the computer software industry, where the Fund had the majority of its
technology holdings, have remained relatively strong. Major positions such as
Cadence Design and Oracle appreciated 67% and 22%, respectively, over the past
six months due to strong earnings growth driven by new product introductions.
Second, the Fund benefited from the acquisition of two of its holdings.
Medisense, a medical-device manufacturer, announced plans to be acquired by
Abbott Laboratories, and its stock appreciated 84% during the period. Also,
Loral, a defense electronics company, announced plans to merge with Lockheed
Martin, and its stock appreciated 72% during the six-month period.
The third factor benefiting performance was the Fund's significant
underweighting in the utility sector. Utility stocks underperformed the market
during the past six months due to increased competitive concerns and rising
interest rates. The Fund has been underweighted in this sector due to
expectations for low growth. Some of the benefit of this underweighting was
offset by the Fund's underweighting in the energy sector, which performed
strongly due to rising oil and natural gas prices. In addition, the Fund's
holdings in the electronics industry underperformed the market due to slower
earnings growth.
Currently, the Fund is overweighted in technology, health care, and
leisure. We believe that selected companies in these groups will continue to
demonstrate strong earnings despite a slow U.S. economy. In technology, our
emphasis is on selected computer software companies such as Microsoft, Cadence,
and Oracle, whose current levels of earnings growth we believe are sustainable
given the proprietary nature of their products and the introduction of new
products. In the leisure sector, our major emphasis is on the hotel industry,
where we believe companies such as HFS, Host Marriott, and Promus Hotels will
demonstrate strong earnings due to favorable economics within that industry. The
Fund
2
<PAGE>
remains underweighted in the more economically sensitive commodity-cyclical,
automotive, and energy sectors.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Photo of A. Keith Brodkin] [Photo of Kevin R. Parke]
[Signature of A. Keith Brodkin] [Signature of Kevin R. Parke]
A. Keith Brodkin Kevin R. Parke
Chairman and President Director of Research
April 12, 1996
The Committee Of MFS Research Analysts is 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.
3
<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, Class B and Class C shares for the applicable
time periods.
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* +14.39% +37.67% +135.42% +253.09%
- --------------------------------------------------------------------------------
Average Annual Total Return* -- +37.67% +18.68% +13.45%
- --------------------------------------------------------------------------------
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% on the initial investment for the 1-, 5- and 10-year periods
ended March 31, 1996, were +29.76%, +17.28% and +12.78%, respectively.
Class B Investment Results
(net asset value change including reinvested distributions) 9/07/93+-
6 Months 1 Year 3/31/96
- --------------------------------------------------------------------------------
Cumulative Total Return++ +13.93% +36.64% +56.09%
- --------------------------------------------------------------------------------
Average Annual Total Return++ -- +36.64% +18.96%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested and reflecting the contingent deferred sales charge (CDSC) of 4% for
the 1-year period ended March 31, 1996, and 3% for the period from September 7,
1993 to March 31, 1996, were +32.64% and +18.07%, respectively.
Class C Investment Results
(net asset value change including reinvested distributions) 1/03/94+-
6 Months 1 Year 3/31/96
- --------------------------------------------------------------------------------
Cumulative Total Return [ss] +13.95% +36.74% +47.05%
- --------------------------------------------------------------------------------
Average Annual Total Return [ss] -- +36.74% +18.77%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested for the 1-year period ended March 31, 1996 and for the period from
January 3, 1994+ to March 31, 1996, were +36.74% and +18.77%, respectively.
All results represent past performance and are not 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.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
+ Commencement of offering of this class of shares.
++ These results do not include any CDSC. If the charge had been included, the
results would have been lower.
[ss] Prior to April 1, 1996, Class C shares had no initial sales charge or CDSC
but, along with Class B shares, have higher annual fees and expenses than
Class A shares. Class C share purchases made on or after April 1, 1996,
will be subject to a 1% CDSC if redeemed within 12 months of purchase.
4
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - March 31, 1996
Common Stocks - 96.4%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - 86.9%
Aerospace - 5.8%
General Dynamics Corp. 209,400 $ 12,249,900
Lockheed Martin Corp. 187,200 14,203,800
McDonnell Douglas Corp. 216,450 19,832,231
United Technologies Corp. 159,700 17,926,325
--------------
$ 64,212,256
- --------------------------------------------------------------------------------
Agricultural Products - 2.0%
AGCO Corp. 441,400 $ 10,648,775
Case Corp. 230,000 11,701,250
--------------
$ 22,350,025
- --------------------------------------------------------------------------------
Apparel and Textiles - 0.7%
Nike, Inc., "B" 98,800 $ 8,027,500
- --------------------------------------------------------------------------------
Automotive - 0.5%
Goodrich (B.F.) Co. 70,700 $ 5,620,650
- --------------------------------------------------------------------------------
Banks and Credit Companies - 3.3%
Baybanks, Inc. 114,200 $ 12,276,500
Chase Manhattan Corp. 180,100 13,237,350
First Interstate Bancorp 61,200 10,618,200
--------------
$ 36,132,050
- --------------------------------------------------------------------------------
Business Machines - 3.1%
Affiliated Computer Co.* 111,000 $ 4,613,438
Gateway 2000, Inc.* 281,000 7,832,875
International Business Machines Corp. 98,200 10,912,475
Sun Microsystems, Inc.* 245,600 10,745,000
--------------
$ 34,103,788
- --------------------------------------------------------------------------------
Business Services - 3.1%
Alco Standard Corp. 233,300 $ 12,160,763
Ceridian Corp.* 275,400 11,842,200
Interim Services, Inc.* 123,900 4,739,175
Technology Solutions Co.* 196,300 5,324,638
--------------
$ 34,066,776
- --------------------------------------------------------------------------------
Cellular Telephones - 0.4%
Telephone & Data Systems, Inc. 98,500 $ 4,555,625
- --------------------------------------------------------------------------------
Chemicals - 2.0%
Grace (W.R.) & Co. 147,200 $ 11,518,400
Hanna (M.A.) Co. 104,450 3,629,638
Praxair, Inc. 98,400 3,917,401
Uniroyal Chemical Corp.* 327,100 3,148,338
--------------
$ 22,213,777
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.9%
Electronic Arts, Inc.* 283,000 $ 7,499,500
Microsoft Corp.* 135,000 13,921,875
--------------
$ 21,421,375
- --------------------------------------------------------------------------------
5
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Computer Software - Systems - 6.5%
Adobe Systems, Inc. 206,700 $ 6,666,075
BMC Software, Inc.* 148,400 8,124,900
Cadence Design Systems, Inc.* 349,450 15,419,481
Computer Associates International, Inc. 104,900 7,513,463
Compuware Corp.* 222,400 5,115,200
Oracle Systems Corp.* 393,950 18,564,894
Sybase, Inc.* 170,100 3,954,825
Synopsys, Inc.* 178,900 5,724,800
--------------
$ 71,083,638
- --------------------------------------------------------------------------------
Consumer Goods and Services - 8.5%
Colgate-Palmolive Co. 215,700 $ 16,797,638
Duracell International, Inc. 219,100 10,872,838
Gillette Co. 238,100 12,321,675
Philip Morris Co., Inc. 209,400 18,374,850
Procter & Gamble Co. 180,900 15,331,275
Service Corp. International 185,200 9,028,500
Tyco International Ltd. 319,300 11,414,975
--------------
$ 94,141,751
- --------------------------------------------------------------------------------
Electronics - 1.7%
Analog Devices, Inc.* 170,500 $ 4,774,000
ESS Technology, Inc.* 9,600 180,000
LSI Logic Corp.* 87,800 2,348,650
Xilinx, Inc.* 366,100 11,623,675
--------------
$ 18,926,325
- --------------------------------------------------------------------------------
Entertainment - 3.5%
Harrah's Entertainment, Inc.* 325,000 $ 9,546,875
Heritage Media Corp.* 186,900 6,705,038
Infinity Broadcasting Corp., "A"* 84,700 3,673,863
Showboat, Inc. 292,500 7,166,250
Viacom, Inc., "B"* 281,500 11,858,188
--------------
$ 38,950,214
- --------------------------------------------------------------------------------
Financial Institutions - 2.2%
Advanta Corp., "B" 198,700 $ 9,438,250
Federal Home Loan Mortgage Corp. 70,800 6,035,700
Integra Financial Corp. 123,800 8,681,475
--------------
$ 24,155,425
- --------------------------------------------------------------------------------
Food and Beverage Products - 3.5%
General Mills, Inc. 167,300 $ 9,766,138
Nabisco Holdings Corp., "A" 347,400 11,377,350
Ralston- Ralston Purina Group 165,700 11,081,188
Universal Foods Corp. 155,800 5,939,875
--------------
$ 38,164,551
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.8%
Fort Howard Corp.* 137,800 $ 3,100,500
Kimberly Clark Corp. 225,500 16,799,750
--------------
$ 19,900,250
- --------------------------------------------------------------------------------
6
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Insurance - 6.5%
Amerin Corp. 169,200 $ 4,610,700
CIGNA Corp. 113,300 12,944,525
Chartwell RE Corp. 132,200 3,007,550
Equitable of Iowa Cos 257,900 9,219,925
GCR Holdings Ltd. 62,300 1,557,500
IPC Holdings Ltd. 57,000 1,189,875
LaSalle Re Holdings Ltd. 155,800 3,349,700
MBIA, Inc. 138,100 10,357,500
Penncorp Financial Group, Inc. 559,700 17,630,550
Prudential Reinsurance Holdings, Inc. 316,900 7,486,763
--------------
$ 71,354,588
- --------------------------------------------------------------------------------
Machinery - 0.4%
York International Corp. 99,300 $ 4,865,700
- --------------------------------------------------------------------------------
Medical and Health Products - 4.3%
Medisense, Inc.* 360,700 $ 16,073,694
Neuromedical Systems, Inc.* 337,100 7,331,925
Pfizer, Inc. 105,900 7,095,300
Uromed Corp.* 1,195,200 13,712,500
Zoll Medical Corp.* 277,900 3,265,325
--------------
$ 47,478,744
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 4.9%
Amisys Managed Care Systems* 333,500 $ 6,169,750
Community Health Systems* 179,300 7,351,300
Living Centers of America* 129,100 4,808,975
Mariner Health Group, Inc.* 123,400 2,036,100
Pacificare Health Systems, Inc., "A"* 17,000 1,394,000
Pacificare Health Systems, Inc., "B"* 104,100 8,874,525
St. Jude Medical, Inc.* 237,050 8,844,928
United Healthcare Corp. 236,800 14,563,200
--------------
$ 54,042,778
- --------------------------------------------------------------------------------
Oils - 3.7%
Belco Oil & Gas Corp.* 95,600 $ 2,152,513
Mobil Corp. 129,300 14,982,638
Newfield Exploration Co.* 147,300 4,492,650
Seacor Holdings, Inc.* 222,600 8,208,375
USX-Marathon Group 562,100 10,820,425
--------------
$ 40,656,601
- --------------------------------------------------------------------------------
Railroads - 2.8%
Burlington Northern Santa Fe 125,100 $ 10,273,838
CSX Corp. 226,800 10,347,750
Wisconsin Central Transportation Corp.* 157,800 10,493,700
--------------
$ 31,115,288
- --------------------------------------------------------------------------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Restaurants and Lodging - 3.3%
Aztar Corp.* 738,800 $ 6,279,800
HFS, Inc.* 190,800 9,277,650
Host Marriott Corp.* 637,800 8,617,356
Mandarin Oriental Hotel 3,000 3,780
Promus Hotel Corp.* 181,250 4,712,500
Sonic Corp.* 366,050 7,504,025
--------------
$ 36,395,111
- --------------------------------------------------------------------------------
Special Products and Services - 2.4%
Intertape Polymer Group, Inc. 280,700 $ 10,842,406
Sphere Drake Holdings Ltd. 303,200 3,069,900
Stanley Works 220,400 12,122,000
--------------
$ 26,034,306
- --------------------------------------------------------------------------------
Stores - 3.9%
Gymboree Corp.* 355,800 $ 9,295,275
Hollywood Entertainment Corp.* 393,500 5,213,875
Home Depot, Inc. 139,300 6,668,988
Lowe's Cos., Inc. 161,200 5,762,900
Micro Warehouse, Inc.* 255,200 10,590,800
Staples, Inc.* 266,850 5,437,069
--------------
$ 42,968,907
- --------------------------------------------------------------------------------
Supermarkets - 0.4%
Safeway, Inc.* 160,800 $ 4,582,800
- --------------------------------------------------------------------------------
Telecommunications - 2.0%
Cabletron Systems, Inc.* 161,200 $ 10,679,500
Cisco Systems, Inc.* 249,100 11,552,013
--------------
$ 22,231,513
- --------------------------------------------------------------------------------
Utilities - Gas - 1.8%
Coastal Corp. 271,200 $ 10,712,400
Enron Corp. 241,200 8,894,250
--------------
$ 19,606,650
- --------------------------------------------------------------------------------
Total U.S. Common Stocks $ 959,358,962
- --------------------------------------------------------------------------------
Foreign Stocks - 9.5%
Denmark - 0.3%
ISS International Service System
(Commercial Services) 74,400 $ 2,076,409
Tele Danmark, ADR (Utilities - Telephone) 55,700 1,441,238
--------------
$ 3,517,647
- --------------------------------------------------------------------------------
Finland - 0.5%
Huhtamaki Free Shares, "I" (Food Processing) 172,500 $ 5,519,225
- --------------------------------------------------------------------------------
France - 1.1%
TV Francaise (Broadcasting) 56,724 $ 5,807,721
Union des Assurances Federal (Insurance) 45,800 5,772,801
--------------
$ 11,580,522
- --------------------------------------------------------------------------------
Hong Kong - 1.5%
Giordano Holdings Ltd. (Retail - Apparel) 6,684,000 $ 6,913,261
Wharf Holdings (Diversified Holdings) 2,565,000 9,683,901
--------------
$ 16,597,162
- --------------------------------------------------------------------------------
8
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
Italy - 0.6%
Telecom Italia Mobile SpA
(Telecommunications) 6,484,400 $ 7,154,887
- --------------------------------------------------------------------------------
Malaysia - 1.0%
New Straits Times Press Holdings Ltd.
(Publishing) 2,181,000 $ 11,206,632
- --------------------------------------------------------------------------------
Singapore - 0.8%
Singapore Press Holdings Ltd.
(Publishing) 436,000 $ 8,700,162
- --------------------------------------------------------------------------------
Sweden - 3.2%
Astra AB, Free Shares, "B"
(Medical and Health Products) 342,060 $ 15,774,336
Ericsson AB, Free Shares, "B"
(Telecommunications Equipment) 245,900 5,420,988
Nobelpharma AB (Medical Supplies) 227,500 3,582,397
Volvo Aktiebolag, Free Shares, "B"
(Automotive) 458,300 10,687,693
--------------
$ 35,465,414
- --------------------------------------------------------------------------------
United Kingdom - 0.5%
Storehouse PLC (Retail Department Stores) 1,032,900 $ 5,410,537
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 105,152,188
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $872,909,535) $1,064,511,150
- --------------------------------------------------------------------------------
Preferred Stock - 0.1%
================================================================================
Cellular Telephones - 0.1%
Cellular Communications, Inc., Cv
(Identified Cost, $746,687) 26,854 $ 1,372,911
- --------------------------------------------------------------------------------
Short-Term Obligations - 1.9%
================================================================================
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 4/02/96 $ 6,330 $ 6,327,220
Federal National Mortgage Assn., due 4/08/96 7,250 7,240,273
Ford Motor Credit Corp., due 4/01/96 3,750 3,748,854
GTE North, due 4/03/96 3,200 3,198,090
- --------------------------------------------------------------------------------
Total Short Term Obligations,
at Amortized Cost and Value $ 20,514,437
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $894,170,659) $1,086,398,498
Other Assets, Less Liabilities - 1.6% 17,310,061
================================================================================
Net Assets - 100.0% $1,103,708,559
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
9
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
March 31, 1996
Assets:
Investments, at value (identified cost, $894,170,659) $1,086,398,498
Cash 1,052
Receivable for investments sold 20,638,465
Receivable for Fund shares sold 13,516,194
Interest and dividends receivable 844,954
Other assets 5,160
--------------
Total assets $1,121,404,323
--------------
Liabilities:
Payable for investments purchased $ 16,009,120
Payable for Fund shares reacquired 1,320,908
Payable to affiliates -
Management fee 25,606
Shareholder servicing agent fee 15,020
Distribution fee 288,956
Accrued expenses and other liabilities 36,154
--------------
Total liabilities $ 17,695,764
--------------
Net assets $1,103,708,559
--------------
Net assets consist of:
Paid-in capital $ 864,677,797
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 192,229,313
Accumulated undistributed net realized gain on
investments and foreign currency transactions 47,020,015
Accumulated distributions in excess of
net investment income (218,566)
--------------
Total $1,103,708,559
==============
Shares of beneficial interest outstanding 66,265,373
==============
Class A shares:
Net asset value and redemption price per share
(net assets of $688,150,273 / 41,088,307 shares of
beneficial interest outstanding) $16.75
======
Offering price per share (100/94.25) $17.77
======
Class B shares:
Net asset value and offering price per share
(net assets of $355,520,784 / 21,543,211 shares of
beneficial interest outstanding) $16.50
======
Class C shares:
Net asset value, offering price, and redemption price
per share (net assets of $60,037,502 / 3,633,855
shares of beneficial interest outstanding) $16.52
======
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
10
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
================================================================================
Six Months Ended March 31, 1996
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 4,086,630
Interest 1,081,802
Foreign taxes withheld (33,740)
------------
Total investment income $ 5,134,692
------------
Expenses -
Management fee $ 1,570,807
Trustees' compensation 21,741
Shareholder servicing agent fee (Class A) 424,340
Shareholder servicing agent fee (Class B) 272,626
Shareholder servicing agent fee (Class C) 28,849
Distribution and service fee (Class A) 827,868
Distribution and service fee (Class B) 1,239,690
Distribution and service fee (Class C) 193,148
Custodian fee 112,554
Printing 84,027
Postage 17,369
Auditing fees 6,050
Miscellaneous 238,586
------------
Total expenses $ 5,037,655
Fees paid indirectly (17,154)
------------
Net expenses $ 5,020,501
------------
Net investment income $ 114,191
------------
Realized and unrealized gain on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 49,107,561
Foreign currency transactions (52,752)
------------
Net realized gain on investments $ 49,054,809
------------
Change in unrealized appreciation -
Investments $ 66,498,376
Translation of assets and liabilities in
foreign currencies 683
------------
Net unrealized gain on investments $ 66,499,059
------------
Net realized and unrealized gain on
investments and foreign currency $115,553,868
------------
Increase in net assets from operations $115,668,059
------------
See notes to financial statements
11
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
======================================================================================================
Six Months Ended
March 31, 1996 Year Ended
(Unaudited) September 30, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 114,191 $ 2,005,330
Net realized gain on investments and
foreign currency transactions 49,054,809 47,454,687
Net unrealized gain on investments and
foreign currency 66,499,059 68,894,341
--------------- ---------------
Increase in net assets from operations $ 115,668,059 $ 118,354,358
--------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,527,183) $ (481,316)
From net investment income (Class B) (14,893)
From net investment income (Class C) (5,537)
In excess of net investment income (Class A) (218,566)
From net realized gain on investments and foreign
currency transactions (Class A) (33,108,971) (820,736)
From net realized gain on investments and foreign
currency transactions (Class B) (13,801,736) (118,230)
From net realized gain on investments and foreign
currency transactions (Class C) (1,987,092) (16,120)
--------------- ---------------
Total distributions declared to shareholders $ (50,649,085) $ (1,451,295)
--------------- ---------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 435,670,203 $ 353,872,982
Net asset value of shares issued to shareholders
in reinvestment of distributions 1,312,062 1,571,633
Cost of shares reacquired (109,930,614) (109,372,045)
--------------- ---------------
Increase in net assets from
Fund share transactions $ 327,051,651 $ 246,072,570
--------------- ---------------
Total increase in net assets $ 392,070,625 $ 362,975,633
Net assets:
At beginning of period 711,637,934 348,662,301
--------------- ---------------
At end of period (including accumulated
undistributed (distributions in excess of)
net investment income of $(218,566) and
$1,418,529, respectively) $ 1,103,708,559 $ 711,637,934
--------------- ---------------
</TABLE>
See notes to financial statements
12
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
====================================================================================================================
Six Months
Ended
March 31, Year Ended September 30,
1996 --------------------------------------------------------
(Unaudited) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 15.61 $ 12.59 $ 14.47 $ 12.18 $ 11.84 $ 9.62
-------- -------- -------- -------- -------- --------
Income from investment operations## -
Net investment income [ss] $ 0.02 $ 0.08 $ 0.02 $ 0.11 $ 0.07 $ 0.27
Net realized and unrealized gain
on investments 2.14 2.99 1.01 3.15 1.27 2.21
-------- -------- -------- -------- -------- --------
Total from investment operations $ 2.16 $ 3.07 $ 1.03 $ 3.26 $ 1.34 $ 2.48
-------- -------- -------- -------- -------- --------
Less distributions declared
to shareholders -
From net investment income $ (0.04) $ (0.02) $ (0.03) $ (0.07) $ -- $ (0.26)
In excess of net investment income (0.01) -- (0.01) -- -- --
From net realized gain on investments (0.97) (0.03) (2.87) (0.90) (1.00) --
-------- -------- -------- -------- -------- --------
Total distributions declared
to shareholders $ (1.02) $ (0.05) $ (2.91) $ (0.97) $ (1.00) $ (0.26)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 16.75 $ 15.61 $ 12.59 $ 14.47 $ 12.18 $ 11.84
-------- -------- -------- -------- -------- --------
Total return+++ 14.39%++ 24.49% 7.72% 28.87% 11.79% 25.87%
Ratios (to average net assets)/Supplemental data [ss]:
Expenses### 0.91%+ 0.95% 0.91% 0.90% 0.84% 0.95%
Net investment income 0.28%+ 0.58% 0.14% 0.36% 0.59% 2.48%
Portfolio turnover 50% 94% 79% 93% 74% 177%
Average commission rate# $ 0.0347 -- -- -- -- --
Net assets at end of period (000 omitted) $688,150 $507,784 $318,170 $294,019 $240,366 $231,316
<FN>
+ Annualized.
++ Not annualized.
# Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
## Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
+++ 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.
[ss] The distributor did not impose a portion of its distribution fee for certain of the periods indicated. If this fee had been
incurred by the Fund, the net investment income per share and ratios would have been:
Net investment income -- $0.07 $0.01 -- -- --
Ratios (to average net assets):
Expenses -- 1.05% 1.01% -- -- --
Net investment income -- 0.48% 0.04% -- -- --
</FN>
</TABLE>
See notes to financial statements
13
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Year Ended September 30,
--------------------------------------------------------------------
1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 10.36
--------- --------- --------- --------- ---------
Income from investment operations -
Net investment income $ 0.36 $ 0.39 $ 0.23 $ 0.19 $ 0.25
Net realized and unrealized gain
(loss) on investments (1.52) 2.30 (2.19) 4.43 2.50
--------- --------- --------- --------- ---------
Total from investment operations $ (1.16) $ 2.69 $ (1.96) $ 4.62 $ 2.75
--------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ (0.36) $ (0.39) $ (0.24) $ (0.19) $ (0.24)
From net realized gain on investments (0.35) (1.01) (0.14) (2.31) (2.45)
--------- --------- --------- --------- ---------
Total distributions declared
to shareholders $ (0.71) $ (1.40) $ (0.38) $ (2.50) $ (2.69)
--------- --------- --------- --------- ---------
Net asset value - end of period $ 9.62 $ 11.49 $ 10.20 $ 12.54 $ 10.42
--------- --------- --------- --------- ---------
Total return+++ (12.73)% 26.91% (15.60)% 44.80% 26.65%
Ratios (to average net assets)/Supplemental data:
Expenses 0.83% 0.88% 0.86% 0.73% 0.77%
Net investment income 3.21% 3.48% 2.36% 1.51% 1.88%
Portfolio turnover 79% 99% 116% 101% 102%
Net assets at end of period (000 omitted) $202,377 $251,857 $239,616 $321,050 $234,804
<FN>
+++ Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to October
1989). If the charge had been included, the results would have been lower.
</FN>
</TABLE>
See notes to financial statements
14
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Six Months Six Months
Ended Year Ended Ended Year Ended
March 31, September 30, March 31, September 30,
1996 --------------------------------- 1996 -------------------------
(Unaudited) 1995 1994 1993* (Unaudited) 1995 1994**
Class B Class C
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning
of period $ 15.40 $ 12.50 $ 14.47 $ 13.95 $ 15.42 $ 12.51 $ 13.18
------- ------- ------- ------- ------- ------- -------
Income from investment
operations## -
Net investment loss $ (0.04) $ (0.03) $(0.08) $ (0.04) $ (0.04) $ (0.02) $ (0.04)
Net realized and unrealized
gain on investments 2.11 2.96 1.00 0.56 2.11 2.96 0.62
------- ------- ------- ------- ------- ------- -------
Total from investment
operations $ 2.07 $ 2.93 $ 0.92 $ 0.52 $ 2.07 $ 2.94 $ 0.58
------- ------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders -
From net investment
income $ -- $ -- $ (0.02) $ -- $ -- $ -- $ --
From net realized gain
on investments (0.97) (0.03) (2.87) -- (0.97) (0.03) (1.25)
------- ------- ------- ------- ------- ------- -------
Total distributions
declared to
shareholders $ (0.97) $ (0.03) $ (2.89) $ -- $ (0.97) $ (0.03) $ (1.25)
------- ------- ------- ------- ------- ------- -------
Net asset value -
end of period $ 16.50 $ 15.40 $ 12.50 $ 14.47 $ 16.52 $ 15.42 $ 12.51
------- ------- ------- ------- ------- ------- -------
Total return 13.93%++ 23.55% 6.91% 3.73% 13.95% 23.58% 4.43%
Ratios (to average net assets)/Supplemental data:
Expenses### 1.71%+ 1.78% 1.82% 2.33%+ 1.65%+ 1.71% 1.74%+
Net investment loss (0.50)%+ (0.21)% (0.65)% (0.89)%+ (0.43)%+ (0.15)% (0.54)%+
Portfolio turnover 50% 94% 79% 93% 50% 94% 79%
Average commission rate# $0.0347 -- -- -- $0.0347 -- --
Net assets at end of period
(000 omitted) $355,521 $178,117 $ 25,672 $ 447 $ 60,038 $ 25,737 $ 4,821
<FN>
* For the period from the commencement of offering of Class B shares, September 7, 1993 to For the period from the commencement
of offering of Class B shares, September 7, 1993 to September 30, 1993.
** For the period from the commencement of offering of Class C shares, January 3, 1994 to September 30, 1994.
+ Annualized.
++ Not annualized.
# Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
## Per share data for the periods subsequent to September 30, 1993 is based on average shares outstanding.
### For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
</FN>
</TABLE>
See notes to financial statements
15
<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
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 these estimates.
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. Short-term obligations, which
mature in 60 days or less, are valued at amortized cost, which approximates
market value. Securities for which there are no such quotations or valuations
are valued 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 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.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
Dividend 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.
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
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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.
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 that the unrecoverable taxes are recorded as a reduction of
investment income.
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 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. All
shareholders bear the common expenses of the Fund pro rata based on the average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.31% of average daily net assets and 4.18% of investment income.
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 of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $7,371 for the six months
ended March 31, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$453,899 as its portion of the sales charge on sales of Class A shares of the
Fund.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
The Trustees have adopted separate distribution plans for Class A, Class B and
Class C shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum (reduced to 0.15% per annum for shares purchased prior to March
1, 1991) of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer, a distribution fee to MFD of
up to 0.10% per annum of the Fund's average daily net assets attributable to
Class A shares, commissions to dealers and payments to MFD wholesalers for sales
at or above a certain dollar level, and other such distribution-related expenses
that are approved by the Fund. MFD retains the service fee for accounts not
attributable to a securities dealer which amounted to $114,892 for the six
months ended March 31, 1996. Fees incurred under the distribution plan during
the six months ended March 31, 1996 were 0.28% of average daily net assets
attributable to Class A shares on an annualized basis.
The Class B and Class C distribution plans provide that the Fund will pay MFD a
monthly distribution fee of 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 an additional consideration for services rendered by the dealer with respect
to Class B and Class C shares. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $7,941 and $2,059 for
Class B and Class C shares, respectively, for the six months ended March 31,
1996. Fees incurred under the distribution plans during the six months ended
March 31, 1996 were 1.00% of average daily net assets attributable to Class B
and Class C shares, respectively, on an annualized basis.
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 12 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, 1996 were
$1,128 and $135,352 for Class A and Class B 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 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.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$634,462,751 and $372,470,303, 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 $ 894,170,659
=============
Gross unrealized appreciation $ 204,468,268
Gross unrealized depreciation (12,240,429)
-------------
Net unrealized appreciation $ 192,227,839
=============
(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, 1996 September 30, 1995
--------------------------- ----------------------------
Shares Amount Shares Amount
=================================================================================================
<S> <C> <C> <C> <C>
Shares sold 13,407,543 $ 215,025,636 12,798,218 $ 172,943,634
Shares issued to shareholders in
reinvestment of distributions 85,278 1,323,009 119,182 1,423,980
Shares reacquired (4,939,103) (79,223,552) (5,659,542) (74,912,826)
----------- ------------- ----------- -------------
-------------
Net increase 8,553,718 $ 137,125,093 7,257,858 $ 99,454,788
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Six Months Ended Year Ended
March 31, 1996 September 30, 1995
--------------------------- ----------------------------
Shares Amount Shares Amount
=================================================================================================
<S> <C> <C> <C> <C>
Shares sold 11,593,394 $ 184,315,392 11,678,569 $ 158,403,133
Shares issued to shareholders in
reinvestment of distributions -- -- 11,368 135,681
Shares reacquired (1,615,578) (25,611,002) (2,178,275) (29,569,820)
----------- ------------- ----------- -------------
Net increase 9,977,816 $ 158,704,390 9,511,662 $ 128,968,994
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Six Months Ended Year Ended
March 31, 1996 September 30, 1995
--------------------------- ----------------------------
Shares Amount Shares Amount
=================================================================================================
<S> <C> <C> <C> <C>
Shares sold 2,286,002 $ 36,329,175 1,642,158 $ 22,526,215
Shares issued to shareholders in
reinvestment of distributions -- -- 1,007 11,972
Shares reacquired (321,417) (5,107,007) (359,369) (4,889,399)
----------- ------------- ----------- -------------
Net increase 1,964,585 $ 31,222,168 1,283,796 $ 17,648,788
=========== ============= =========== =============
</TABLE>
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by 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, 1996 was $5,441.
---------------------------------------------------------------
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.
20
<PAGE>
THE MFS FAMILY OF FUNDS [Registration Mark]
America's Oldest Mutual Fund Group
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
anytime). This material should be read carefully before investing or sending
money.
Stock
================================================================================
Massachusetts Investors Trust
- --------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Capital Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Emerging Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Gold & Natural Resources Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Growth Opportunities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Managed Sectors Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] OTC Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Research Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Value Fund
- --------------------------------------------------------------------------------
Stock and Bond
================================================================================
MFS [Registration Mark] Total Return Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Utilities Fund
- --------------------------------------------------------------------------------
Bond
================================================================================
MFS [Registration Mark] Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Mortgage Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Securities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] High Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Intermediate Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Strategic Income Fund
- --------------------------------------------------------------------------------
Limited Maturity Bond
================================================================================
MFS [Registration Mark] Government Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Limited Maturity Fund
- --------------------------------------------------------------------------------
World
================================================================================
MFS [Registration Mark]/Foreign & Colonial Emerging Markets Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth and Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Asset Allocation Fund [Service Mark]
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Governments Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Total Return Fund
- --------------------------------------------------------------------------------
National Tax-Free Bond
================================================================================
MFS [Registration Mark] Municipal Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal High Income Fund
(closed to new investors)
- --------------------------------------------------------------------------------
MFS [Registration Mark] 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 [Registration Mark] Cash Reserve Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Money Market Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Money Market Fund
- --------------------------------------------------------------------------------
<PAGE>
MFS [Registration Mark] RESEARCH FUND [Dalbar Logo] U.S. Postage
500 Boylston Street PAID
Boston, MA 02116 Permit #55638
Boston, MA
[MFS Logo]
The First Name in Mutual Funds
MFR-3 5/96 /92.5M 14/214/314
<PAGE>
