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[MFS LOGO] SEMIANNUAL REPORT
FEBRUARY 29, 1996
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MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
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MFS(R) INCUBATOR FUNDS
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MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
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TRUSTEES PORTFOLIO MANAGERS*
A. Keith Brodkin* -- Chairman and President John F. Brennan
Christian A. Felipe
Richard B. Bailey* -- Private Investor; Former John D. Laupheimer
Chairman and Director (until 1991), Massachusetts Robert J. Manning
Financial Services Company; Director, Cambridge Lisa B. Nurme
Bancorp; Director, Cambridge Trust Company Kevin R. Parke
Marshall N. Cohan -- Private Investor TREASURER
W. Thomas London*
Lawrence H. Cohn, M.D. -- Chief of Cardiac Surgery,
Brigham and Women's Hospital; Professor of Surgery, ASSISTANT TREASURER
Harvard Medical School James O. Yost*
The Hon. Sir J. David Gibbons, KBE -- Chief SECRETARY
Executive Officer, Edmund Gibbons Ltd.; Chairman, Stephen E. Cavan*
Bank of N.T. Butterfield & Son Ltd.
ASSISTANT SECRETARY
Abby M. O'Neill -- Private Investor; Director, James R. Bordewick, Jr.*
Rockefeller Financial Services, Inc. (investment
adviser) CUSTODIAN
State Street Bank and Trust Company
Walter E. Robb, III -- President and Treasurer,
Benchmark Advisors, Inc. (corporate financial INVESTOR INFORMATION
consutants); President, Benchmark Consulting Group, For MFS stock and bond market outlooks, call toll
Inc. (office services); Trustee, Landmark Funds free: 1-800-637-4458 anytime from a touch-tone
(mutual funds) telephone.
Arnold D. Scott* -- Senior Executive Vice President, For information on MFS mutual funds, call your
Director and Secretary, Massachusetts Financial financial adviser or, for an information kit,
Services Company call toll free: 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time
Jeffrey L. Shames* -- President and Director, (or leave a message anytime).
Massachusetts Financial Services Company
J. Dale Sherratt -- President, Insight Resources, INVESTOR SERVICE
Inc. (acquisition planning specialists) MFS Service Center, Inc.
P.O. Box 2281
Ward Smith -- Former Chairman (until 1994), NACCO Boston, MA 02107-9906
Industries; Director, Sundstrand Corporation
For general information, call toll free:
INVESTMENT ADVISER 1-800-225-2606 any business day from 8 a.m. to 8
Massachusetts Financial Services Company p.m. Eastern time.
500 Boylston Street
Boston, MA 02116-3741 For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from 9
DISTRIBUTOR a.m. to 5 p.m. Eastern time. (To use this service,
MFS Fund Distributors, Inc. 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,
call toll free: 1-800-MFS-TALK (1-800-637-8255)
*Affiliated with the Investment Adviser anytime from a touch-tone telephone.
</TABLE>
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LETTER TO SHAREHOLDERS
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Dear Shareholders:
MFS Equity Income Fund, MFS Research Growth and Income Fund, MFS Core Growth
Fund, MFS Aggressive Growth Fund, and MFS Special Opportunities Fund commenced
operations on January 2, 1996. From that date through February 29, 1996, the
Funds' Class A shares provided the following total returns, all of which assume
the reinvestment of any distributions: MFS RESEARCH GROWTH AND INCOME FUND,
6.20%; MFS CORE GROWTH FUND, 9.30%; MFS SPECIAL OPPORTUNITIES FUND, 4.50%; and
MFS EQUITY INCOME FUND 3.60%. For the same period, the returns for these four
funds compare to a 4.36% return for the Standard & Poor's 500 Composite Index
(the S&P 500), a popular, unmanaged index of common stock performance. MFS
AGGRESSIVE GROWTH FUND'S 16.00% total return for this period compares to a
return of 3.01% for the Russell 2000 Total Return Index (the Russell Index), an
unmanaged index comprised of 2,000 of the smallest U.S.-domiciled company stocks
which are traded on the New York Stock Exchange, the American Stock Exchange,
and NASDAQ. A discussion of each Fund's investments can be found in the
Portfolio Performances and Strategies section of this report.
Economic Environment
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. A second reason
for the economy's weakness is the "lag effect" of increases in short-term
interest rates by the Federal Reserve Board 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 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 Markets
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity markets this
year. 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 expect 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.
Bond Markets
Persistent signs of economic weakness led to decreases in short-term interest
rates by the Federal Reserve in late 1995 and early 1996 and, we believe, will
lead to some additional reductions as the year progresses. In the beginning of
the year, bond markets were trading in a narrow range as investors shifted
between concern about the lack of a budget resolution in Washington and hopes
that sluggish economic reports and low inflation might lead to lower interest
rates. In the recent trading period not covered by this report, the fixed-income
markets have reacted to conflicting signals regarding the strength of the
economy with more-volatile trading patterns marked by an upward bias in interest
rates. However, we believe the fundamentals of moderate economic growth and low
inflation will continue to benefit long-term investors. Barring an unexpected
shock, we anticipate that the still-cheap dollar, low interest rates, and strong
total employment will likely cushion the economy from a sharp decline. Still,
given the subdued state of the economy, we believe that some additional interest
rate reductions by the Fed are possible, although their timing and magnitude is
uncertain, and that bonds continue to represent good value.
We appreciate you support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
- --------------------
A. Keith Brodkin
Chairman and President
March 14, 1996
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PORTFOLIO PERFORMANCES AND STRATEGIES
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MFS Equity Income Fund
The Fund's performance benefited from a significant weighting in the industrial
goods and services sector in which certain stocks such as United Technologies
and B.F. Goodrich were positively impacted by the emerging commercial airplane
cycle. Financial services stocks, led by banks such as Chemical, continued to
rise on the back of lower interest rates and opportunities to cut costs. Certain
retail stocks, such as Sears, have also performed well as investors have begun
to reassess the outlook for this depressed sector. The Fund's performance was
negatively impacted by its exposure to energy stocks, as prices for oil and gas
have been volatile since the beginning of the year.
The Fund continues to seek companies that we believe are distinguished
by attractive dividend yields, reasonable valuations, and the potential to
improve returns. Our focus remains in the financial services, energy, and
industrial goods sectors. We continue to be cautious in our outlook for the
electric and telephone utility sector, given its difficult regulatory and
competitive environment. Instead, we have been focusing on opportunities within
the gas pipeline industry. Finally, we are continuing to concentrate our
cyclical exposure within the chemical industry.
Lisa B. Nurme
Portfolio Manager
MFS Research Growth and Income Fund
Currently, the Fund's top holdings are in financial services, consumer staples,
and industrial goods and services. Within financial services, the Fund is
invested in insurance and banking stocks which we believe have above-average
earnings growth prospects due either to restructuring, as in the cases of Chase
Manhattan Corp. and CIGNA, or to the strength of their market niche, as in the
cases of Advanta and PennCorp Financial. The Fund is also invested in several
international stocks that we feel offer very attractive valuations.
Within the consumer staples sector, the Fund is primarily invested in
companies that possess strong international franchises, such as Gillette and
Philip Morris. We believe these companies can grow more rapidly due to new
product introductions and increased economic development. The Fund's industrial
goods and services holdings are primarily in the farm equipment and aerospace
industries. We anticipate farm equipment sales to remain strong due to healthy
export demand. The Fund's holdings in this sector include Deere & Co. and Case,
two major farm equipment manufacturers. Meanwhile, as global demand for new
aircrafts increases, the aerospace market appears to be strengthening, and we
believe the Fund's holdings of such companies as B.F. Goodrich, Honeywell, and
United Technologies will benefit from this trend.
Kevin R. Parke
Director of Research
Certain MFS Research Analysts are responsible for the day-to-day management of
the Fund under the general supervision of Mr. Parke.
MFS Core Growth Fund
The Fund's investments have been concentrated in companies which we believe
exhibit strong unit growth and those capable of achieving earnings growth
through cost reduction, restructuring, or other actions. Leading sectors in the
portfolio include technology (such as proprietary, value-added electronic, and
client server software companies), retailing, consumer goods and services, and
health care (including relatively inexpensive overseas pharmaceutical companies
and companies with what appear to be promising new products).
In searching for the dynamics of strong demand in an uncertain economic
environment, the Fund has also invested in companies which we believe could
benefit from such developments as an emerging commercial airline building cycle,
including Honeywell, B.F. Goodrich, and United Technologies; and companies which
may benefit from relatively low mortgage finance interest rates, such as the
Federal Home Loan Mortgage Corporation, Stanley Works, and Lowes. Other
investment themes reflected in the Fund's holdings include agriculture, where
factors such as China's becoming a net importer of grains could alter the global
supply/demand balance; and electronic data processing, where we anticipate the
penetration of electronic payments to continue to grow dramatically.
John D. Laupheimer
Portfolio Manager
MFS Aggressive Growth Fund
The outperformance of the Fund versus the Russell Index was a result of
favorable stock selection in two major sectors: telecommunications and media.
Both of these sectors benefited from recent government deregulation of the
entire radio, television, long-distance, cable and local telephone markets. We
anticipate that the result will be a consolidation in the media and telephone
markets, and major capital spending increases for the regional Bell operating
companies (RBOCs). Two of the Fund's radio holdings, Infinity Broadcasting and
Clear Channel, made major purchases of media assets, and the anticipated pricing
power created by these combinations has lifted the prices of their stocks.
The deregulation of the local and long-distance telephone market also
benefited many of the Fund's other holdings. Companies such as WorldCom and
Frontier are believed to be important resellers of long-distance services to the
major RBOCs, and their stock prices have risen on this basis. Also, the need to
protect their local markets from competition from cable companies has led to a
massive increase in capital spending by RBOCs. Our holdings in Tellabs and U.S.
Robotics have been major beneficiaries of this trend.
Looking ahead, we anticipate that the pace of developments such as
these will intensify, and we plan to maintain and add to our holdings in
companies we believe will benefit from these events.
Christian A. Felipe
Portfolio Manager
MFS Special Opportunities Fund
As of February 29, 1996, 77% of the Fund's assets were invested in equities and
14% in high-yield and distressed corporate bonds, with the balance in cash and
Treasury securities. We intend to maintain an opportunistic style of investing
and will seek out investments in any market or security which we believe offer
unusually attractive risk-adjusted returns. We currently have positions in both
defaulted and cash-paying corporate bonds, including Harrah's Jazz
first-mortgage bonds and Mesa Petroleum. Both of these debt instruments are
secured by the companies' assets, and we believe we are creating asset values at
significant discounts to their true market value. In the equity section of the
portfolio, one-third of holdings would be considered turnaround candidates,
one-third leveraged-company equities, and one-third companies which have
recently emerged from bankruptcy reorganization. Examples of each include Fort
Howard, Granite Broadcasting, and Walter Industries. We expect to continue our
value-oriented style of investing while waiting for other opportunities to
unfold.
John F. Brennan
Robert J. Manning
Portfolio Managers
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PORTFOLIO MANAGERS PROFILES
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John Brennan has been a member of the MFS investment staff since 1985. A
graduate of the University of Rhode Island and Stanford University's Graduate
School of Business Adminstration, he began his career at MFS as an industry
specialist and was promoted to Assistant Vice President -- Investments in 1987.
He was named Vice President -- Investments in 1988 and Senior Vice President --
Investments in 1995.
Christian Felipe joined MFS in 1986. A graduate of U.C.L.A. and the
University of Pennsylvania's Wharton School of Finance and Commerce, he was
named Investment Officer in 1987, Assistant Vice President -- Investments in
1988, Vice President -- Investments in 1989, and Senior Vice President in 1996.
John Laupheimer joined MFS in 1981 as an industry specialist. A
graduate of Boston University and the Sloan School of Management of
Massachusetts Institute of Technology, he was named Investment Officer in 1983,
Assistant Vice President -- Investments in 1984, Vice President -- Investments
in 1986, and Senior Vice President in 1995.
Robert Manning began his career at MFS in 1984 as a research analyst in
the High Yield Bond Department. A graduate of the University of Lowell and
Boston College's Graduate School of Management, he was named Vice President --
Investments in 1988 and Senior Vice President in 1993.
Lisa Nurme joined MFS in 1987 as a research analyst. She was named
Investment Officer in 1990, Assistant Vice President -- Investments in 1991, and
Vice President -- Investments in 1992. Ms. Nurme is a graduate of the University
of North Carolina.
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INVESTMENT OBJECTIVES AND POLICIES
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Currently each Fund only offers Class A shares for sale which are available for
purchase at net asset value only by certain retirement plans established for the
benefit of employees of MFS and its affiliates and certain of their family
members who are also residents of The Commonwealth of Massachusetts.
MFS Equity Income Fund
The objective of the Fund is to achieve a yield that exceeds the yield of the
S&P 500. In selecting investments, the Fund also considers the potential for
capital appreciation.
Under normal market conditions, the Fund invests at least 65% of its
total assets in income producing equity securities. The Fund may also invest up
to 35% of its total assets in fixed-income securities, including up to 20% of
its net assets in fixed-income securities rated BB or lower by Standard & Poor's
Rating Group or Fitch Investors Service, Inc., or Ba or lower by Moody's
Investors Service, Inc.
MFS Research Growth and Income Fund
The objective of the Fund is long-term growth of capital, current income, and
growth of income.
Under normal market conditions, the Fund invests at least 65% of its
total assets in equity securities of companies which offer earnings growth
potential while paying current dividends. The Fund may also invest up to 35% of
its total assets in equity securities which do not pay current dividends but
which offer prospects for growth of capital and future income. In addition, the
Fund may invest up to 35% of its net assets in foreign equity securities which
are not traded on a U.S. exchange.
MFS Core Growth Fund
The objective of the Fund is long-term growth of capital.
Under normal market conditions, the Fund invests at least 65% of its
total assets in equity securities of well-known and established companies which
have above-average growth potential. The Fund may also invest up to 35% of its
total assets in equity securities of companies in the developing stages of their
life cycles that offer the potential for accelerated earnings or revenue growth
(emerging growth companies).
MFS Aggressive Growth Fund
The objective of the Fund is capital appreciation.
Under normal market conditions, the Fund invests substantially all of
its assets in equity securities of companies which have
above-average growth potential. The Fund may invest in companies of any size,
including smaller, lesser known companies in the developing stages of their life
cycles that offer the potential for accelerated earnings or revenue growth
(emerging growth companies). In addition, the Fund may invest up to 35% of its
net assets in foreign equity securities which are not traded on a U.S. exchange.
MFS Special Opportunities Fund
The objective of the Fund is capital appreciation.
Under normal market conditions, the Fund invests substantially all of
its assets in equity and fixed-income securities which represent uncommon value
by having the potential for significant capital appreciation over a period of 12
months or longer. The Fund may invest a substantial amount of its assets in U.S.
government securities when, in the judgement of the Adviser, securities with the
potential for significant capital appreciation are not available for purchase by
the Fund.
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PORTFOLIO OF INVESTMENTS (UNAUDITED) - FEBRUARY 29, 1996
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MFS EQUITY INCOME FUND
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COMMON STOCKS - 89.7%
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Issuer Shares Value
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Aerospace - 6.8%
Goodrich (B.F.) Co. 100 $ 7,613
United Technologies Corp. 100 10,750
Wyman-Gordon Co.* 200 3,550
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$ 21,913
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Automotive - 1.6%
General Motors Corp. 100 $ 5,125
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Banks and Credit Companies - 7.2%
Bank of Boston Corp. 100 $ 4,863
Chemical Banking Corp. 100 7,162
Corestates Financial Corp. 100 4,300
National City Corp. 200 6,950
----------
$ 23,275
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Chemicals - 8.0%
Betz Laboratories, Inc. 200 $ 8,750
Dexter Corp. 400 9,400
du Pont (E. I.) de Nemours & Co., "A" 100 7,650
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$ 25,800
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Consumer Goods and Services - 3.1%
Philip Morris Cos., Inc. 100 $ 9,900
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Electrical Equipment - 6.0%
General Electric Co. 100 $ 7,550
Honeywell, Inc. 100 5,300
Hubbell, Inc., "B" 100 6,600
----------
$ 19,450
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Financial Institutions - 3.5%
Southern National Co. 400 $ 11,200
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Food and Beverage Products - 4.0%
General Mills, Inc. 100 $ 5,750
Nabisco Holdings Corp., "A" 200 7,025
----------
$ 12,775
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Insurance - 2.9%
Torchmark Corp. 200 $ 9,275
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Medical and Health Products - 6.2%
Abbott Labs 100 $ 4,175
American Home Products Corp. 100 9,850
Lilly (Eli) & Co. 100 6,050
----------
$ 20,075
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Oils - 7.9%
British Petroleum Co. Ltd., ADR 50 $ 5,018
Mobil Corp. 100 10,962
USX-Marathon Group 500 9,250
----------
$ 25,230
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Photographic Products - 2.2%
Eastman Kodak Co. 100 $ 7,150
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Printing and Publishing - 2.0%
Dun & Bradstreet Corp. 100 $ 6,325
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Railroads - 1.2%
Illinois Central Corp. 100 $ 3,725
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Real Estate Investment Trusts - 4.8%
Felcor Suite Hotels, Inc. 200 $ 6,125
Public Storage, Inc. 300 6,412
Trinet Corp. Realty Trust, Inc. 100 2,900
----------
$ 15,437
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Restaurants and Lodging - 3.2%
Innkeepers USA Trust 500 $ 5,000
Mandarin Oriental Hotels 4,000 5,240
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$ 10,240
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Stores - 2.8%
Sears, Roebuck & Co. 200 $ 9,075
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Utilities - Electric - 6.8%
Carolina Power & Light Co. 100 $ 3,650
Cinergy Corp. 100 2,987
Edison International 200 3,500
Pinnacle West Capital Corp 200 5,675
Portland General Corp. 200 6,125
----------
$ 21,937
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Utilities - Gas - 4.1%
Panhandle Eastern Corp. 150 $ 4,293
Sonat, Inc. 200 6,700
UGI Corp. 100 2,100
----------
$ 13,093
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Utilities - Telephone - 5.4%
AT&T Corp. 50 $ 3,182
Ameritech Corp. 50 2,881
MCI Communications Corp. 200 5,850
SBC Communications, Inc. 100 5,488
----------
$ 17,401
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Total Common Stocks (Identified Cost, $279,003) $ 288,401
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<PAGE>
CONVERTIBLE PREFERRED STOCKS - 5.3%
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Matewan Bancshares, Inc., 7.5s
(Financial Institutions) 150 $ 3,753
Unocal Corp., 7s (Utilities - Gas)## 100 5,500
Williams Cos., Inc., 3.5s
(Utilities - Gas)## 100 7,861
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Total Convertible Preferred Stocks (Identified Cost, $16,588) $ 17,114
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CONVERTIBLE BOND - 2.4%
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Principal Amount
(000 Omitted)
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Fieldcrest Cannon Industries,
6s, 2012 (Consumer Goods and
Services) (Identified Cost, $7,012) $ 10 $ 7,700
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Total Investments (Identified Cost, $302,603) $ 313,215
OTHER ASSETS, LESS LIABILITIES - 2.6% 8,298
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Net Assets -- 100.0% $ 321,513
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See portfolio footnotes and notes to financial statements
<PAGE>
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Portfolio of Investments (Unaudited) - February 29, 1996
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MFS RESEARCH GROWTH AND INCOME FUND
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COMMON STOCKS - 97.5%
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Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Stocks - 83.1%
Aerospace - 6.4%
General Dynamics Corp. 80 $ 4,770
Goodrich (B.F.) Co. 80 6,090
Lockheed Martin Corp. 50 3,812
McDonnell Douglas Corp. 40 3,530
United Technologies Corp. 40 4,300
----------
$ 22,502
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Agricultural Products - 1.7%
Case Corp. 110 $ 5,844
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Apparel and Textiles - 1.3%
Nike, Inc., "B" 70 $ 4,541
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Banks and Credit Companies - 5.0%
Baybanks, Inc. 50 $ 5,225
Chase Manhattan Corp. 50 3,725
Corestates Financial Corp. 100 4,300
Fleet/Norstar Financial Group, Inc. 100 4,112
----------
$ 17,362
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Business Machines - 2.3%
Gateway 2000, Inc. 100 $ 2,950
International Business Machines Corp. 40 4,905
----------
$ 7,855
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Business Services - 2.1%
Alco Standard Corp. 80 $ 3,790
Ceridian Corp. 80 3,440
----------
$ 7,230
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Chemicals - 3.4%
du Pont (E. I.) de Nemours & Co., "A" 100 $ 7,650
Grace (W.R.) & Co. 60 4,140
----------
$ 11,790
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Computer Software - Personal Computers - 2.4%
First Data Corp. 50 $ 3,464
Microsoft Corp.* 50 4,934
----------
$ 8,398
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Computer Software - Systems - 1.5%
Oracle Systems Corp.* 100 $ 5,200
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Consumer Goods and Services - 9.6%
Colgate-Palmolive Co. 70 $ 5,479
Duracell International, Inc. 60 3,098
Gillette Co. 80 4,330
Philip Morris Cos., Inc. 100 9,900
Procter & Gamble Co. 50 4,100
Revlon, Inc., "A" 100 2,762
Tyco International Ltd. 100 3,612
----------
$ 33,281
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Electrical Equipment - 0.8%
Honeywell, Inc. 50 $ 2,650
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Electronics - 1.9%
Analog Devices, Inc. 150 $ 4,032
Atmel Corp. 100 2,675
----------
$ 6,707
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Entertainment - 0.6%
Chancellor Corp., "A"* 100 $ 2,050
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Financial Institutions - 1.3%
Advanta Corp., "B" 100 $ 4,500
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Food and Beverage Products - 3.5%
General Mills, Inc. 70 $ 4,025
Nabisco Holdings Corp., "A" 100 3,513
Ralston-Ralston Purina Group 70 4,690
----------
$ 12,228
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Forest and Paper Products - 1.3%
Kimberly-Clark Corp. 60 $ 4,582
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Insurance - 4.6%
Cigna Corp. 40 $ 4,740
LaSalle Reassurance Holdings Ltd. 120 2,760
PennCorp Financial Group, Inc. 120 3,930
Transamerica Corp. 60 4,523
----------
$ 15,953
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Machinery - 2.6%
Deere & Co., Inc. 130 $ 5,087
York International Corp. 80 3,830
----------
$ 8,917
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Medical and Health Products - 2.4%
Baxter International, Inc. 100 $ 4,575
Lilly (Eli) & Co. 60 3,630
----------
$ 8,205
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Medical and Health Technology and Services - 3.0%
Pacificare Health Systems, Inc., "A"* 30 $ 2,790
Riscorp, Inc., "A" 100 2,150
St. Jude Medical, Inc. 80 3,020
United Healthcare Corp. 40 2,610
----------
$ 10,570
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Metals and Minerals - 1.7%
Aluminum Cos. of America 50 $ 2,837
Phelps Dodge Corp. 50 3,056
----------
$ 5,893
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Oils - 4.3%
Amoco Corp. 40 $ 2,780
Mobil Corp. 50 5,481
Newfield Exploration Co. 100 2,925
USX-Marathon Group 200 3,700
----------
$ 14,886
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Printing and Publishing - 0.6%
World Color Press, Inc.* 100 $ 2,087
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Railroads - 2.3%
CSX Corp. 100 $ 4,488
Conrail, Inc. 50 3,606
----------
$ 8,094
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Real Estate Investment Trusts - 2.9%
Felcor Suite Hotels, Inc. 100 $ 3,062
Public Storage, Inc. 200 4,275
Trinet Corp. Realty Trust, Inc. 100 2,900
----------
$ 10,237
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Special Products and Services - 1.3%
Stanley Works 80 $ 4,520
- --------------------------------------------------------------------------------
Stores - 2.7%
Lowes Co., Inc. 300 $ 9,300
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Utilities - Electric - 3.4%
CMS Energy Corp. 100 $ 3,037
Illinova Corp. 100 2,850
Pinnacle West Capital Corp. 100 2,837
Portland General Corp. 100 3,062
----------
$ 11,786
- --------------------------------------------------------------------------------
Utilities - Gas - 3.2%
Coastal Corp. 150 $ 5,512
Enron Corp. 150 5,494
----------
$ 11,006
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Utilities - Telephone - 3.0%
AT&T Corp. 50 $ 3,181
Frontier Corp. 100 3,000
GTE Corp. 100 4,287
----------
$ 10,468
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Total U.S. Stocks $ 288,642
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Foreign Stocks - 14.4%
France - 1.7%
TV Francaise (Broadcasting) 40 $ 4,276
Union des Assurances Federales S.A. (Insurance) 15 1,666
----------
$ 5,942
- --------------------------------------------------------------------------------
Hong Kong - 3.0%
Giordano International Ltd. (Retail) 2,000 $ 2,134
Liu Chong Hing Bank (Finance) 3,000 4,580
Wharf Holdings (Real Estate) 1,000 3,874
----------
$ 10,588
- --------------------------------------------------------------------------------
Italy - 0.5%
Telecom Italia Mobile (Utilities-Telephone) 1,500 $ 1,676
- --------------------------------------------------------------------------------
Malaysia - 1.4%
New Straits Time Press Berhad (Publishing) 1,000 $ 4,710
- --------------------------------------------------------------------------------
Singapore - 1.3%
Hong Leong Finance (Financial Services) 1,000 $ 4,357
- --------------------------------------------------------------------------------
Sweden - 4.9%
Astra AB, Free Shares, "B"
(Medical and Health Products) 100 $ 4,578
Ericsson AB (Telecom-Equipment) 200 4,341
Sparbanken Svergie AB (Finance) 350 3,785
Volvo AB (Automotive) 200 4,282
----------
$ 16,986
- --------------------------------------------------------------------------------
United Kingdom - 1.6%
PowerGen PLC (Utilities - Electric) 400 $ 3,307
Storehouse PLC (Retail) 500 2,366
----------
$ 5,673
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 49,932
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $319,478) $ 338,574
OTHER ASSETS, LESS LIABILITIES - 2.5% 8,687
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 347,261
- --------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
<PAGE>
================================================================================
Portfolio of Investments (Unaudited) - February 29, 1996
================================================================================
MFS CORE GROWTH FUND
- --------------------------------------------------------------------------------
COMMON STOCKS - 84.2%
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Stocks - 80.0%
Aerospace - 6.3%
Goodrich (B.F.) Co. 120 $ 9,135
Raytheon Co. 140 7,018
United Technologies Corp. 70 7,525
----------
$ 23,678
- --------------------------------------------------------------------------------
Airlines - 1.6%
American West Airlines, Inc., "B"* 300 $ 6,187
- --------------------------------------------------------------------------------
Apparel and Textiles - 3.5%
Mossimo, Inc.* 100 $ 2,450
Nine West Group, Inc.* 275 10,794
----------
$ 13,244
- --------------------------------------------------------------------------------
Business Machines - 2.8%
Sun Microsystems, Inc.* 200 $ 10,500
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 2.4%
First Data Corp. 130 $ 9,003
- --------------------------------------------------------------------------------
Computer Software - Systems - 9.5%
Computer Associates International, Inc. 150 $ 10,312
Engineering Animation, Inc.* 100 2,575
Oracle Systems Corp.* 200 10,400
Performance Technologies, Inc.* 400 4,500
Raptor System, Inc.* 100 3,175
Red Brick Systems, Inc.* 100 5,100
----------
$ 36,062
- --------------------------------------------------------------------------------
Consumer Goods and Services - 4.8%
Gillette Co. 150 $ 8,119
Philip Morris Cos., Inc. 100 9,900
----------
$ 18,019
- --------------------------------------------------------------------------------
Defense Electronics - 1.7%
Loral Corp. 140 $ 6,598
- --------------------------------------------------------------------------------
Electrical Equipment - 2.5%
Honeywell, Inc. 180 $ 9,540
- --------------------------------------------------------------------------------
Electronics - 9.0%
Altera Corp.* 150 $ 9,787
Analog Devices, Inc. 400 10,750
LSI Logic Corp.* 150 4,144
Tektronix, Inc. 100 4,538
Xilinx, Inc.* 125 4,828
----------
$ 34,047
- --------------------------------------------------------------------------------
Financial Institutions - 4.1%
Advanta Corp., "B" 140 $ 6,300
Federal Home Loan Mortgage Corp. 110 9,075
----------
$ 15,375
- --------------------------------------------------------------------------------
Food and Beverage Products - 4.8%
PepsiCo, Inc. 150 $ 9,487
Ralston-Ralston Purina Group 130 8,710
----------
$ 18,197
- --------------------------------------------------------------------------------
Forest and Paper Products - 2.0%
Kimberly-Clark Corp. 100 $ 7,638
- --------------------------------------------------------------------------------
Insurance - 2.4%
Amerin Corp.* 350 $ 9,187
- --------------------------------------------------------------------------------
Medical and Health Products - 3.7%
Lilly (Eli) & Co. 75 $ 4,537
MediSense, Inc.* 300 9,338
----------
$ 13,875
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.8%
Oxford Health Plans, Inc.* 50 $ 4,116
Pharmaceutical Product Development, Inc.* 100 2,712
----------
$ 6,828
- --------------------------------------------------------------------------------
Photographic Products - 2.5%
Eastman Kodak Co. 130 $ 9,295
- --------------------------------------------------------------------------------
Printing and Publishing - 1.7%
Pulitzer Publishing Co. 125 $ 6,312
- --------------------------------------------------------------------------------
Restaurants and Lodging - 2.5%
HFS, Inc.* 200 $ 9,300
- --------------------------------------------------------------------------------
Special Products and Services - 2.4%
Stanley Works 160 $ 9,040
- --------------------------------------------------------------------------------
Stores - 4.0%
Gymboree Corp.* 400 $ 10,400
Office Depot, Inc.* 230 4,801
----------
$ 15,201
- --------------------------------------------------------------------------------
Telecommunications - 4.0%
Cabletron Systems, Inc.* 120 $ 9,015
Omnipoint Corp.* 100 2,700
US Satellite Broadcasting Co., Inc., "A" * 100 3,250
----------
$ 14,965
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 302,091
- --------------------------------------------------------------------------------
Foreign Stocks - 4.2%
Sweden
Astra AB, Free Shares, "B"
(Medical and Health Products) 200 $ 9,156
Noblepharma AB (Medical and Health Products) 400 6,697
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 15,853
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $281,343) $ 317,944
OTHER ASSETS, LESS LIABILITIES - 15.8% 59,722
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 377,666
- --------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
<PAGE>
================================================================================
Portfolio of Investments (Unaudited) - February 29, 1996
================================================================================
MFS AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
COMMON STOCKS - 92.0%
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Stocks - 90.7%
Apparel and Textiles - 0.7%
Mossimo, Inc.* 100 $ 2,450
Nike, Inc., "B" 750 48,656
----------
$ 51,106
- --------------------------------------------------------------------------------
Business Machines - 4.6%
Affiliated Computer Services, Inc., "A"* 2,000 $ 72,250
Sun Microsystems, Inc.* 5,000 262,500
----------
$ 334,750
- --------------------------------------------------------------------------------
Business Services - 4.7%
CUC International, Inc.* 3,000 $ 97,125
Computer Sciences Corp.* 1,000 73,000
DST Systems, Inc.* 500 17,125
Policy Management Systems Corp.* 1,000 51,125
SPS Transaction Services, Inc.* 2,500 80,625
Technology Solutions Co.* 1,000 24,000
----------
$ 343,000
- --------------------------------------------------------------------------------
Computer Software - 0.1%
Documentum, Inc.* 100 $ 3,875
Indus Group 100 2,200
----------
$ 6,075
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 4.8%
Autodesk, Inc. 500 $ 17,687
First Data Corp. 500 34,625
Microsoft Corp.* 3,000 296,063
----------
$ 348,375
- --------------------------------------------------------------------------------
Computer Software - Systems - 21.4%
Adobe Systems, Inc. 1,000 $ 33,500
BDM International, Inc.* 1,000 40,375
BMC Software, Inc.* 5,300 295,475
Brandon Systems Corp. 1,700 57,375
Cadence Design Systems, Inc.* 5,000 223,125
Computer Associates International, Inc. 5,000 343,750
Cotelligent Group, Inc.* 200 1,800
Cylink Corp.* 100 2,350
Engineering Animation, Inc.* 100 2,575
Oracle Systems Corp.* 6,000 312,000
Raptor Systems, Inc.* 100 3,175
Red Brick Systems, Inc.* 100 5,100
SCB Computer Technology, Inc.* 100 1,900
Softquad International, Inc.* 4,500 32,625
Sybase, Inc.* 4,000 125,500
Synopsys, Inc.* 500 16,375
System Software Associates, Inc. 2,500 52,500
----------
$1,549,500
- --------------------------------------------------------------------------------
Consumer Goods and Services - 0.1%
Revlon, Inc., "A"* 100 $ 2,763
- --------------------------------------------------------------------------------
Electronics - 4.9%
LSI Logic Corp.* 5,000 $ 138,125
Linear Technology Corp. 1,000 46,500
Maxim Integrated Products, Inc.* 2,000 72,500
Xilinx, Inc.* 2,500 96,562
----------
$ 353,687
- --------------------------------------------------------------------------------
Entertainment - 4.7%
American Radio Systems, "A"* 200 $ 6,100
Chancellor Corp., "A"* 100 2,050
Clear Channel Communications, Inc.* 1,050 53,156
Harrah's Entertainment, Inc.* 2,500 67,812
Heritage Media Corp., "A"* 1,500 54,187
Infinity Broadcasting Corp., "A"* 1,500 61,875
LIN Television Corp.* 700 23,975
Mirage Resorts, Inc.* 1,000 46,375
Sinclair Broadcast Group, "A"* 1,000 23,500
----------
$ 339,030
- --------------------------------------------------------------------------------
Financial Institutions - 4.7%
Advanta Corp., "B" 1,000 $ 45,000
Donaldson Lufkin & Jenrette, Inc. 500 15,625
Federal Home Loan Mortgage Corp. 750 61,875
Franklin Resources, Inc. 3,000 172,875
Schwab (Charles) Corp. 1,000 25,500
Student Loan Corp. 500 20,625
----------
$ 341,500
- --------------------------------------------------------------------------------
Food and Beverage Products - 0.2%
Nabisco Holdings Corp., "A" 500 $ 17,563
- --------------------------------------------------------------------------------
Forest and Paper Products - 0.5%
Fort Howard Corp.* 1,500 $ 34,500
- --------------------------------------------------------------------------------
Insurance - 0.5%
Equitable of Iowa Cos. 1,000 $ 38,625
- --------------------------------------------------------------------------------
Medical and Health Products - 3.0%
Cohr, Inc.* 100 $ 1,400
Johnson & Johnson 1,500 140,250
NCS Healthcare, Inc., "A"* 100 2,525
Schering Plough Corp. 1,250 70,156
Vitalcom, Inc.* 100 1,325
----------
$ 215,656
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 5.6%
Genesis Health Ventures, Inc.* 500 $ 21,813
Health Management Associates, Inc., "A"* 2,000 62,750
Healthsouth Corp.* 4,690 164,150
HealthWise of America, Inc.* 400 16,600
Lincare Holdings, Inc.* 500 15,656
Living Centers of America* 200 8,100
Pacificare Health Systems, Inc., "B"* 750 70,500
Pharmaceutical Product Development, Inc.* 100 2,713
Phymatrix Corp.* 200 4,500
Physician Support Systems, Inc.* 100 1,775
Renal Care Group, Inc.* 100 2,750
Riscorp, Inc., "A"* 100 2,150
United Healthcare Corp. 500 32,625
----------
$ 406,082
- --------------------------------------------------------------------------------
Pollution Control - 1.1%
Sanifill, Inc.* 2,100 $ 82,163
- --------------------------------------------------------------------------------
Printing and Publishing - 1.7%
Pulitzer Publishing Co. 1,000 $ 50,500
Tribune Co., Inc. 1,000 66,750
World Color Press, Inc.* 200 4,175
----------
$ 121,425
- --------------------------------------------------------------------------------
Restaurants and Lodging - 4.7%
Apple South, Inc. 1,500 $ 33,000
HFS, Inc.* 1,000 46,500
Promus Hotel Corp.* 10,000 260,000
----------
$ 339,500
- --------------------------------------------------------------------------------
Special Products and Services
F.Y.I., Inc.* 100 $ 1,725
- --------------------------------------------------------------------------------
Stores - 8.2%
General Nutrition Cos., Inc.* 900 $ 20,363
Gymboree Corp.* 5,300 137,800
Home Depot, Inc. 1,500 64,875
Micro Warehouse, Inc.* 5,100 242,250
Office Depot, Inc.* 3,000 62,625
Officemax, Inc.* 3,000 64,500
----------
$ 592,413
- --------------------------------------------------------------------------------
Telecommunications - 13.7%
Bay Networks, Inc.* 1,000 $ 40,625
CSG Systems International, Inc.* 100 2,200
Cabletron Systems, Inc.* 4,400 330,550
Cisco Systems, Inc.* 7,000 332,500
Glenayre Technologies, Inc.* 1,400 61,775
Omnipoint Corp.* 100 2,700
Rogers Cantel Mobile Communications, "B"* 2,000 47,500
Tellabs, Inc.* 1,500 70,875
U.S. Robotics Corp.* 500 62,000
U.S. Satellite Broadcasting Co., Inc., "A"* 100 3,250
WorldCom, Inc.* 1,000 39,375
----------
$ 993,350
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.8%
Frontier Corp. 1,000 $ 30,000
MCI Communications Corp. 1,000 29,250
----------
$ 59,250
- --------------------------------------------------------------------------------
Total U.S. Stocks $6,572,038
- --------------------------------------------------------------------------------
Foreign Stock - 1.3%
Sweden
Astra AB, Free Shares, "B"
(Medical and Health Products) 2,000 $ 91,562
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $5,748,885) $6,663,600
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 10.9%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 3/01/96,
at Amortized Cost 790 $ 790,000
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $6,538,885) $7,453,600
OTHER ASSETS, LESS LIABILITIES - (2.9)% (211,128)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $7,242,472
- --------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
<PAGE>
================================================================================
Portfolio of Investments (Unaudited) - February 29, 1996
================================================================================
MFS SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
COMMON STOCKS - 76.8%
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Stocks - 75.1%
Aerospace - 1.7%
B.E. Aerospace, Inc.* 1,500 $ 19,313
General Dynamics Corp. 100 5,963
Raytheon Co. 100 5,012
----------
$ 30,288
- --------------------------------------------------------------------------------
Agricultural Products - 2.2%
AGCO Corp. 900 $ 24,413
Case Corp. 300 15,937
----------
$ 40,350
- --------------------------------------------------------------------------------
Airlines - 1.0%
Midwest Express Holdings, Inc.* 600 $ 18,000
- --------------------------------------------------------------------------------
Automotive - 1.1%
General Motors Corp. 400 $ 20,500
- --------------------------------------------------------------------------------
Banks and Credit Companies - 0.9%
First Interstate Bancorp 100 $ 16,338
- --------------------------------------------------------------------------------
Building - 3.9%
Eljer Industries, Inc.* 1,200 $ 13,050
Nortek, Inc.* 2,000 21,750
Walter Industries, Inc.* 2,700 36,788
----------
$ 71,588
- --------------------------------------------------------------------------------
Business Services - 1.5%
ADT Ltd.* 1,800 $ 26,550
- --------------------------------------------------------------------------------
Computer Software - Systems - 3.5%
Adobe Systems, Inc. 600 $ 20,100
BMC Software, Inc.* 600 33,450
Sybase, Inc.* 300 9,413
----------
$ 62,963
- --------------------------------------------------------------------------------
Conglomerates - 1.4%
Insilco Corp.* 800 $ 25,400
- --------------------------------------------------------------------------------
Consumer Goods and Services - 5.4%
Darling International, Inc.* 600 $ 17,700
Philip Morris Cos., Inc. 100 9,900
Revlon, Inc., "A"* 100 2,763
Thermadyne Industries Holdings Corp.* 1,200 22,200
Tyco International Ltd. 700 25,288
Westpoint Stevens, Inc.* 1,100 21,450
----------
$ 99,301
- --------------------------------------------------------------------------------
Containers - 0.6%
Atlantis Plastics, Inc. 2,000 $ 10,250
- --------------------------------------------------------------------------------
Defense Electronics - 2.3%
Loral Corp. 900 $ 42,412
- --------------------------------------------------------------------------------
Electrical Equipment - 0.9%
Honeywell, Inc. 300 $ 15,900
- --------------------------------------------------------------------------------
Electronics - 1.6%
Altera Corp.* 100 $ 6,525
Analog Devices, Inc.* 400 10,750
LSI Logic Corp.* 400 11,050
----------
$ 28,325
- --------------------------------------------------------------------------------
Entertainment - 10.4%
American Radio Systems Corp., "A"* 100 $ 3,050
Ameristar Casinos, Inc.* 1,600 11,000
Chancellor Corp., "A"* 100 2,050
Citicasters, Inc. 1,100 31,900
Cobb Theaters 20,000 20,000
Comcast Corp., "A" 600 11,775
Harrah's Entertainment, Inc.* 900 24,412
Harveys Casino Resorts 700 10,850
Hasbro, Inc. 300 10,350
Jacor Communications, Inc., "A"* 500 10,875
LIN Television Corp.* 100 3,425
Mattel, Inc. 300 9,975
New World Communications, "A"* 1,000 18,750
Showboat, Inc. 900 21,600
----------
$ 190,012
- --------------------------------------------------------------------------------
Financial Institutions - 2.7%
Federal Home Loan Mortgage Corp. 300 $ 24,750
Student Loan Marketing Assn. 300 24,787
----------
$ 49,537
- --------------------------------------------------------------------------------
Food and Beverage Products - 1.8%
General Mills, Inc. 100 $ 5,750
Interstate Bakeries Corp. 1,200 26,400
----------
$ 32,150
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.9%
Fort Howard Corp.* 1,200 $ 27,600
Kimberly-Clark Corp. 100 7,637
----------
$ 35,237
- --------------------------------------------------------------------------------
Insurance - 0.2%
PennCorp Financial Group, Inc. 100 $ 3,275
- --------------------------------------------------------------------------------
Machinery - 1.7%
Ingersoll Rand Co. 400 $ 16,350
York International Corp. 300 14,362
----------
$ 30,712
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 4.0%
Beverly Enterprises, Inc.* 1,300 $ 15,762
OrNda Healthcorp, Inc.* 800 20,500
Pacificare Health Systems, Inc., "B"* 100 9,400
Regency Health Services, Inc.* 1,500 18,563
St. Jude Medical, Inc. 200 7,550
----------
$ 71,775
- --------------------------------------------------------------------------------
Oils - 2.3%
USX-Marathon Group 900 $ 16,650
Union Pacific Resources Group, Inc. 1,000 25,750
----------
$ 42,400
- --------------------------------------------------------------------------------
Photographic Products - 1.2%
Eastman Kodak Co. 300 $ 21,450
- --------------------------------------------------------------------------------
Printing and Publishing - 2.0%
Pulitzer Publishing Co. 300 $ 15,150
Scripps (E.W.) Co., "A" 200 8,400
Tribune Co. 200 13,350
----------
$ 36,900
- --------------------------------------------------------------------------------
Railroads - 1.6%
Illinois Central Corp. 200 $ 7,450
Wisconsin Central Transportation Corp.* 300 22,275
----------
$ 29,725
- --------------------------------------------------------------------------------
Restaurants and Lodging - 4.8%
Felcor Suite Hotels, Inc. 1,000 $ 30,625
Promus Hotel Corp.* 2,200 57,200
----------
$ 87,825
- --------------------------------------------------------------------------------
Special Products and Services - 4.1%
Gillett Holdings, Inc.* 531 $ 11,151
IMO Industries, Inc.* 5,800 36,250
Pullman Co.* 1,250 7,500
Spreckels Industries, Inc.* 1,300 18,931
----------
$ 73,832
- --------------------------------------------------------------------------------
Stores - 3.7%
Carr-Gottstein Foods Co.* 4,000 $ 18,000
Carson Pirie Scott & Co.* 900 17,662
Jitney Jungle Stores of America 10,000 10,000
Office Depot, Inc.* 600 12,525
Tyco Toys, Inc. 1,600 9,000
----------
$ 67,187
- --------------------------------------------------------------------------------
Telecommunications - 4.7%
American Communications Services, Inc.* 1,500 $ 11,438
Cabletron Systems, Inc.* 300 22,537
Granite Broadcasting Corp.* 2,800 31,850
Metrocall, Inc.* 1,000 20,000
----------
$ 85,825
- --------------------------------------------------------------------------------
Total U.S. Stocks $1,366,007
- --------------------------------------------------------------------------------
Foreign Stocks - 1.7%
Canada - 0.8%
Rogers Communications, Inc., "B"
(Telecommunications) 1,500 $ 15,036
- --------------------------------------------------------------------------------
Hong Kong - 0.9%
Semi-Tech (Global) Ltd. (Electronics) 10,500 $ 16,299
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 31,335
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $1,364,373) $1,397,342
- --------------------------------------------------------------------------------
PREFERRED STOCK - 1.5%
- --------------------------------------------------------------------------------
Supermarkets General Holdings Corp., 3.52, Exch.##
(Identified Cost, $28,100) 1,100 $ 27,500
- --------------------------------------------------------------------------------
BONDS - 14.2%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Aerospace - 1.4%
CHC Helicopter, 11.5s, 2002 $ 26 $ 24,570
- --------------------------------------------------------------------------------
Containers - 1.0%
Atlantis Group, Inc., 11s, 2003 $ 20 $ 18,600
- --------------------------------------------------------------------------------
Financial Institutions - 1.4%
GPA Delaware, Inc., 8.75s, 1998 $ 26 $ 25,837
- --------------------------------------------------------------------------------
Oils - 1.1%
Mesa Capital Corp., secured, 0s, 1998 $ 20 $ 19,600
- --------------------------------------------------------------------------------
Railroads - 1.6%
Tiphook Finance Corp., 8s, 2000 $ 40 $ 29,900
- --------------------------------------------------------------------------------
Restaurants and Lodging - 3.5%
Boomtown, Inc., 11.5s, 2003 $ 25 $ 21,250
Harrah's Jazz Co., 14.25s, 2001** 110 42,900
----------
$ 64,150
- --------------------------------------------------------------------------------
Stores - 1.2%
Parisian, Inc., 9.875s, 2003 $ 25 $ 21,250
- --------------------------------------------------------------------------------
Supermarkets - 0.9%
Grand Union Co., 12s, 2004 $ 20 $ 16,300
- --------------------------------------------------------------------------------
U.S. Treasury Obligations - 1.0%
U.S.Treasury Bonds, 6.875s, 2025 $ 18 $ 18,757
- --------------------------------------------------------------------------------
Utilities - Electric - 1.1%
Kenetech Corp., 12.75s, 2002 $ 50 $ 19,500
- --------------------------------------------------------------------------------
Total Bonds (Identified Cost, $248,208) $ 258,464
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 7.4%
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 3/01/96,
at Amortized Cost 135 $ 135,000
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,775,681) $1,818,306
OTHER ASSETS, LESS LIABILITIES - 0.1% 900
- --------------------------------------------------------------------------------
Net Assets -100.0% $1,819,206
- --------------------------------------------------------------------------------
See portfolio footnotes and notes to financial statements
PORTFOLIO FOOTNOTES:
* Non-income producing security.
** Non-income producing security - in default.
## SEC Rule 144A restriction.
<PAGE>
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Research
Equity Growth Core
Income and Income Growth
February 29, 1996 Fund Fund Fund
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at value (identified cost, $302,603,
$319,478 and $281,343, respectively) $313,215 $338,574 $317,944
Cash 11,223 10,955 43,878
Receivable for Fund shares sold -- -- 3,000
Receivable for investments sold 3,493 6,307 26,050
Interest and dividends receivable 1,159 617 268
Deferred organization expenses 2,104 2,104 2,104
-------- -------- --------
Total assets $331,194 $358,557 $393,244
-------- -------- --------
Liabilities:
Payable for investments purchased $ 6,834 $ 8,370 $ 12,677
Net payable for forward foreign currency exchange
contracts purchased -- 24 --
Accrued expenses and other liabilities 2,847 2,902 2,901
-------- -------- --------
Total liabilities $ 9,681 $ 11,296 $ 15,578
-------- -------- --------
Net assets $321,513 $347,261 $377,666
======== ======== ========
Net assets consist of:
Paid-in capital $310,069 $327,083 $344,045
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 10,612 19,095 36,601
Accumulated undistributed net realized gain (loss)
on investments and foreign currency transactions (124) 654 (3,124)
Accumulated undistributed net investment income 956 429 144
-------- -------- --------
Total $321,513 $347,261 $377,666
======== ======== ========
Shares of beneficial interest outstanding 31,028 32,707 34,564
======== ======== ========
Class A shares:
Net asset value and redemption price per share
(net assets / shares of beneficial
interest outstanding) $10.36 $10.62 $10.93
====== ====== ======
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Aggressive Special
Growth Opportunities
February 29, 1996 Fund Fund
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $6,538,885 and
$1,775,681, respectively) $7,453,600 $1,818,306
Cash 1,274 3,566
Receivable for Fund shares sold 5,000 --
Receivable for investments sold 5,725 37,007
Interest and dividends receivable 678 6,750
Deferred organization expenses 2,104 2,104
---------- ----------
Total assets $7,468,381 $1,867,733
---------- ----------
Liabilities:
Payable for investments purchased $ 208,716 $ 43,144
Accrued expenses and other liabilities 17,193 5,383
---------- ----------
Total liabilities $ 225,909 $ 48,527
---------- ----------
Net assets $7,242,472 $1,819,206
========== ==========
Net assets consist of:
Paid-in capital $6,289,739 $1,766,498
Unrealized appreciation on investments and
translation of assets and liabilities in
foreign currencies 914,715 42,626
Accumulated undistributed net realized gain on
investments and foreign currency transactions 38,330 5,704
Accumulated undistributed net investment income (loss) (312) 4,378
---------- ----------
Total $7,242,472 $1,819,206
========== ==========
Shares of beneficial interest outstanding 624,122 174,025
========== ==========
Class A shares:
Net asset value and redemption price per share
(net assets / shares of beneficial
interest outstanding) $11.60 $10.45
====== ======
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Equity Research Growth Core
Income and Income Growth
Period Ended February 29, 1996* Fund Fund Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Income -
Interest $ 322 $ 397 $ 672
Dividends 1,370 818 269
-------- -------- -------
Total investment income $ 1,692 $ 1,215 $ 941
-------- -------- -------
Expenses -
Management fee $ 368 $ 393 $ 398
Shareholder servicing agent fee 74 79 80
Registration fees 4,085 4,085 4,085
Auditing fees 3,000 3,000 3,000
Printing 1,025 1,025 1,025
Legal fees 300 300 300
Amortization of organization expenses 67 67 67
Custodian fee 55 55 55
Miscellaneous 25 25 25
-------- -------- -------
Total expenses $ 8,999 $ 9,029 $ 9,035
Preliminary reduction of expenses by investment
adviser (8,263) $ (8,243) (8,238)
-------- -------- -------
Net expenses $ 736 $ 786 $ 797
-------- -------- -------
Net investment income $ 956 $ 429 $ 144
-------- -------- -------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (124) $ 685 $(3,125)
Foreign currency transactions -- (31) 1
-------- -------- -------
Net realized gain (loss) on investments and
foreign currency transactions $ (124) $ 654 $(3,124)
-------- -------- -------
Change in unrealized appreciation on investments
and translation of assets and liabilities in
foreign currencies $ 10,612 $ 19,095 $36,601
-------- -------- -------
Net realized and unrealized gain on investments
and foreign currency $ 10,488 $ 19,749 $33,477
-------- -------- -------
Increase in net assets from operations $ 11,444 $ 20,178 $33,621
======== ======== =======
* For the period from the commencement of investment operations, January 2, 1996 to February 29, 1996.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENTS OF OPERATIONS (UNAUDITED) - CONTINUED
- -------------------------------------------------------------------------------
Aggressive Special
Growth Opportunities
Period Ended February 29, 1996* Fund Fund
- -------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 13,318 $ 6,412
Dividends 1,458 1,245
-------- --------
Total investment income $ 14,776 $ 7,657
-------- --------
Expenses -
Management fee $ 7,544 $ 1,640
Shareholder servicing agent fee 1,509 328
Registration fees 8,729 4,085
Auditing fees 3,000 3,000
Printing 1,050 1,025
Legal fees 500 300
Custodian fee 2,250 145
Amortization of organization expenses 67 67
Miscellaneous 500 25
-------- --------
Total expenses $ 25,149 $ 10,615
Premliminary reduction of expenses
by investment adviser (10,061) (7,336)
-------- --------
Net expenses $ 15,088 $ 3,279
-------- --------
Net investment income (loss) $ (312) $ 4,378
-------- --------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) -
Investment transactions $ 38,282 $ 5,703
Foreign currency transactions 48 1
-------- --------
Net realized gain on investments and
foreign currency transactions $ 38,330 $ 5,704
-------- --------
Change in unrealized appreciation on investments
and translation of assets and liabilities in
foreign currencies $914,715 $ 42,626
-------- --------
Net realized and unrealized gain on
investments and foreign currency $953,045 $ 48,330
-------- --------
Increase in net assets from operations $952,733 $ 52,708
======== ========
* For the period from the commencement of investment operations, January 2, 1996
to February 29, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Equity Research Growth Core
Income and Income Growth
Period Ended February 29, 1996* Fund Fund Fund
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 956 $ 429 $ 144
Net realized gain (loss) on investments and
foreign currency transactions (124) 654 (3,124)
Net unrealized gain on investments and
foreign currency translation 10,612 19,095 36,601
-------- -------- --------
Increase in net assets from operations $ 11,444 $ 20,178 $ 33,621
-------- -------- --------
Fund share (principal) transactions -
Net proceeds from sale of shares $310,069 $327,083 $344,045
-------- -------- --------
Total increase in net assets $321,513 $347,261 $377,666
Net assets:
At beginning of period -- -- --
-------- -------- --------
At end of period (including accumulated
undistributed net investment income of
$956, $429 and $144, respectively) $321,513 $347,261 $377,666
======== ======== ========
* For the period from the commencement of investment operations, January 2, 1996 to February 29, 1996.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) - CONTINUED
- --------------------------------------------------------------------------------
Aggressive Special
Growth Opportunities
Period Ended February 29, 1996* Fund Fund
- --------------------------------------------------------------------------------
Increase in net assets:
From operations -
Net investment income (loss) $ (312) $ 4,378
Net realized gain on investments and
foreign currency transactions 38,330 5,704
Net unrealized gain on investments and
foreign currency translation 914,715 42,626
---------- ----------
Increase in net assets from operations $ 952,733 $ 52,708
---------- ----------
Fund share (principal) transactions -
Net proceeds from sale of shares $6,291,924 $1,766,498
Cost of shares reacquired (2,185) --
---------- ----------
Increase in net assets from Fund share
transactions $6,289,739 $1,766,498
---------- ----------
Total increase in net assets $7,242,472 $1,819,206
Net assets:
At beginning of period -- --
---------- ----------
At end of period (including accumulated
undistributed net investment income
(loss) of $(312) and $4,378, respectively) $7,242,472 $1,819,206
========== ==========
* For the period from the commencement of investment operations, January 2, 1996
to February 29, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Equity Research Growth Core Aggressive Special
Class A Income and Income Growth Growth Opportunities
Period Ended February 29, 1996* Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations # -
Net investment income (s) $ 0.05 $ 0.04 $ 0.01 $ -- $ 0.04
Net realized and unrealized gain on investments
and foreign currency transactions 0.31 0.58 0.92 1.60 0.41
-------- -------- -------- -------- --------
Total from investment operations $ 0.36 $ 0.62 $ 0.93 $ 1.60 $ 0.45
-------- -------- -------- -------- --------
Net asset value - end of period $ 10.36 $ 10.62 $ 10.93 $ 11.60 $ 10.45
======== ======== ======== ======== ========
Total return 3.60%++ 6.20%++ 9.30%++ 16.00%++ 4.50%++
Ratios (to average net assets)/Supplemental data (s):
Expenses 1.50%+ 1.50%+ 1.50%+ 1.50%+ 1.50%+
Net investment income (loss) 1.95%+ 0.82%+ 0.27%+ (0.03)%+ 2.00%+
Portfolio turnover 11% 8% 22% 15% 43%
Average commission rate $ 0.0246 $ 0.0249 $ 0.0365 $ 0.0544 $ 0.0311
Net assets at end of period (000 omitted) $ 322 $ 347 $ 378 $ 7,242 $ 1,819
* For the period from the commencement of investment operations, January 2, 1996 to February 29, 1996.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
(s) The Adviser voluntarily agreed to maintain the expenses of the Funds at not more than 1.50% of each
Fund's average daily net assets. To the extent actual expenses were over/under these limitations, the net
investment loss per share and the ratios would have been:
Net investment loss $ (0.35) $ (0.72) $ (0.70) $ (0.03) $ (0.03)
Ratios (to average net assets):
Expenses 18.20%+ 17.08%+ 16.86%+ 2.35%+ 4.71%+
Net investment loss (14.75)%+ (14.76)%+ (15.09)%+ (0.88)%+ (1.21)%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Series Trust I (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. The Trust presently consists of eight
Funds, as follows: MFS Managed Sectors Fund, MFS Cash Reserve Fund, MFS World
Asset Allocation Fund, MFS Equity Income Fund* (the Equity Income Fund), MFS
Research Growth and Income Fund* (the Research Growth and Income Fund), MFS Core
Growth Fund* (the Core Growth Fund), MFS Aggressive Growth Fund* (the Aggressive
Growth Fund) and MFS Special Opportunities Fund* (the Special Opportunities
Fund). Each Fund, except MFS Managed Sectors Fund, MFS World Asset Allocation
Fund and the Special Opportunities Fund, is diversified.
The Funds denoted with an asterisk (*) above are included within these financial
statements.
(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.
Deferred Organization Expenses - Costs incurred by the Funds in connection with
their organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of each Fund.
Forward Foreign Currency Exchange Contracts - The Funds may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of current parties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Funds will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Funds may enter into contracts to deliver or receive
foreign currency they will receive from or require for their normal investment
activities. They may also use contracts in a manner intended to protect foreign
currency-denominated securities from declines in value due to unfavorable
exchange rate movements. For non-hedging purposes, the Funds may enter into
contracts with the intent of changing the relative exposure of each Fund's
portfolio of securities to different currencies to take advantage of anticipated
changes. The forward foreign currency exchange contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date.
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.
The Special Opportunities Fund can invest up to 100% of its portfolio in
high-yield securities rated below investment grade. Investments in high-yield
securities involve greater degrees of credit and market risk than investments in
higher-rated securities, and tend to be more sensitive to economic conditions.
The Special Opportunities Fund uses the effective interest method for reporting
interest income on payment-in-kind (PIK) bonds, whereby interest income on PIK
bonds is recorded ratably by the Fund at a constant yield to maturity. Legal
fees and other related expenses incurred to preserve and protect the value of a
security owned are added to the cost of the security; other legal fees are
expensed. Capital infusions, which are generally non-recurring, incurred to
protect or enhance the value of high-yield debt securities, are reported as an
addition to the cost basis of the security. Costs that are incurred to negotiate
the terms or conditions of capital infusions or that are expected to result in a
plan of reorganization are reported as realized losses. Ongoing costs incurred
to protect or enhance an investment, or costs incurred to pursue other claims or
legal actions, are reported as operating expenses.
Tax Matters and Distributions - The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. Each 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 each Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Foreign taxes
have been provided for on interest and dividend income earned on foreign
investments in accordance with the applicable country's tax rates and to the
extent unrecoverable are recorded as a reduction of investment income.
Distributions to shareholders are recorded on the ex-dividend date.
Each Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
(3) Transactions with Affiliates
Investment Adviser - Each 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 each Fund's average daily net assets. The investment adviser did not
impose any of its fee, which is reflected as a preliminary reduction of expenses
in the Statement of Operations.
Under a temporary expense reimbursement agreement with MFS, MFS has voluntarily
agreed to pay all of each of the Fund's operating expenses, exclusive of
management and distribution fees. Each Fund in turn will pay MFS an expense
reimbursement fee not greater than 1.50% of the average daily net assets of its
Class A shares. To the extent that the expense reimbursement fee exceeds each
Fund's actual expenses, the excess will be applied to amounts paid by MFS in
prior years. At February 29, 1996, the aggregate unreimbursed expenses owed to
MFS by each Fund amounted to:
Equity Research Growth Core Aggressive Special
Income and Income Growth Growth Opportunities
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------
$ 7,821 $ 7,771 $ 7,760 $ 1,008 $ 5,368
Each Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of each Fund, all of whom receive
remuneration for their services to each Fund from MFS. Certain of the officers
and Trustees of the Fund are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trustees are
currently not receiving any payments for their services to the Funds.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, did not
receive any sales charges on sales of Class A shares of the Funds for the period
ended February 29, 1996.
The Trustees have adopted a distribution plan for Class A shares of each Fund
pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Class A distribution plan provides that each Fund will pay MFD up to 0.50%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of each 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 each 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 0.25% per annum of each 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 each Fund. Distribution and
service fees under the Class A distribution plan are not currently being
imposed.
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. There
were no contingent deferred sales charges imposed during the period ended
February 29, 1996 on Class A shares of each Fund.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder serving agent. The fee is calculated as a
percentage of the average daily net assets of each Fund at an effective annual
rate of up to 0.15% attributable to Class A shares. MFSC is currently waiving
its fee for an indefinite period.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
<TABLE>
<CAPTION>
Research
Equity Growth Core Aggressive Special
Income and Income Growth Growth Opportunities
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases
U.S. government
securities $ -- $ -- $ -- $ -- $ 18,788
==============================================================================
Investments (non-U.S.
government securities) $ 322,565 $ 336,107 $ 325,846 $ 6,309,139 $ 1,990,909
==============================================================================
Sales
U.S. government
securities $ -- $ -- $ -- $ -- $ --
==============================================================================
Investments (non-U.S.
government securities) $ 23,599 $ 17,314 $ 41,378 $ 597,537 $ 395,487
==============================================================================
The cost and unrealized appreciation or depreciation in value of the investments owned by the Funds, as computed
on a federal income tax basis, are as follows:
Research
Equity Growth Core Aggressive Special
Income and Income Growth Growth Opportunities
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
Aggregate cost $ 302,603 $ 319,478 $ 281,343 $6,538,885 $ 1,775,681
==============================================================================
Gross unrealized
appreciation $ 14,208 $ 22,769 $ 38,933 $ 977,144 $ 81,817
Gross unrealized
depreciation (3,596) (3,673) (2,332) (62,429) (39,192)
------------------------------------------------------------------------------
Net unrealized
appreciation $ 10,612 $ 19,096 $ 36,601 $ 914,715 $ 42,625
==============================================================================
</TABLE>
(5) Shares of Beneficial Interest
The 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>
Research
Equity Income Growth and Core Growth
Period Ended Fund Income Fund Fund
February 29, ------------------------------------------------------------------------------
1996* Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 31,028 $310,069 32,707 $327,083 34,564 $344,045
==============================================================================
* For the period from the commencement of investment operations, January 2, 1996 to February 29, 1996.
</TABLE>
<TABLE>
<CAPTION>
Aggressive Special
Growth Fund Opportunities Fund
----------------------------------------------------
Period Ended February 29, 1996* Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 624,323 $6,291,924 174,025 $1,766,498
Shares reacquired (201) (2,185) - -
----------------------------------------------------
Net increase 624,122 $6,289,739 174,025 $1,766,498
====================================================
* For the period from the commencement of investment operations, January 2, 1996 to February 29, 1996.
</TABLE>
(6) Line of Credit
The Trust entered into an agreement which enables each of the Funds 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 each of the Funds for the
period ended February 29, 1996 ranged from $0 to $21.
(7) Financial Instruments
The Funds trade financial instruments with off-balance sheet risk in the normal
course of their investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exhange rates. These financial
instruments include written options, forward foreign currency exchange contracts
and futures contracts. The notional or contractual amounts of these instruments
represent the investment each Fund has in particular classes of financial
instruments and does not necessarily represent the amounts potentially subject
to risk. The measurement of the risks associated with these instruments is
meaningful only when all related and offsetting transactions are considered.
Forward Foreign Currency Exchange Contracts
Research Growth and Income Fund
<TABLE>
<CAPTION>
In Contracts
Settlement Contracts to Exchange at Net Unrealized
Transaction Date Receive For Value Depreciation
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases 3/01/96 HKD 15,301 $ 1,979 $ 1,979 $ 0
3/01/96 SEK 14,117 2,116 2,092 (24)
-----------------------------------------------
$ 4,095 $ 4,071 $ (24)
===============================================
HKD = Hong Kong Dollars SEK = Swedish Kronor
</TABLE>
At February 29, 1996, the Research Growth and Income Fund had sufficient cash
and/or securities to cover any commitments under these contracts.
(8) Restricted Securities
The Funds may invest not more than 15% of each Fund's net assets in securities
which are subject to legal or contractual restrictions on resale. At February
29, 1996, the Equity Income Fund and Special Opportunities Fund owned the
following restricted securities (consisting of 4.16% and 1.51% of net assets,
respectively) which may not be publicly sold without registration under the
Securities Act of 1933 (the 1933 Act). The Equity Income Fund and Special
Opportunities Fund do not have the right to demand that such securities be
registered. The value of these securities 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. All of these securities may be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act.
<TABLE>
<CAPTION>
Equity Income Fund
Date of
Description Acquisition Shares Cost Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund Unocal Corp., 7s 1/03/96 100 $ 5,425 $ 5,500
Williams Cos., Inc., 3.5s 1/03/96 100 7,421 7,861
-------
$ 13,361
=========
Special Opportunities Supermarkets General 2/09/96 -
Fund Holdings Corp., 3.52 2/13/96 1,100 $ 28,100 $ 27,500
=========
</TABLE>
-------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when prededed or
accompanied by a current prospectus.
<PAGE>
MFS(R) EQUITY INCOME FUND
MFS(R) RESEARCH GROWTH AND INCOME FUND
MFS(R) CORE GROWTH FUND
MFS(R) AGGRESSIVE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
500 Boylston Street
Boston, MA 02116
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THE FIRST NAME IN MUTUAL FUNDS
