<PAGE>
[Logo] MFS(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) MID CAP
GROWTH FUND
SEMIANNUAL REPORT o FEBRUARY 28, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 21
MFS' Year 2000 Readiness Disclosure ....................................... 27
Trustees and Officers ..................................................... 29
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
Since we launched Massachusetts Investors Trust, the nation's first mutual
fund, 75 years ago, MFS has weathered numerous market and economic cycles,
from the occasional recession to long periods of growth and prosperity.
Throughout that time, we have tried to give investors a realistic assessment
of the investment markets and, when necessary, to sound a note of caution --
even when market conditions appear quite favorable.
Although the equity markets have overcome last year's volatility, we still
think stocks are overdue for a correction that will rid them of the excesses
that have developed. Perhaps the most glaring measure of those excesses is the
high level of valuations, that is, the amount equity investors are paying for
each dollar of earnings. By mid-March, the price-to-earnings (P/E) ratio of
the average stock in the Standard & Poor's 500 Composite Index, a popular,
unmanaged index of common stock total return performance, was almost 28%
higher than it was a year ago. While P/E ratios keep going up, earnings have
essentially been flat, and we believe they are likely to stay that way, for a
few months at least. This leaves stock prices vulnerable to negative events
such as a domestic or international crisis, a sudden increase in interest
rates, or a slowing economy, any of which could lead to lower corporate
earnings.
While risks in the overall market have increased, one industry calls for
particular attention. For several months, Internet-related stocks have
exhibited extreme price volatility. The Internet's potential impact on the way
individuals and companies communicate and conduct business is certainly great,
but we feel that most of the recent run-up in the share prices of these
companies is unjustified. Many of them have not yet reported any profits, and
there is no way of knowing which of today's "hot" Internet stocks will be
successful -- or even in existence -- a few years from now. Therefore, we
think the frenzy surrounding even the best-known Internet stocks is purely
speculative.
However, there are some established companies offering Internet-related
products and services that may generate revenue. These include companies that
provide networking equipment, that make servers to store information, and that
help customers make better use of Internet services. Because they already have
profitable businesses as well as the potential to use the Internet to increase
their opportunities to generate revenue, these companies have been the focus
of our research efforts.
Although we think valuations for the overall equity market, and especially for
Internet stocks, are excessive, we see this situation as an opportunity for
our portfolio managers to capitalize on MFS(R) Original Research(SM). This is
a fundamental, company-by-company process that helps us find investments that
we believe are most likely to achieve long-term earnings growth, through both
negative and positive market cycles.
We also rely heavily on our research process when investing in the fixed-
income markets. Last year, turmoil in emerging markets and volatility in the
U.S. stock market helped create a "flight to quality," meaning that investors
moved toward U.S. Treasury securities, which are seen as carrying less risk,
and away from almost everything else. As a result, yields on non-Treasury
securities increased, while yields on Treasuries fell. Some of these yield
spreads, or differentials, have narrowed, but they have not returned to the
levels seen before last year's market turmoil. We think this has created
opportunities for our portfolio managers to find attractive yields in
these markets.
Individual investors, meanwhile, should keep in mind that the tremendous
increases in the broad stock market averages of the past several years
are a historical aberration and do not necessarily indicate future market
performance. If they are not already diversified across a range of
investments, including growth stock funds, value-oriented funds, and fixed-
income funds, investors may want to talk to their financial advisers about
developing well-diversified portfolios with the potential to weather
unexpected changes in the markets. Doing so may help investors more
effectively meet their long-term financial goals. We appreciate your
confidence and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
March 16, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Mark Regan]
Mark Regan
For the six months ended February 28, 1999, Class A shares of the Fund
provided a total return of 38.49%, Class B shares 38.01%, Class C shares
37.85%, and Class I shares 38.55%. These returns, which include the
reinvestment of distributions but exclude the effects of any sales charges,
compare to a 33.27% return for the Russell Mid-Cap Growth Index (the Russell
Index), which measures the performance of the 800 smallest growth companies in
the Russell 1000 Index. The average mid cap growth fund, as measured by Lipper
Analytical Services, Inc., an independent firm that tracks mutual fund
performance, returned 25.17% for the period.
Q. HOW HAS THE OVERALL MARKET ENVIRONMENT IMPACTED THE FUND'S PERFORMANCE OVER
THE PAST SIX MONTHS?
A. The market correction in the early part of the period hurt small- and
mid-cap stocks. However, through MFS(R) Original Research(SM), our process
of analyzing a host of critical factors that affect the performance of
individual stocks, we located what we view as good values and buying
opportunities among mid-cap stocks. Thanks to our research, we continued to
find what we believe are attractive companies that displayed strong growth
prospects and healthy balance sheets. These stocks had been abandoned by
investors avoiding any securities that they considered risky. As the broad
market strengthened in late 1998, investors became more confident in the
earnings potential of mid-cap companies, and many of these stock prices
increased. Additionally, the Federal Reserve Board intervened to reduce
interest rates last fall, which pumped more money into the economy and
boosted growth in most market capitalization bands. Overall, while the stock
market is still heavily driven by a small number of the biggest stocks, we
see signs of improvement in mid-cap stocks and are optimistic about their
long-term growth prospects.
Q. WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO OVER THE PAST SIX MONTHS?
A. We sold out of Ascend at a high price just prior to its acquisition by
Lucent, which resulted in a lower weighting in the technology sector. Ascend
had been one of our largest holdings, accounting for about 10% of the
portfolio's assets, and had been an excellent performer for the Fund. The
company was a leader in data communications and was able to exploit
increased demand for its products, which provide key building blocks for the
Internet. By selling Ascend as its price was climbing, we secured a nice
boost for the portfolio. We increased our business services sector holdings
during the period because many of these companies' business models are based
on generating recurring revenues from long-term contracts. As companies
outsource functions like data processing and payroll services, business
services companies that have been able to maintain fairly steady revenue
streams. We've also boosted our health care holdings by adding companies
such as STERIS and IDEXX Labs. STERIS is the market-share leader in the
medical instrument sterilization industry. The company is benefiting from
the rise in less invasive surgeries, which require large amounts of
disposable supplies and substantial on-site sterilization services. IDEXX
Labs, a veterinary instrument company, is attractive because it is also
focusing on disposable products rather than on high-cost instrument and
equipment sales. We feel companies that sell disposable supplies, as opposed
to capital equipment, can generate better recurring revenue streams.
Q. CAN YOU DISCUSS A FEW STOCKS THAT HELPED THE FUND'S PERFORMANCE?
A. Synopsys, a market leader in electronic design automation software for
semiconductor manufacturers, helped the Fund's performance. The
semiconductor market is showing renewed strength, which has boosted demand
for Synopsys' product line, resulting in increased earnings for the company.
SportsLine USA has performed solidly over the past few months. The company
is one of two main suppliers, along with ESPN, of sports news and
information to the Internet. SportsLine provides high-quality content from
its partner CBS and has shown great growth in the number of people viewing
its Web site. We think it is well positioned to sign up new Internet portal
partners to compete with ESPN in the growing online sports information
market. Finally, BJ's Wholesale Club has been a success story for the
portfolio. BJ's has shown consistent earnings growth and is driven by a
strong management team. We feel the stock is attractively valued in
comparison to other wholesale clubs and retailers, mainly because the
company has a lower profile than the biggest retail store chains. We think
it has gone unnoticed by many investors. We like the company, however, and
it has rewarded our interest by routinely beating its earnings estimates.
Q. WHAT ARE YOU SEEING IN HEALTH CARE THESE DAYS?
A. Cytyc has developed an alternative pap smear process that promises more
accurate results at a lower cost than the old method. The company has gained
FDA approval, and the medical and insurance communities are learning the
benefits of the new process. STERIS is putting massive sales forces into the
top five national markets, which should lock out competitors and raise the
possibility of their process becoming standard. We think STERIS has minimal
competition and a bright future.
Q. HOW ABOUT A COUPLE OF STOCKS THAT DISAPPOINTED RECENTLY?
A. Concentra Managed Care had a rough six months. The stock dropped sharply as
its management sold off shares to try to dilute the company's value and
privatize it at a discounted price. While the stock's slide hurt the Fund
during the period, we took the opportunity to accumulate shares at prices we
feel will be below management's purchase price. When the company ultimately
goes private, we may see a gain from those purchases because the buyer may
pay a higher share price than we did. Our deep-water oil drilling stocks
also disappointed during the period. Oil prices were driven lower by a
supply and demand imbalance created by weak demand for oil from emerging
market economies and a resulting oversupply. As prices decline, oil
companies produce less oil to balance supply with demand. This hurt the
earnings of our holdings in deep-water drilling companies such as Transocean
and Diamond Offshore. We'll stay with them because we don't believe that oil
prices can remain at their current lows. When oil prices rebound, these
share prices may rise sharply again.
/s/ Mark Regan
Mark Regan
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
MARK REGAN IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND THE
PORTFOLIO MANAGER OF MFS(R) MID CAP GROWTH FUND AND A PORTFOLIO MANAGER OF
MFS(R) INSTITUTIONAL MID CAP GROWTH FUND.
HE JOINED MFS IN 1989 AS A RESEARCH ANALYST. HE WAS NAMED INVESTMENT OFFICER
IN 1990, ASSISTANT VICE PRESIDENT IN 1991, VICE PRESIDENT IN 1992, PORTFOLIO
MANAGER IN 1993, AND SENIOR VICE PRESIDENT IN 1999. MR. REGAN IS A GRADUATE OF
CORNELL UNIVERSITY AND THE SLOAN SCHOOL OF MANAGEMENT OF THE MASSACHUSETTS
INSTITUTE OF TECHNOLOGY.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R) ORIGINAL RESEARCH
(SM), A COMPANY-ORIENTED, BOTTOM UP PROCESS OF SELECTING SECURITIES.
- --------------------------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS LONG-TERM GROWTH OF
COMMENCEMENT OF
INVESTMENT OPERATIONS: DECEMBER 1, 1993
CLASS INCEPTION: CLASS A DECEMBER 1, 1993
CLASS B DECEMBER 1, 1993
CLASS C AUGUST 1, 1994
CLASS I JANUARY 2, 1997
SIZE: $141.9 MILLION NET ASSETS AS OF FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH FEBRUARY 28, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +38.49% +3.26% +42.72% +83.51% +106.77%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +3.26% +12.59% +12.91% + 14.85%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- -2.68% +10.39% +11.58% + 13.56%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +38.01% +2.53% +39.52% +76.39% + 97.68%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +2.53% +11.74% +12.02% + 13.87%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- -1.07% +10.94% +11.77% + 13.76%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +37.85% +2.47% +39.55% +76.55% + 97.77%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +2.47% +11.75% +12.04% + 13.88%
- --------------------------------------------------------------------------------------------------------------
SEC Results -- +1.57% +11.75% +12.04% + 13.88%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +38.55% +3.58% +43.45% +84.41% +107.81%
- --------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +3.58% +12.78% +13.02% + 14.96%
- --------------------------------------------------------------------------------------------------------------
* For the period from the commencement of the Fund's investment operations, December 1, 1993, through February 28, 1999.
</TABLE>
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class C shares
("C") have no initial sales charge but, like B, have higher annual fees and
expenses than A. C SEC results reflect the 1% CDSC applicable to shares
redeemed within 12 months. Class I shares ("I") have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
C results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of B for periods prior to the inception of C. Operating expenses of C
are not significantly different than those of B. The B performance included in
the C SEC performance has been adjusted to reflect the CDSC generally
applicable to C rather than the CDSC generally applicable to B.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been
higher than A performance. The A performance included in the I performance has
been adjusted to reflect the fact that I have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details.
All results are historical and assume the reinvestment of dividends and
capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF FEBRUARY 28, 1999
FIVE LARGEST STOCK SECTORS
HEALTH CARE 20.1%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 19.2%
TECHNOLOGY 16.3%
LEISURE 14.2%
RETAILING 9.6%
TOP 10 STOCK HOLDINGS
GEMSTAR INTERNATIONAL GROUP 8.7% CONCENTRA MANAGED CARE, INC. 2.7%
Audio/video products company Health care management and services company
SPORTSLINE USA, INC. 7.4% SYNOPSYS, INC. 2.4%
Internet sports media company Integrated circuits design software provider
BJ'S WHOLESALE CLUB, INC. 3.5% COOPER CAMERON CORP. 2.2%
Discount retail store Oil and gas production equipment manufacturer
CYTYC CORP. 3.4% STERIS CORP. 2.1%
Medical testing company Medical sterilization and instrument company
BMC SOFTWARE, INC. 2.8% COMPUSA, INC. 2.1%
Computer software company Computer products retailer
The portfolio is actively managed, and holdings are subject to change.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 28, 1999
Stocks - 98.8%
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ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
U.S. Stocks - 97.5%
Automotive - 0.9%
Federal-Mogul Corp. 25,300 $ 1,244,444
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Banks and Credit Companies - 1.0%
Compass Bancshares, Inc. 14,500 $ 531,063
First Security Corp. 32,600 605,137
Regions Financial Corp. 9,100 345,800
------------
$ 1,482,000
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Biotechnology - 2.1%
IDEXX Laboratories, Inc.* 133,700 $ 2,991,538
- -------------------------------------------------------------------------------
Business Machines - 2.6%
Affiliated Computer Services, Inc., "A"* 38,900 $ 1,799,125
Kulicke & Soffa Industries, Inc.* 74,200 1,882,825
------------
$ 3,681,950
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Business Services - 8.6%
BISYS Group, Inc.* 14,000 $ 747,250
Computer Horizons Corp.* 18,400 274,850
DST Systems, Inc.* 18,800 1,019,900
Fiserv, Inc.* 39,200 1,842,400
Learning Tree International, Inc.* 104,100 871,837
Paymentech, Inc.* 60,400 1,155,150
Policy Management Systems Corp.* 50,800 1,857,375
Preview Travel, Inc.* 34,200 696,825
Quintiles Transnational Corp.* 49,600 2,139,000
Technology Solutions Co.* 201,125 1,646,711
------------
$ 12,251,298
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Chemicals - 0.6%
Cambrex Corp. 37,700 $ 902,444
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Computer Hardware - Systems - 0.5%
Rambus, Inc.* 9,600 $ 697,800
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Computer Software - Personal Computers - 1.2%
Autodesk, Inc. 9,300 $ 373,163
Electronic Arts, Inc.* 9,300 370,838
Intuit, Inc.* 9,400 930,012
------------
$ 1,674,013
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Computer Software - Systems - 12.0%
Aspen Technology, Inc.* 57,400 $ 735,438
BMC Software, Inc.* 97,300 3,977,137
Cadence Design Systems, Inc.* 55,540 1,336,431
Cambridge Technology Partners, Inc.* 64,100 1,610,512
Citrix Systems, Inc.* 25,800 1,989,825
Compuware Corp.* 17,600 984,500
Edify Corp.* 360,200 2,138,687
JDA Software Group, Inc.* 72,400 452,500
Keane, Inc.* 7,400 228,938
Synopsys, Inc.* 75,059 3,471,479
Vantive Corp.* 9,600 110,400
------------
$ 17,035,847
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Consumer Goods and Services - 8.8%
Dial Corp. 29,000 $ 846,437
LoJack Corp.* 102,900 926,100
Sportsline USA, Inc.* 238,080 10,713,600
------------
$ 12,486,137
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Electronics - 3.0%
Cable Design Technologies Corp.* 172,800 $ 2,235,600
SIPEX Corp.* 174,900 2,000,419
------------
$ 4,236,019
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Entertainment - 11.8%
Entercom Communications Corp.* 500 $ 15,687
Gemstar International Group Ltd.* 196,240 12,559,360
Heftel Broadcasting Corp., "A"* 31,700 1,307,625
MediaOne Group, Inc.* 51,100 2,784,950
------------
$ 16,667,622
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Financial Institutions - 2.4%
Edwards (A.G.), Inc. 87,300 $ 2,842,707
Finova Group, Inc. 9,700 492,881
------------
$ 3,335,588
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Food and Beverage Products - 2.1%
Del Monte Foods Co.* 95,100 $ 1,301,681
Keebler Foods Co.* 42,000 1,638,000
------------
$ 2,939,681
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Medical and Health Products - 0.8%
PSS World Medical, Inc.* 102,600 $ 1,167,075
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Medical and Health Technology and Services - 14.6%
Concentra Managed Care, Inc.* 370,255 $ 3,933,959
Cyberonics, Inc.* 23,700 208,856
Cytyc Corp.* 273,200 4,951,750
Health Management Associates, Inc., "A"* 151,100 1,954,856
Lincare Holdings, Inc.* 54,100 1,927,313
Martek Biosciences Corp.* 70,000 446,250
PAREXEL International Corp.* 37,200 774,225
Shared Medical Systems Corp. 17,400 887,400
STERIS Corp.* 93,500 3,073,812
Total Renal Care Holdings, Inc.* 231,643 2,055,832
Ventana Medical Systems, Inc.* 24,200 420,475
------------
$ 20,634,728
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Oil Services - 6.5%
Cooper Cameron Corp.* 134,200 $ 3,103,375
Diamond Offshore Drilling, Inc. 56,200 1,162,638
Global Industries, Inc.* 337,300 1,707,581
Noble Drilling Corp.* 207,800 2,571,525
Transocean Offshore, Inc. 34,800 717,750
------------
$ 9,262,869
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Pharmaceuticals - 1.4%
Cytoclonal Pharmaceutics, Inc.* 18,300 $ 143,541
Sepracor, Inc.* 14,800 1,846,300
------------
$ 1,989,841
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Printing and Publishing - 1.6%
Scholastic Corp.* 47,000 $ 2,314,750
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Special Products and Services - 0.3%
Gartner Group, Inc.* 12,100 $ 271,494
Sylvan Learning Systems, Inc.* 6,200 206,150
------------
$ 477,644
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Stores - 8.1%
BJ's Wholesale Club, Inc.* 115,100 $ 5,014,044
Borders Group, Inc.* 74,600 1,030,412
CompUSA, Inc.* 285,700 2,999,850
Gymboree Corp.* 184,600 1,938,300
Petco Animal Supplies, Inc.* 62,000 499,875
------------
$ 11,482,481
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Supermarkets - 1.6%
Meyer (Fred), Inc.* 35,890 $ 2,305,933
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Telecommunications - 5.0%
Advanced Fibre Communications, Inc.* 94,700 $ 769,438
Aerial Communications, Inc.* 188,700 1,320,900
American Tower Corp., "A"* 51,200 1,372,800
Aspect Telecommunications Corp.* 150,780 1,159,121
Cellular Communications International, Inc.* 6,550 514,584
CIENA Corp.* 30,700 855,762
Lightbridge, Inc.* 59,500 282,625
Qwest Communications International, Inc.* 12,543 770,611
------------
$ 7,045,841
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Total U.S. Stocks $138,307,543
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Foreign Stocks - 1.3%
Bermuda
Global Crossing Ltd. (Telecommunications)* 1,100 $ 64,900
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Canada - 0.4%
Southern Africa Minerals Corp. (Diversified
Minerals)* 794,600 $ 499,914
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United Kingdom - 0.9%
CBT Group PLC, ADR (Computer Software - Personal
Computers)* 82,700 $ 1,318,031
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Total Foreign Stocks $ 1,882,845
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Total Stocks (Identified Cost, $141,456,226) $140,190,388
- -------------------------------------------------------------------------------
Convertible Preferred Stock - 2.4%
- -------------------------------------------------------------------------------
U.S. Stocks - 2.4%
Medical and Health Technology and Services - 2.4%
Concentra Managed Care, Inc., 4.50% 3,440,000 $ 2,713,300
Concentra Managed Care, Inc., 6.00% 771,000 654,386
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Total Convertible Preferred Stock (Identified Cost,
$2,948,370) $ 3,367,686
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Short-Term Obligations - 14.6%
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Navigator Securities Lending Prime Portfolio 0,657,699 $ 20,657,699
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Total Investments (Identified Cost, $165,062,295) $164,215,773
Other Assets, Less Liabilities - (15.8)% (22,355,253)
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Net Assets - 100.0% $141,860,520
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*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------
FEBRUARY 28, 1999
- -------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $165,062,295) $164,215,773
Receivable for Fund shares sold 541,154
Receivable for investments sold 72,140
Interest and dividends receivable 103,544
Other assets 1,585
------------
Total assets $164,934,196
------------
Liabilities:
Payable for Fund shares reacquired $ 286,018
Payable for investments purchased 813,855
Collateral for securities loaned, at value 20,657,699
Payable to affiliates -
Management fee 8,824
Shareholder servicing agent fee 1,324
Distribution and service fee 78,627
Administrative fee 176
Accrued expenses and other liabilities 1,227,153
------------
Total liabilities $ 23,073,676
------------
Net assets $141,860,520
============
Net assets consist of:
Paid-in capital $131,232,860
Unrealized depreciation on investments (846,522)
Accumulated undistributed net realized gain on
investments and foreign currency transactions 12,247,731
Accumulated net investment loss (773,549)
------------
Total $141,860,520
============
Shares of beneficial interest outstanding 15,362,229
==========
Class A shares:
Net asset value per share
(net assets of $55,029,773 / 5,911,511 shares of
beneficial interest outstanding) $9.31
=====
Offering price per share (100 / 94.25 of net asset
value per share) $9.88
=====
Class B shares:
Net asset value and offering price per share
(net assets of $76,868,985 / 8,355,905 shares of
beneficial interest outstanding) $9.20
=====
Class C shares:
Net asset value and offering price per share
(net assets of $8,916,734 / 982,673 shares of
beneficial interest outstanding) $9.07
=====
Class I shares:
Net asset value, offering price, and redemption
price per share (net assets of $1,045,028 / 112,140
shares of beneficial interest outstanding) $9.32
=====
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
Six Months Ended February 28, 1999
- -------------------------------------------------------------------------------
Net investment loss:
Income -
Interest $ 323,478
Dividends 101,028
Income on securities loaned 56,684
-----------
Total investment income $ 481,190
-----------
Expenses -
Management fee $ 512,036
Trustees' compensation 11,954
Shareholder servicing agent fee 76,815
Distribution and service fee (Class A) 64,323
Distribution and service fee (Class B) 380,380
Distribution and service fee (Class C) 39,443
Administrative fee 6,733
Custodian fee 28,085
Printing 31,412
Postage 16,824
Auditing fees 15,823
Legal fees 392
Miscellaneous 62,102
-----------
Total expenses $ 1,246,322
Fees paid indirectly (6,494)
-----------
Net expenses $ 1,239,828
-----------
Net investment loss $ (758,638)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $17,145,936
Foreign currency transactions (63)
-----------
Net realized gain on investments and foreign
currency transactions $17,145,873
-----------
Change in unrealized appreciation on investments $23,271,830
-----------
Net realized and unrealized gain on investments
and foreign currency $40,417,703
-----------
Increase in net assets from operations $39,659,065
===========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (758,638) $ (2,000,225)
Net realized gain on investments and foreign currency
transactions 17,145,873 18,745,576
Net unrealized gain (loss) on investments and foreign
currency translation 23,271,830 (35,717,948)
------------- -------------
Increase (decrease) in net assets from operations $ 39,659,065 $ (18,972,597)
------------- -------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (6,881,999) $ (1,274,408)
From net realized gain on investments and foreign
currency transactions (Class B) (9,892,160) (1,589,641)
From net realized gain on investments and foreign
currency transactions (Class C) (1,090,223) (131,365)
From net realized gain on investments and foreign
currency transactions (Class I) (168,193) (38,088)
------------- -------------
Total distributions declared to shareholders $ (18,032,575) $ (3,033,502)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions $ 21,190,787 $ (1,808,418)
------------- -------------
Total increase (decrease) in net assets $ 42,817,277 $ (23,814,517)
Net assets:
At beginning of period 99,043,243 122,857,760
------------- -------------
At end of period (including accumulated net investment
loss of $773,549 and $14,911, respectively) $ 141,860,520 $ 99,043,243
============= =============
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR ENDED AUGUST 31, ENDED
FEBRUARY 28, --------------------------------------------------------- AUGUST 31,
1999 1998 1997 1996 1995 1994*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
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 $ 7.71 $ 9.42 $ 9.06 $10.08 $ 8.68 $ 7.83
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.03) $(0.11) $(0.09) $(0.10) $(0.03) $(0.05)
Net realized and unrealized
gain (loss) on investments
and foreign currency 2.97 (1.31) 1.77 0.96 1.69 0.90
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.94 $(1.42) $ 1.68 $ 0.86 $ 1.66 $ 0.85
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized
gain on investments and foreign
currency transactions $(1.34) $(0.29) $(1.32) $(1.88) $(0.26) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.31 $ 7.71 $ 9.42 $ 9.06 $10.08 $ 8.68
====== ====== ====== ====== ====== ======
Total return(+) 38.49%++ (15.44)% 20.26% 10.55% 19.77% 10.86%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.37%+ 1.43% 1.41% 1.28% 1.29% 1.50%+
Net investment loss (0.65)%+ (1.07)% (1.09)% (1.08)% (0.40)% (0.87)%+
Portfolio turnover 80% 168% 170% 157% 218% 82%
Net assets at end of period (000
omitted) $55,030 $36,413 $41,737 $35,098 $30,194 $17,776
* For the period from the commencement of the Fund's investment operations, December 1, 1993, through August 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for this expense offset arrangement.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
(S) The investment adviser did not impose a portion of its management fee for the period indicated. If this fee had been incurred
by the Fund, the investment loss per share and the ratios would have been:
Net investment loss $ -- $ -- $ -- $ -- $ -- $(0.08)
Ratios (to average net assets):
Expenses -- -- -- -- -- 2.03%+
Net investment loss -- -- -- -- -- (1.40)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR ENDED AUGUST 31, ENDED
FEBRUARY 28, --------------------------------------------------------- AUGUST 31,
1999 1998 1997 1996 1995 1994*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 7.60 $ 9.27 $ 8.93 $ 9.94 $ 8.59 $ 7.83
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.07) $(0.18) $(0.16) $(0.17) $(0.13) $(0.12)
Net realized and unrealized
gain (loss) on investments
and foreign currency 2.94 (1.28) 1.75 0.95 1.69 0.88
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.87 $(1.46) $ 1.59 $ 0.78 $ 1.56 $ 0.76
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized
gain on investments and foreign
currency transactions $(1.27) $(0.21) $(1.25) $(1.79) $(0.21) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.20 $ 7.60 $ 9.27 $ 8.93 $ 9.94 $ 8.59
====== ====== ====== ====== ====== ======
Total return 38.01%++ (16.05)% 19.36% 9.67% 18.75% 9.71%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 2.12%+ 2.18% 2.20% 2.13% 2.29% 2.57%+
Net investment loss (1.41)%+ (1.82)% (1.87)% (1.81)% (1.44)% (2.02)%+
Portfolio turnover 80% 168% 170% 157% 218% 82%
Net assets at end of period (000
omitted) $76,869 $56,098 $73,940 $67,043 $61,742 $36,849
* For the period from the commencement of the Fund's investment operations, December 1, 1993, through August 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for this expense offset arrangement.
(S) The investment adviser did not impose a portion of its management fee for the period indicated. If this fee had been incurred
by the Fund, the net investment loss per share and the ratios would have been:
Net investment loss $ -- $ -- $ -- $ -- $ -- $(0.15)
Ratios (to average net assets):
Expenses -- -- -- -- -- 3.10%+
Net investment loss -- -- -- -- -- (2.56)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR ENDED AUGUST 31, ENDED
FEBRUARY 28, --------------------------------------------------------- AUGUST 31,
1999 1998 1997 1996 1995 1994*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 7.53 $ 9.19 $ 8.85 $ 9.91 $ 8.61 $ 7.80
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss(S) $(0.06) $(0.18) $(0.16) $(0.17) $(0.14) $(0.04)
Net realized and unrealized
gain (loss) on investments
and foreign currency 2.89 (1.26) 1.74 0.94 1.69 0.85
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.83 $(1.44) $ 1.58 $ 0.77 $ 1.55 $ 0.81
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized
gain on investments and foreign
currency transactions $(1.29) $(0.22) $(1.24) $(1.83) $(0.25) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 9.07 $ 7.53 $ 9.19 $ 8.85 $ 9.91 $ 8.61
====== ====== ====== ====== ====== ======
Total return 37.85%++ (16.00)% 19.44% 9.60% 18.63% 10.38%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 2.12%+ 2.18% 2.16% 2.17% 2.30% 2.50%+
Net investment loss (1.41)%+ (1.82)% (1.79)% (1.90)% (1.55)% (2.22)%+
Portfolio turnover 80% 168% 170% 157% 218% 82%
Net assets at end of period (000
omitted) $8,917 $5,607 $5,796 $6,860 $3,209 $87
* For the period from the inception of Class C, August 1, 1994, through August 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's expenses
are calculated without reduction for this expense offset arrangement.
(S) The investment adviser did not impose a portion of its management fee for the period indicated. If this fee had been incurred
by the Fund, the net investment loss per share and the ratios would have been:
Net investment loss $ -- $ -- $ -- $ -- $ -- $(0.05)
Ratios (to average net assets):
Expenses -- -- -- -- -- 3.03%+
Net investment loss -- -- -- -- -- (2.71)%+
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
FEBRUARY 28, AUGUST 31, AUGUST 31,
1999 1998 1997*
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 7.73 $ 9.44 $ 8.50
------ ------ ------
Income from investment operations# -
Net investment loss $(0.02) $(0.08) $(0.05)
Net realized and unrealized gain (loss) on investments
and foreign currency 2.97 (1.32) 0.99
------ ------ ------
Total from investment operations $ 2.95 $(1.40) $ 0.94
------ ------ ------
Less distributions declared to shareholders from net
realized gain on investments and foreign currency
transactions $(1.36) $(0.31) $ --
------ ------ ------
Net asset value - end of period $ 9.32 $ 7.73 $ 9.44
====== ====== ======
Total return 38.55%++ (15.23)% 11.06%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.12%+ 1.18% 1.03%+
Net investment loss (0.41)%+ (0.82)% (0.74)%+
Portfolio turnover 80% 168% 170%
Net assets at end of period (000 omitted) $1,045 $925 $1,384
* For the period from the inception of Class I, January 2, 1997, through August 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated
without reduction for this expense offset arrangement.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Mid Cap Growth Fund (the Fund) is a diversified series of MFS Series Trust
IV (the Trust). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic conditions.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued at fair value as determined in good
faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
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. State Street Bank and Trust Company ("State Street"), as
agent, loans the securities to certain brokers (the "Borrowers") approved by the
Fund. The loans are collateralized at all times by cash and U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street provides the Fund with indemnification against Borrower
default. The Fund bears the risk of loss with respect to the investment of cash
collateral.
At February 28, 1999, the value of securities loaned was $21,231,719. These
loans were collateralized by cash of $20,657,699 and U.S. Treasury securities of
$1,244,601. Cash collateral is invested in short-term securities, which are
included in the Portfolio of Investments. A portion of the income generated upon
investment of the collateral is remitted to the Borrowers, and the remainder is
allocated between the Fund and State Street in its capacity as lending agent. On
loans collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and State Street. The dividend and
interest income earned on the securities loaned is accounted for in the same
manner as other dividend and interest income.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend payments received in additional securities are
recorded on the ex-dividend date in an amount equal to the value of the security
on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by the Fund. This
amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code, which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.75% of
the Fund's average daily net assets
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $3,905 for the six months
ended February 28, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$18,729 for the six months ended February 28, 1999, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer and a distribution fee to MFD
of up to 0.10% per annum of the Fund's average daily net assets attributable to
Class A shares. Payment of the 0.10% per annum Class A distribution fee will be
implemented on such date as the Trustees of the Fund may determine. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $6,825 the six months ended February 28, 1999. Fees incurred under
the distribution plan during the six months ended February 28, 1999, were 0.25%
of average daily net assets attributable to Class A shares on an annualized
basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $5,087 and $140 for Class B and Class C shares, respectively, for
the six months ended February 28, 1999. Fees incurred under the distribution
plan during the six months ended February 28, 1999, were 1.00% of average daily
net assets attributable to both Class B and Class C shares on an annualized
basis.
Certain Class A and Class C are subject to a contingent deferred sales charge in
the event of a shareholder redemption within 12 months following purchase. A
contingent deferred sales charge is imposed on shareholder redemption's of Class
B shares in the event of a shareholder redemption within six years of purchase.
MFD receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the six months ended February 28, 1999, were $227,
$73,633, and $1,485 for Class A, Class B, and Class C shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$110,185,652 and $105,246,453, 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 $165,062,295
------------
Gross unrealized appreciation $ 22,730,685
Gross unrealized depreciation (23,577,207)
------------
Net unrealized depreciation $ (846,522)
============
(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 FEBRUARY 28, 1999 YEAR ENDED AUGUST 31, 1998
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 6,563,165 $ 61,230,203 3,064,610 $ 31,014,067
Shares issued to shareholders in
reinvestment of distributions 742,158 6,802,247 136,735 1,206,006
Shares reacquired (6,115,473) (57,541,730) (2,908,810) (29,471,262)
---------- ------------ ---------- -------------
Net increase 1,189,850 $ 10,490,720 292,535 $ 2,748,811
========== ============ ========== =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED FEBRUARY 28, 1999 YEAR ENDED AUGUST 31, 1998
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,038,355 $ 28,152,221 3,317,869 $ 33,017,562
Shares issued to shareholders in
reinvestment of distributions 977,808 8,839,388 160,209 1,398,805
Shares reacquired (3,039,333) (28,390,241) (4,071,465) (39,885,321)
---------- ------------ ---------- -------------
Net increase (decrease) 976,830 $ 8,601,368 (593,387) $ (5,468,954)
========== ============ ========== =============
<CAPTION>
Class C Shares
SIX MONTHS ENDED FEBRUARY 28, 1999 YEAR ENDED AUGUST 31, 1998
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 416,053 $ 3,912,017 529,840 $ 5,257,980
Shares issued to shareholders in
reinvestment of distributions 100,761 897,779 13,332 115,323
Shares reacquired (278,795) (2,632,846) (428,913) (4,191,955)
---------- ------------ ---------- -------------
Net increase 238,019 $ 2,176,950 114,259 $ 1,181,438
========== ============ ========== =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED FEBRUARY 28, 1999 YEAR ENDED AUGUST 31, 1998
---------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 6,850 $ 61,883 18,237 $ 183,027
Shares issued to shareholders in
reinvestment of distributions 18,401 168,185 4,318 38,087
Shares reacquired (32,819) (308,319) (49,523) (490,737)
---------- ------------ ---------- -------------
Net decrease (7,568) $ (78,251) (26,968) $ (269,623)
========== ============ ========== =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
the Fund for the six months ended February 28, 1999, was $550.
<PAGE>
MFS(R) MID CAP GROWTH FUND
<TABLE>
<S> <C>
Trustees Secretary
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management Assistant Secretary
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
Custodian
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified services
company) Auditors
Deloitte & Touche LLP
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) Investor Information
For MFS stock and bond market outlooks,
William J. Poorvu - Adjunct Professor, Harvard call toll free: 1-800-637-4458 anytime from
University Graduate School of Business a touch-tone telephone.
Administration
For information on MFS mutual funds, call your
Charles W.Schmidt - Private Investor financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
Arnold D. Scott* - Senior Executive a.m. to 5 p.m. Eastern time (or leave a message
Vice President, Director, and Secretary, anytime).
MFS Investment Management
Investor Service
Jeffrey L. Shames* - Chairman, Chief MFS Service Center, Inc.
Executive Officer, and Director, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Elaine R. Smith - Independent Consultant For general information, call toll free:
1-800-225-2606 any business day from
David B. Stone - Chairman and Director, 8 a.m. to 8 p.m. Eastern time.
North American Management Corp.
(investment advisers) For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from 9
Investment Adviser a.m. to 5 p.m. Eastern time. (To use this service,
Massachusetts Financial Services Company your phone must be equipped with a
500 Boylston Street Telecommunications Device for the Deaf.)
Boston, MA 02116-3741
For share prices, account balances, and exchanges,
Distributor call toll free: 1-800-MFS-TALK (1-800-637-8255)
MFS Fund Distributors, Inc. anytime from a touch-tone telephone.
500 Boylston Street
Boston, MA 02116-3741 World Wide Web
www.mfs.com
Portfolio Manager
Mark Regan*
Treasurer
W. Thomas London*
Assistant Treasurers
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
</TABLE>
*Affiliated with the Investment Adviser
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INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(C)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MMC-3 4/99 20M 83/283/383/883
