MFS MANAGED SECTORS FUND
(A SERIES OF MFS SERIES TRUST I)
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
April 25, 1996
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS Series Trust I (File No. 811-4777), on Behalf of
MFS Managed Sectors 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 February 29, 1996 of MFS Managed Sectors Fund.
Very truly yours,
JOHN F. MCNAMARA
John F. McNamara
Production Editor
<PAGE>
[LOGO] M F S Semiannual Report
THE FIRST NAME IN MUTUAL FUNDS Febraury 29, 1996
- --------------------------------------------------------------------------------
MFS [Register Mark] MANAGED SECTORS FUND
[GRAPHIC]
- --------------------------------------------------------------------------------
<PAGE>
MFS [Register Mark] MANAGED SECTORS 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
Marshall N. Cohan - Private Investor
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School
The Hon. Sir J. David Gibbons, KBE - Chief
Executive Officer, Edmund Gibbons Ltd.;
Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor;
Director, Rockefeller Financial Services, Inc.
(investment adviser)
Walter E. Robb, III - President and Treasurer,
Benchmark Advisors, Inc.
(corporate financial consultants)
Arnold D. Scott* - Senior Executive Vice
President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director,
Massachusetts Financial Services Company
J. Dale Sherratt - President, Insight Resources,
Inc. (acquisition planning specialists)
Ward Smith - Former Chairman (until 1994),
NACCO Industries; Director, Sundstrand C
orporation
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
Portfolio Manager
Kenneth J. Enright*
Treasurer
W. Thomas London*
Assistant Treasurer
James O. Yost*
* Affiliated with the Investment Adviser
Secretary
Stephen E. Cavan*
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and 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.
[LOGO]
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 companies
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."
<PAGE>
Letter to Shareholders
Dear Shareholders:
Overall stock market performance for the past six months has continued to be
very strong, with all of the major indices posting robust gains. This strong
performance has been fueled by the apparent success of the Federal Reserve Board
to engineer a "soft landing" for the economy. This has resulted in modest
inflation and relatively low interest rates, both of which are generally
favorable for equities, especially when combined with expectations for slower
but steady economic growth. A key investment theme over the past several months
has been the growth of industrial productivity resulting from companies using
technology to increase their global competitiveness. At the same time, the
growth prospects for U.S. consumers' disposable income can best be described as
fair, as debt levels of individual households remain fairly high. Investors, for
their part, were not blind to these trends, as seen in the strong advances of
the technology sector and the very weak performance of the retail sector. For
the six months ended February 29, 1996, Class A shares of the Fund provided a
total return of 4.71%, while Class B shares returned 4.34%. Both of these
returns assume the reinvestment of distributions but exclude the effects of any
sales charges, and they compare to a 15.31% return for the Standard &Poor's 500
Composite Index, a popular, unmanaged index of common stock performance.
Economic Outlook
We believe the U.S. economy will continue to grow in 1996 -- although "subdued"
may be the best way to describe this growth. One factor holding growth in check
is the continued sluggishness of the consumer sector, an area that represents
approximately two-thirds of the economy. Going into this year, consumers have
been left in a somewhat weakened position, due in part to an increase in
consumer installment debt of some 30% over the past two years. Asecond reason
for the economy's weakness is the "lag effect" of increases in short-term
interest rates by the Federal Reserve in 1994 and into 1995. This lag effect can
last up to two years, although a series of reductions in short-term rates by the
Fed, which began late last year, could provide some support to the economy
through 1996. A third reason for weakness is the ongoing economic doldrums in
Europe and Japan, important markets for U.S. exports. Here again, we are seeing
a few signs, particularly in Japan, of modest recoveries that could lead to
improved prospects for U.S. exporters. Also, we believe lower interest rates
will give a boost to the U.S. housing market, an important segment of the
economy since it also affects such industries as major appliances, furniture,
and building-supply companies. Finally, although the first few weeks of 1996 saw
some signs of inflationary pressures, caused primarily by rising energy prices
and followed
1
<PAGE>
Letter to Shareholders -- continued
by an upward movement in gold, we believe inflation will remain under control
this year, due mainly to the subdued level of economic growth.
Stock Market
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be somewhat positive about the equity
markets this year. First, the broad decline in interest rates in 1995 made
fixed-income investments less competitive with equity investments, which helped
overall stock valuations. In 1996, however, any additional declines in interest
rates are expected to be much more modest. Another trend from 1995 that seems
likely to decelerate in 1996 is the growth of corporate earnings, as more
companies report lower earnings gains resulting from the slower economy.
However, to the extent that some earnings disappointments are a sign that the
economy is not overheating, which could lead to higher inflation, this may prove
beneficial for the longer-term health of the equity markets. For the market as a
whole, we believe corporate earnings will grow modestly in 1996, but well below
the strong earnings gains of 1995. Longer term, we anticipate that many of the
technology-driven gains in productivity that U.S. companies have made in recent
years will continue to enhance corporate America's competitiveness and
profitability.
Portfolio Performance and Strategy
Over the past six months, the stock market has maintained its upward bias, as
low inflation and still lower real (adjusted for inflation) interest rates have
been augmented by the potential for fiscal discipline in Washington. However,
overall advances have become significantly harder to come by as the breadth of
the market is decidedly narrower. In many respects, investors today are
exhibiting some of the same types of actions they demonstrated in 1994; that is,
a high degree of rotation among sectors, with individual groups having price
changes ranging from 10% to 20% in either direction while the market overall
makes little headway. A significant correction of technology issues and the more
favorable recent performance of the retail sector are two examples of such a
rotation.
While positive sentiment does remain relatively high, this has been largely
discounted by the market, reducing the probability of further multiple
expansion. The Fund, therefore, has continued to focus on companies with both
earnings visibility and momentum.
In addition, the Fund has significant exposure to companies whose
managements have embarked on restructuring and/or industry consolidation
activities aimed at improving their cost structures and, thus, competitiveness.
This is in contrast to the merger mania of the 1980s, when companies acquired
businesses but often without an apparent strategic purpose. Sectors where these
trends are
2
<PAGE>
Letter to Shareholders -- continued
most prevalent include financial services, aerospace and defense, retail, and
energy services.
In terms of sector weightings, technology holdings were a major
contributor to performance during most of 1995, but they have hindered results
over the past four months. The weighting in this sector was reduced from a high
of 28% in mid-summer to a low of 17% in September. Recently, given their price
corrections and still-positive prospects for relatively strong earnings growth,
selective purchases of individual technology stocks have been made. The retail
weighting was modestly decreased as it became apparent that a weak Christmas was
unfolding, and future retail prospects remain gloomy. Energy, financial
services, and leisure weightings have remained basically intact, although some
changes in individual positions have been made.
The Fund continues to search for companies with growing, visible earnings
streams. We are selectively looking at technology stocks while reducing our
consumer exposure, and we are adding to securities that we believe could benefit
from a rebound in the economy, based on the belief that the Federal Reserve will
take additional measures to stimulate the economy in 1996.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin /s/ Kenneth J. Enright
A. Keith Brodkin Kenneth J. Enright
Chairman and President Portfolio Manager
March 14, 1996
Portfolio Manager Profile
Kenneth Enright joined the MFSResearch Department in 1986. A graduate of Boston
State College and of the Babson College Graduate School of Business
Administration, he was named Assistant Vice President - Investments in 1987 and
Vice President - Investments in 1988. Mr. Enright became Portfolio Manager of
MFS Managed Sectors Fund in 1993. He is a Chartered Financial Analyst (C.F.A.).
3
<PAGE>
Objective and Policies
The Fund's investment objective is to provide capital appreciation. Dividend
income, if any, is incidental to the Fund's objective. To achieve its objective,
the Fund varies the weighting of its portfolio among 13 industry sectors which
include autos and housing, consumer goods and services, defense and aerospace,
energy, financial services, foreign securities, health care, heavy industry,
leisure, machinery and equipment, retailing, technology, transportation and
utilities.
As much as 50% of the Fund's assets may be in one sector or cash. Generally,
at least 90% of the Fund's assets will be invested in up to five of the industry
sectors or cash.
Performance Summary
Because mutual funds like MFS Managed Sectors 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 and Class B shares for the applicable time
periods.
Average Annual and Cumulative Total Rates of Return
<TABLE>
<CAPTION>
Class A Investment Results
(net asset value change including reinvested distributions) 9/20/93+-
6 Months 1 Year 2/29/96
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return* +4.71% +29.43% +37.22%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return* -- +29.43% +13.82%
- -----------------------------------------------------------------------------------------------
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-year period ended December
31, 1995 and for the period from September 20, 1993+ to December 31, 1995 were
+25.44% and +10.02%, respectively.
<CAPTION>
Class B Investment Results
(net asset value change including reinvested distributions) 12/29/86+-
6 Months 1 Year 5 Years 2/29/96
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return++ +4.34% +28.44% +99.20% +244.23%
- -----------------------------------------------------------------------------------------------
Average Annual Total Return++ -- +28.44% +14.78% +14.42%
- -----------------------------------------------------------------------------------------------
</TABLE>
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%, 2%
and 0% for the 1- and 5-year periods ended December 31, 1995 and for the period
from December 29, 1986+ to December 31, 1995 were +28.12%, +16.76% and +14.23%,
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.
+ Commencement of offering of this class of shares.
* These results do not include the sales charge. If the charge had been
included, the results would have been lower.
++ These results do not include any CDSC. If the charge had been included, the
results would have been lower.
4
<PAGE>
Portfolio of Investments (Unaudited) -- February 29, 1996
<TABLE>
<CAPTION>
Common Stocks - 100.0%
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Energy - 8.3%
BJ Services Co.* 160,000 $ 4,420,000
Occidental Petroleum Corp. 500,000 11,500,000
Seacor Holdings, Inc.* 121,200 4,060,200
Snyder Oil Corp. 264,600 2,249,100
Weatherford International, Inc.* 270,000 8,268,750
-----------
$30,498,050
- --------------------------------------------------------------------------------
Financial Institutions - 9.5%
Advanta Corp. 111,000 $ 4,995,000
CNA Financial Corp.* 16,800 1,953,000
Equitable of Iowa Cos. 229,900 8,879,887
Federal Home Loan Mortgage Corp. 56,000 4,620,000
First Interstate Bancorp 52,000 8,495,500
Fleet Financial Group, Inc. 130,000 5,346,250
Penncorp Financial Group, Inc. 21,200 694,300
-----------
$34,983,937
- --------------------------------------------------------------------------------
Leisure - 23.4%
Argosy Gaming Corp.* 350,000 $ 3,150,000
HFS, Inc.* 105,000 4,882,500
Harrah's Entertainment, Inc.* 625,000 16,953,125
Promus Hotel Corp.* 237,000 6,162,000
Rogers Communications, Inc., "B" (Canada)* 1,465,000 14,685,243
Showboat, Inc. 175,000 4,200,000
Sky City Ltd. (New Zealand)* 1,250,000 4,843,439
Sydney Harbor Casino Ltd. (Australia)* 1,093,900 1,622,396
Telephone & Data Systems, Inc. 637,800 29,418,525
-----------
$85,917,228
- --------------------------------------------------------------------------------
Retail - 9.5%
Circuit City Stores, Inc. 185,500 $ 5,495,438
Federated Department Stores, Inc.* 265,000 8,016,250
Gymboree Corp.* 280,000 7,280,000
Office Depot, Inc.* 95,400 1,991,475
Sears, Roebuck & Co. 140,000 6,352,500
Wal-Mart Stores, Inc. 270,000 5,737,500
-----------
$34,873,163
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Portfolio of Investments (Unaudited) - continued
<TABLE>
<CAPTION>
Common Stocks - continued
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Technology - 25.5%
ADT Ltd.* 550,000 $ 8,112,500
Adobe Systems, Inc. 138,000 4,623,000
Analog Devices, Inc.* 150,000 4,031,250
Atmel Corp.* 172,000 4,601,000
BMC Software, Inc.* 70,000 3,902,500
Cabletron Systems, Inc.* 83,000 6,235,375
Electronic Arts, Inc.* 435,000 10,875,000
Intel Corp. 126,000 7,410,375
International Business Machines Corp. 55,400 6,793,425
LSI Logic Corp.* 320,000 8,840,000
National Semiconductor Corp.* 472,000 7,375,000
Oracle Systems Corp.* 115,000 5,980,000
Spectrum Holobyte, Inc.* 800,000 6,500,000
Sun Microsystems, Inc.* 75,000 3,937,500
Sybase, Inc.* 140,000 4,392,500
-----------
$93,609,425
- --------------------------------------------------------------------------------
Other - 23.8%
AGCO Corp. 392,900 $10,657,413
AT&T Corp. 55,000 3,499,375
Beverly Enterprises* 124,200 1,505,925
Colgate-Palmolive Co. 84,000 6,573,000
General Motors Corp. 210,000 10,762,500
Ingersoll Rand Co. 130,000 5,313,750
Kimberly-Clark Corp. 19,000 1,451,125
Loral Corp. 271,700 12,803,863
McDonnell Douglas Corp. 70,000 6,177,500
Medisense, Inc.* 115,000 3,579,375
Rhone-Poulenc Rorer, Inc. 67,000 4,288,000
Tribune Co., Inc. 1,800 120,150
Tyco International Ltd. 300,000 10,837,500
United Healthcare Corp. 150,000 9,787,500
-----------
$87,356,976
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $324,726,900) $367,238,779
- --------------------------------------------------------------------------------
Convertible Bond - 0.1%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Spectrum Holobyte, Inc., 6.5s, 2002 (Technology)##
(Identified Cost, $560,000) $ 560 $ 408,800
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $325,286,900) $367,647,579
Other Assets, Less Liabilities - (0.1)% (340,423)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $367,307,156
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
6
<PAGE>
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
February 29, 1996
- --------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $325,286,900) $ 367,647,579
Receivable for Fund shares sold 846,030
Receivable for investments sold 3,294,410
Interest and dividends receivable 324,381
Other assets 4,251
-------------
Total assets $ 372,116,651
-------------
Liabilities:
Cash overdraft $ 773,923
Payable for Fund shares reacquired 1,097,327
Payable for investments purchased 2,598,092
Payable to affiliate -
Management fee 7,685
Shareholder servicing agent fee 1,849
Distribution fee 155,568
Accrued expenses and other liabilities 175,051
-------------
Total liabilities $ 4,809,495
-------------
Net assets $ 367,307,156
-------------
Net assets consist of:
Paid-in capital $ 306,331,209
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 42,360,249
Accumulated undistributed net realized gain
on investments and foreign currency transactions 20,237,902
Accumulated net investment loss (1,622,204)
-------------
Total $ 367,307,156
=============
Shares of beneficial interest outstanding 27,678,676
=============
Class A shares:
Net asset value and redemption price per share
(net assets of $207,943,490 / 15,686,192
shares of beneficial interest outstanding) $13.26
------
Offering price per share (100/94.25) $14.07
------
Class B shares:
Net asset value and offering price per share
(net assets of $159,363,666 / 11,992,484
shares of beneficial interest outstanding) $13.29
======
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A and
Class B shares.
See notes to financial statements
7
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended February 29, 1996
- --------------------------------------------------------------------------------
<S> <C>
Net investment income:
Income -
Dividends $ 1,552,603
Interest 94,347
------------
Total investment income $ 1,646,950
------------
Expenses -
Management fee $ 1,369,990
Trustees' compensation 20,638
Shareholder servicing agent fee (Class A) 144,779
Shareholder servicing agent fee (Class B) 189,522
Distribution and service fee (Class A) 337,337
Distribution and service fee (Class B) 858,167
Custodian fee 95,362
Postage 42,464
Auditing fees 1,570
Miscellaneous 143,073
------------
Total expenses $ 3,202,902
Fees paid indirectly (3,286)
------------
Net expenses $ 3,199,616
------------
Net investment loss $ (1,552,666)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 41,433,775
Foreign currency transactions (54,316)
------------
Net realized gain on investments and
foreign currency transactions $ 41,379,459
------------
Change in unrealized appreciation (depreciation) -
Investments $(23,845,586)
Translation of assets and liabilities in
foreign currencies (430)
------------
Net unrealized loss on investments $(23,846,016)
------------
Net realized and unrealized gain
on investments and foreign currency $ 17,533,443
------------
Increase in net assets from operations $ 15,980,777
------------
</TABLE>
See notes to financial statements
8
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
February 29, 1996 August 31,
(Unaudited) 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,552,666) $ (2,610,783)
Net realized gain on investments and
foreign currency transactions 41,379,459 52,247,905
Net unrealized gain (loss) on investments and
foreign currency translation (23,846,016) 29,148,730
------------- -------------
Increase in net assets from operations $ 15,980,777 $ 78,785,852
------------- -------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (37,126,651) $ (8,991,673)
From net realized gain on investments and foreign
currency transactions (Class B) (28,912,351) (14,927,407)
------------- -------------
Total distributions declared to shareholders $ (66,039,002) $ (23,919,080)
------------- -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 62,270,220 $ 126,368,710
Net asset value of shares issued to shareholders
in reinvestment of distributions 60,335,667 21,847,531
Cost of shares reacquired (83,379,989) (160,496,119)
------------- -------------
Increase (decrease) in net assets from
Fund share transactions $ 39,225,898 $ (12,279,878)
------------- -------------
Total increase (decrease) in net assets $ (10,832,327) $ 42,586,894
Net assets:
At beginning of period 378,139,483 335,552,589
------------- -------------
At end of period (including accumulated net investment
loss of $1,622,204 and $69,538, respectively) $ 367,307,156 $ 378,139,483
------------- -------------
</TABLE>
See notes to financial statements
9
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Nine Months Ended
February 29, Year Ended Ended Period Ended February 29,
1996 August 31, August 31, November 30, 1996
(Unaudited) 1995 1994 1993* (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 15.55 $ 13.41 $ 15.50 $ 15.68 $ 15.46
-------- -------- -------- -------- --------
Income from investment operations# -
Net investment loss $ (0.04) $ (0.05) $ (0.03) $ (0.02) $ (0.09)
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions 0.64 3.22 0.77 (0.16) 0.64
-------- -------- -------- -------- --------
Total from investment operations $ 0.60 $ 3.17 $ 0.74 $ (0.18) $ 0.55
-------- -------- -------- -------- --------
Less distributions declared to shareholders
from net realized gain on investments
and foreign currency transactions $ (2.89) $ (1.03) $ (2.83) $-- $ 2.72)
-------- -------- -------- -------- --------
Net asset value - end of period $ 13.26 $ 15.55 $ 13.41 $ 15.50 $ 13.29
-------- -------- -------- -------- --------
Total return++ 4.71%++ 26.12% 5.12%++ (5.99)%++ 4.34%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.42%+ 1.46% 1.52%+ 1.59%+ 2.13%
Net investment loss (0.51)%++ (0.34)% (0.26)%+ (0.75)%+ (1.23)%
Portfolio turnover 56% 115% 76% 106% 56%
Average commission rate### $ 0.0343 -- -- $ 0.0343
Net assets at end of period (000 omitted) $207,943 $178,367 $121,498 $136,179 $159,364
</TABLE>
* For the period from the commencement of offering of Class A shares,
September 20, 1993 to November 30, 1993.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to November 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. ###Average
commission rate is calculated for funds with fiscal years beginning on or
after September 1, 1995.
++ Total returns for Class A shares do not include the applicable sales
charge. If the charge had been included, the results would have been lower.
See notes to financial statements
10
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
Nine Months
Year Ended Ended Year Ended November 30,
August 31 August 31, ----------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 13.35 $ 15.49 $ 15.42 $ 13.00 $ 9.23
-------- -------- -------- -------- --------
Income from investment operations# -
Net investment loss $ (0.14) $ (0.10) $ (0.25) $ (0.24) $ (0.12)
Net realized and unrealized gain on
investments and foreign
currency transactions 3.20 0.75 0.94 2.66 3.89
-------- -------- -------- -------- --------
Total from investment operations $ 3.06 $ 0.65 $ 0.69 $ 2.42 $ 3.77
-------- -------- -------- -------- --------
Less distributions declared to shareholders
from net realized gain on investments
and foreign currency transactions $ (0.95) $ (2.79) $ (0.62) $ -- $--
-------- -------- -------- -------- --------
Net asset value - end of period $ 15.46 $ 13.35 $ 15.49 $ 15.42 $ 13.00
-------- -------- -------- -------- --------
Total return 25.19% 4.47%++ 4.50% 18.62% 40.85%
Ratios (to average net assets)/Supplemental data:
Expenses 2.18% 2.26%+ 2.21% 2.37% 2.44%
Net investment loss (1.06)% (1.01)%+ (1.55)% (1.85)
Portfolio turnover 115% 76% 106% 22% 59%
Net assets at end of period (000 omitted) $199,773 $214,055 $232,982 $249,493 $190,232
</TABLE>
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to November 30, 1993 is based on
average shares outstanding.
See notes to financial statements
11
<PAGE>
Financial Statements - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30, 1990 1989 1988 1987**
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 11.32 $ 7.86 $ 6.94 $ 6.50
----------- ----------- ----------- -----------
Income from investment operations -
Net investment income (loss) $ (0.03) $ 0.03 $ 0.09 $ 0.03
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions (2.06) 3.51 0.89 0.42
----------- ----------- ----------- -----------
Total from investment operations $ (2.09) $ 3.54 $ 0.98 $ 0.45
----------- ----------- ----------- -----------
Less distributions declared to shareholders
from net investment income $ -- $ (0.08) $ (0.06) $ (0.01)
----------- ----------- ----------- -----------
Net asset value - end of period $ 9.23 $ 11.32 $ 7.86 $ 6.94
----------- ----------- ----------- -----------
Total return (18.46)% 45.35% 14.06% 7.47%+
Ratios (to average net assets)/Supplemental data:
Expenses 2.50% 2.52 %2.31% 2.25%+
Net investment income (loss) (0.27)% 0.37% 1.08% 0.09%+
Portfolio turnover 79% 84% 146% 163%+
Net assets at end of period (000 omitted) $ 152,132 $ 180,416 $ 137,311 $ 134,762
</TABLE>
** For the period from the commencement of investment operations, December 29,
1986 to November 30, 1987.
+ Annualized.
See notes to financial statements
12
<PAGE>
Notes to Financial Statements (Unaudited)
(1) Business and Organization
MFS Managed Sectors Fund (the Fund) is a non-diversified series of MFS Series
Trust I (the Trust). The Trust is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
(2) Significant Accounting Policies
Investment Valuations -- Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value. 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.
Investment Transactions and Income -- Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend and interest payments received in additional securities are
recorded on the ex-dividend or ex-interest date in an amount equal to the value
of the security on such date.
Fees Paid Indirectly -- The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
13
<PAGE>
Notes to Financial Statements (Unaudited) - continued
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 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 both Class
A and Class B shares. The two 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 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
0.75% of 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
$5,738 for the period ended February 29, 1996.
Distributor -- MFD, a wholly owned subsidiary of MFS, as distributor, received
$17,353 for the period ended February 29, 1996, as its portion of the sales
charge on sales of Class A shares of the Fund.
14
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
The Trustees have adopted separate distribution plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets attributable
to Class A shares, commissions to dealers and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. MFD retains the service fee for accounts
not attributable to a securities dealer which amounted to $32,600 for the period
ended February 29, 1996. Fees incurred under the distribution plan during the
period ended February 29, 1996 were 0.35% of average daily net assets
attributable to Class A shares on an annualized basis.
The Class B 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 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 shares. The service fee is intended
to be additional consideration for services rendered by the dealer with respect
to Class B shares. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $29,360 for Class B shares for the period
ended February 29, 1996. Fees incurred under the distribution plan during the
period ended February 29, 1996 were 1.00% of average daily net assets
attributable to Class B shares 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 twelve months following the share purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of Class
B shares in the event of a shareholder redemption within six years of purchase.
MFD receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the period ended February 29, 1996 were $0 and $67,817
for Class A shares 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% and up to 0.22% attributable to Class A and
Class B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$202,991,832 and $231,781,934, respectively.
15
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 325,286,900
-------------
Gross unrealized appreciation $ 65,398,220
Gross unrealized depreciation (23,037,541)
-------------
Net unrealized appreciation $ 42,360,679
-------------
(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
Period Ended Year Ended
February 29, 1996 August 31, 1995
------------------------------- ------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,893,580 $ 43,584,702 3,546,423 $ 50,859,620
Shares issued to shareholders in
reinvestment of distributions 2,625,369 33,263,497 694,041 8,168,939
Shares reacquired (1,306,689) (19,084,019) (1,829,247) (24,588,500)
---------- ------------ ---------- ------------
Net increase 4,212,260 $ 57,764,180 2,411,217 $ 34,440,059
========== ============ =========== ============
<CAPTION>
Class B Shares
Period Ended Year Ended
February 29, 1996 August 31, 1995
------------------------------- ------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,302,198 $ 18,685,518 5,728,388 $ 75,509,090
Shares issued to shareholders in
reinvestment of distributions 2,128,298 27,072,170 1,162,148 13,678,592
Shares reacquired (4,359,608) (64,295,970) (10,002,205) (135,907,619)
---------- ------------ ----------- ------------
Net decrease (929,112) $(18,538,282) (3,111,669) $(46,719,937)
========== ============ =========== =============
</TABLE>
(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 period ended February
29, 1996 was $1,734.
16
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
(7) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which are
subject to legal or contractual restrictions on resale. At February 29, 1996,
the Fund owned the following restricted security (constituting 0.11% of net
assets) which may not be publicly sold without registration under the Securities
Act of 1933 (the 1933 Act). The Fund does not have the right to demand that such
security be registered. The value of this security is determined by valuations
supplied by a pricing service or brokers or, if not available, in good faith by
or at the direction of the Trustees. This security may be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act.
Date of Par
Description Acquisition Amount Cost Value
- --------------------------------------------------------------------------------
Spectrum Holobyte, Inc.,
6.5s, 2002 9/27/95 $560,000 $560,000 $408,800
--------
- --------------------------------------------------------------------------------
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.
17
<PAGE>
It's Easy to Contact Us
MFS Automated Information
[GRAPHIC] Account Information:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.
Market Outlook:
Call 1-800-637-4458 anytime for the MFS outlook
on the bond and stock markets.
[GRAPHIC] MFS Personal Service
Account Service:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
Product Information:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
IRA Service:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.
Service for the Hearing-Impaired:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).
[GRAPHIC] MFS Mailing Addresses
For Personal Accounts:
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For IRA Accounts:
MFS Service Center, Inc.
J.W. McCormack Station
P.O. Box 4501
Boston, MA 02101-9817
18
<PAGE>
MFS Investment Opportunities
Mutual Funds
MFS Family of Funds(R), shown on the facing page, falls into the eight general
categories below. All offer full-time professional management, a diversified
portfolio, and a wide array of shareholder services.
Stock funds seek growth of capital rather than income through investments in
stocks.
Stock and bond funds seek current income and growth of capital through
investments in both stocks and bonds.
Bond funds seek current income through investments in debt securities.
World funds seek stock, balanced, and bond fund objectives through investments
in U.S. and foreign stocks and bonds.
Limited-maturity funds seek current income and preservation of capital through
investments in debt securities with remaining maturities of five years or less.
National tax-free bond funds seek current income exempt from federal income tax
through investments in debt securities issued by states and municipalities.1
State tax-free bond funds seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state and
its municipalities.1
Money market funds seek preservation of capital and current income through
investments in short-term debt securities.2
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call MFS Investor Information for
literature3 on MFS products and services: 1-800-637-2929, from 9 a.m. to 5 p.m.
Eastern time any business day (leave a message anytime).
1 A small portion of the income may be subject to federal, state and/or
alternative minimum tax.
2 Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain
a stable net asset value.
3 Including a prospectus containing more complete information including
charges and expenses. Read the prospectus carefully before investing.
19
<PAGE>
A Financial Adviser Can Help You Be a Better Investor
Financial advisers can be valuable resources for their clients, providing
ongoing education and guidance about investments, as well as a wide range of
services. Here are just some of the ways your financial adviser may be able to
help you be a better investor:
[GRAPHIC] Day-to-day monitoring of your portfolio
[GRAPHIC] Tax recordkeeping
[GRAPHIC] In-depth information on fund managers, their track records and
their tenure
[GRAPHIC] Risk/reward analyses of current or potential holdings
[GRAPHIC] Asset allocation advice
[GRAPHIC] Construction of a detailed personal financial profile
[GRAPHIC] Order and confirmation processing
[GRAPHIC] Information on a fund group's range of shareholder services
[GRAPHIC] Portfolio adjustments based on lifestyle changes
[GRAPHIC] Assistance with business retirement planning
[GRAPHIC] Evaluation of lump-sum distribution options
[GRAPHIC] Recommendations on a selection of fund groups
[GRAPHIC] Specialized research and investment information not readily
available to individuals
[GRAPHIC] In-depth knowledge of markets and products, kept current by ongoing
tracking
[GRAPHIC] Estate, tax, insurance, and business planning
[GRAPHIC] Help with possible savings on sales charges through breakpoints,
rights of accumulation, and letters of intent
20
<PAGE>
The MFS Family of Funds(R)
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(R) Capital Growth Fund
- --------------------------------------------------------------------------------
MFS(R) Emerging Growth Fund
- --------------------------------------------------------------------------------
MFS(R) Gold & Natural Resources Fund
- --------------------------------------------------------------------------------
MFS(R) Growth Opportunities Fund
- --------------------------------------------------------------------------------
MFS(R) Managed Sectors Fund
- --------------------------------------------------------------------------------
MFS(R) OTC Fund
- --------------------------------------------------------------------------------
MFS(R) Research Fund
- --------------------------------------------------------------------------------
MFS(R) Value Fund
- --------------------------------------------------------------------------------
Stock and Bond
================================================================================
MFS(R) Total Return Fund
- --------------------------------------------------------------------------------
MFS(R) Utilities Fund
- --------------------------------------------------------------------------------
Bond
================================================================================
MFS(R) Bond Fund
- --------------------------------------------------------------------------------
MFS(R) Government Mortgage Fund
- --------------------------------------------------------------------------------
MFS(R) Government Securities Fund
- --------------------------------------------------------------------------------
MFS(R) High Income Fund
- --------------------------------------------------------------------------------
MFS(R) Intermediate Income Fund
- --------------------------------------------------------------------------------
MFS(R) Strategic Income Fund
- --------------------------------------------------------------------------------
Limited Maturity Bond
================================================================================
MFS(R) Government Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS(R) Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS(R) Municipal Limited Maturity Fund
- --------------------------------------------------------------------------------
World
================================================================================
MFS(R)/Foreign & Colonial Emerging Markets Equity Fund
- --------------------------------------------------------------------------------
MFS(R)/Foreign & Colonial International Growth Fund
- --------------------------------------------------------------------------------
MFS(R)/Foreign & Colonial International Growth and Income Fund
- --------------------------------------------------------------------------------
MFS(R) World Asset Allocation FundSM
- --------------------------------------------------------------------------------
MFS(R) World Equity Fund
- --------------------------------------------------------------------------------
MFS(R) World Governments Fund
- --------------------------------------------------------------------------------
MFS(R) World Growth Fund
- --------------------------------------------------------------------------------
MFS(R) World Total Return Fund
- --------------------------------------------------------------------------------
National Tax-Free Bond
================================================================================
MFS(R) Municipal Bond Fund
- --------------------------------------------------------------------------------
MFS(R) Municipal High Income Fund
(closed to new investors)
- --------------------------------------------------------------------------------
MFS(R) Municipal Income Fund
- --------------------------------------------------------------------------------
State Tax-Free Bond
================================================================================
Alabama, Arkansas, California, Florida,
Georgia, Louisiana, Maryland, Massachusetts, Mississippi, New York,
North Carolina, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia
- --------------------------------------------------------------------------------
Money Market
================================================================================
MFS(R) Cash Reserve Fund
- --------------------------------------------------------------------------------
MFS(R) Government Money Market Fund
- --------------------------------------------------------------------------------
MFS(R) Money Market Fund
- --------------------------------------------------------------------------------
<PAGE>
MFS(R) Managed
Sectors Fund [LOGO]
-----------------
500 Boylston Street Bulk Rate
Boston, MA 02116 U.S. Postage PAID
Permit #55638
Boston, MA
-----------------
[LOGO] M F S
THE FIRST NAME IN MUTUAL FUNDS
MMS-3 4/96/48M 08/208
