<PAGE>
[LOGO: M F S(SM)] Semiannual Report
INVESTMENT MANAGEMENT February 28, 1997
- --------------------------------------------------------------------------------
MFS(R) RESEARCH GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
[Graphic Omitted]
LEARNING FINANCIAL BASICS THE EASY WAY (see page 23)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
Director of Research's Overview ............................................ 2
Fund Facts ................................................................. 4
Performance Summary ........................................................ 4
Portfolio Concentration .................................................... 6
Portfolio of Investments ................................................... 7
Financial Statements .......................................................12
Notes to Financial Statements ..............................................17
The ABCs of Investing ......................................................23
The MFS Family of Funds(R) .................................................24
Trustees and Officers ......................................................25
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HIGHLIGHTS
o FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 19.85%.
o THE FUND SEEKS LARGER-CAPITALIZATION, DIVIDEND-YIELDING COMPANIES THAT, IN
OUR OPINION, HAVE THE POTENTIAL FOR STRONG EARNINGS GROWTH AT REASONABLE
PRICES.
o THE TOP THREE SECTORS IN THE FUND ARE: FINANCIAL SERVICES, AT 23.9% OF THE
PORTFOLIO; CONSUMER STAPLES, AT 12.9%; AND HEALTH CARE, AT 10.7%.
------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
After more than six years of expansion, the U.S. economy appears to be
experiencing another year of moderate growth in 1997, although a few signs point
to the possibility of a modest rise in inflation during the year. On the
positive side, the pattern of moderate growth and inflation set over the past
few years now seems fairly well entrenched in the economy and, short of a major
international or domestic crisis, appears to have enough momentum to remain on
track for some time. Also, gains in such important sectors as housing,
automobiles, industrial production, and exports indicate a fair amount of
underlying strength in the economy. However, some reason for caution can be seen
in the continuing high levels of consumer debt and rising personal bankruptcies,
as well as in the ongoing tightness in labor markets, which could add some
inflationary pressures to the economy. Given these somewhat conflicting
indicators, we expect real (inflation-adjusted) growth to revolve around 2% in
1997, which would represent a modest decline from 1996.
We continue to urge U.S. equity investors to lower their expectations for 1997
and to point out that the impressive gains of the past two years are not
sustainable. Just as the slowdown in corporate earnings growth and increases in
interest rates in 1996 raised some near-term concerns, further interest rate
increases and an acceleration of inflation could negatively affect the stock
market in 1997. However, to the extent that some slowdown in earnings means that
the economy is not overheating, this could be beneficial for the equity market
in the long run. Also, we believe many of the technology-driven productivity
gains that U.S. companies have made in recent years will continue to enhance
corporate America's competitiveness and profitability. Therefore, while we have
some near-term concerns, we remain reasonably positive about the long-term
viability of the equity market.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
March 13, 1997
<PAGE>
DIRECTOR OF RESEARCH'S OVERVIEW
[Photo of Kevin R. Parke]
Kevin R. Parke
Dear Shareholders:
For the six months ended February 28, 1997, Class A shares of the Fund provided
a total return of 19.85%, Class B returned 20.14%, Class C returned 19.85%, and
Class I returned 20.14%. The Fund began investment operations on January 2, 1996
with the offering of Class A shares to MFS employees only. The Fund opened its
other three share classes on January 2, 1997. The performance of the Fund's
Class A shares, which assumes the reinvestment of distributions but excludes the
effects of any sales charges, compares to a 22.50% return for the Standard &
Poor's 500 Composite Index, a popular, unmanaged index of common stock total
return performance.
Two of the largest sectors in the Fund are financial services, at 23.9% of the
portfolio, and health care, at 10.7%.
In financial services, the top three holdings are Compass Bancshares, Chase
Manhattan Bank, and Storage Realty Trust. Compass has been successfully buying
smaller banks at reasonable multiples within the southeast region of the United
States, while maintaining its ongoing cost-savings efforts. Compass also offers
strong fundamentals in a growing region, which could make it an attractive
takeover target in the current industry consolidation. Chase Manhattan continues
to provide earnings-per-share growth in the mid-teens through leveraging the
cost savings of its merger with Chemical Bank, as well as a share repurchase
plan. Finally, Storage Realty Trust is a storage company which has been able to
break even financially with a 32% occupancy rate in an industry in which the
average occupancy rate is around 90%.
All three of these companies offer above-average yields and are at valuation
levels that are equal to or below their industry average.
Within the health care sector, one of our top holdings is the pharmaceutical
company Bristol-Myers Squibb. The company's price/earnings multiple is below the
rest of the group, and we anticipate earnings growth to be at or above the
industry average over the next several years, mainly due to three diabetes or
cholesterol-related products that we expect to contribute to higher-than-
anticipated net income.
Several aerospace and defense companies contribute to the overweighting in the
industrial goods and services sector. Some of those names include United
Technologies, General Dynamics, and Lockheed-Martin. These companies have what
we believe are attractive fundamental outlooks based on a modestly improving
defense budget, incrementally rising foreign defense sales, three years of
merger-driven cost savings, high cash flows, and structural improvements to
their profit margins.
We will continue to seek larger-capitalization, dividend-yielding companies
that, in our opinion, have the potential for strong earnings growth at
reasonable prices.
Respectfully,
/s/ Kevin R. Parke
Kevin R. Parke
Director of Research
The committee of MFS research analysts is responsible for the day-to-day
management of the Fund under the general supervision of Mr. Parke.
LARGEST SECTORS
Miscellaneous 35.5%*
Financial Services 23.9%
Consumer Staples 12.9%
Health Care 10.7%
Industrial Goods & Services 8.4%
Technology 8.6%
*For a more complete breakdown, refer to Portfolio of Investments.
- -------------------------------------------------------------------------------
FUND FACTS
STRATEGY: THE INVESTMENT OBJECTIVE OF THE FUND IS LONG-TERM
GROWTH OF CAPITAL, CURRENT INCOME, AND GROWTH OF
INCOME.
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: JANUARY 2, 1996
CLASS B: JANUARY 2, 1997
CLASS C: JANUARY 3, 1997
CLASS I: JANUARY 2, 1997
SIZE: $28.1 MILLION NET ASSETS AS OF FEBRUARY 28, 1997
- -------------------------------------------------------------------------------
PERFORMANCE SUMMARY
Because mutual funds like MFS(R) Research Growth and Income Fund are designed
for investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A, Class B, Class C, and Class I
shares for the applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
Life of
6 Months 1 Year Fund*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +19.85% +25.84% +33.39%
- --------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +25.84% +28.22%
- --------------------------------------------------------------------------------------------------------------------
SEC Results -- +19.85% +22.94%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
Life of
6 Months 1 Year Fund*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +20.14% +26.14% +33.71%
- --------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +26.14% +28.49%
- --------------------------------------------------------------------------------------------------------------------
SEC Results -- +22.14% +25.17%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
Life of
6 Months 1 Year Fund*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +19.85% +25.84% +33.39%
- --------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +25.84% +28.22%
- --------------------------------------------------------------------------------------------------------------------
SEC Results -- +24.84% +28.22%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
Life of
6 Months 1 Year Fund*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +20.14% +26.14% +33.71%
- --------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +26.14% +28.49%
- --------------------------------------------------------------------------------------------------------------------
SEC Results -- +20.14% +23.19%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Fund's investment operations,
January 2, 1996 to February 28, 1997.
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A SEC results include the maximum 5.75% sales charge. Class B results
reflect the applicable contingent deferred sales charge (CDSC), which declines
over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C shares have no
initial sales charge but, along with Class B shares, have higher annual fees and
expenses than Class A shares. Class C share purchases are subject to a 1% CDSC
if redeemed within 12 months of purchase. Class I shares, which became available
on January 2, 1997, have no sales load or 12b-1 fees and are only available to
certain institutional investors.
Class B and Class C share results include the performance and operating expenses
(e.g., Rule 12b-1) of the Fund's Class A shares for periods prior to the
commencement of offering of Class B and Class C shares. Because operating
expenses attributable to Class B and Class C shares are higher than those of
Class A shares, Class B and C share performance would have been lower had Class
B and Class C shares been outstanding during the entire period. The Class A
share performance included in the Class B and Class C share performance with
CDSC, has been adjusted to reflect the CDSC generally applicable to Class B and
Class C shares rather than the sales charge generally applicable to Class A
shares.
Class I share results include the performance and operating expenses (e.g., Rule
12b-1) of Class A shares, for periods prior to the commencement of offering of
Class I shares. Because operating expenses attributable to Class A shares are
greater than those of Class I shares, Class I share performance would have been
higher had Class I shares been outstanding during the entire period. The Class A
share performance included in Class I share performance has been adjusted to
reflect the fact that Class I shares have no initial sales load.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
PORTFOLIO CONCENTRATION AS OF FEBRUARY 28, 1997
<TABLE>
<CAPTION>
TOP 10 EQUITY HOLDINGS
<S> <C>
PHILIP MORRIS COS., INC. EXXON CORP.
Tobacco, food, and beverage conglomerate International oil and gas company
INTEL CORP. GTE CORP.
Semiconductor manufacturer Telecommunications company
MICROSOFT CORP. COMPASS BANCSHARES, INC.
Semiconductor manufacturer Southern U.S. bank holding company
DU PONT (E.I.) DE NEMOURS & CO., INC. CIGNA CORP.
Diversified chemical company Multi-line insurance company
BRITISH PETROLEUM PLC CHASE MANHATTAN CORP.
Oil exploration and production company Money center bank
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - February 28, 1997
Stocks - 92.9%
- -------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------
U.S. Stocks - 84.4%
Aerospace - 3.5%
General Dynamics Corp. 4,310 $ 289,848
Lockheed-Martin Corp. 3,180 281,430
McDonnell Douglas Corp. 70 4,445
United Technologies Corp. 5,250 395,062
-----------
$ 970,785
- -------------------------------------------------------------------------------
Automotive - 0.9%
Goodrich (B.F.) Co. 5,890 $ 239,281
- -------------------------------------------------------------------------------
Agricultural Products - 0.2%
Case Corp. 800 $ 41,500
- -------------------------------------------------------------------------------
Apparel and Textiles - 1.0%
Reebok International Ltd. 3,200 $ 149,600
VF Corp. 1,800 125,100
-----------
$ 274,700
- -------------------------------------------------------------------------------
Banks and Credit Companies - 5.7%
Bank of Boston Corp. 2,770 $ 208,789
Chase Manhattan Corp. 4,150 415,519
Compass Bancshares, Inc. 9,460 422,152
Corestates Financial Corp. 4,880 256,810
Fleet/Norstar Financial Group, Inc. 4,830 294,630
-----------
$ 1,597,900
- -------------------------------------------------------------------------------
Building - 0.3%
Newport News Shipbuilding, Inc. 5,700 $ 88,350
- -------------------------------------------------------------------------------
Business Machines - 0.9%
Sun Microsystems, Inc.* 8,510 $ 262,746
- -------------------------------------------------------------------------------
Business Services - 0.6%
Ikon Office Solutions, Inc. 3,950 $ 162,938
- -------------------------------------------------------------------------------
Chemicals - 5.5%
Air Products & Chemicals, Inc. 5,600 $ 415,100
Betzdearborn, Inc. 5,260 341,242
du Pont (E. I.) de Nemours & Co., Inc. 4,065 435,971
Praxair, Inc. 7,310 355,449
-----------
$ 1,547,762
- -------------------------------------------------------------------------------
Computer Software - Personal Computers - 2.6%
First Data Corp. 6,775 $ 248,134
Microsoft Corp.* 4,790 467,025
-----------
$ 715,159
- -------------------------------------------------------------------------------
Computer Software - Systems - 1.7%
Compaq Computer Corp.* 3,520 $ 278,960
Oracle Systems Corp.* 4,930 193,503
-----------
$ 472,463
- -------------------------------------------------------------------------------
Consumer Goods and Services - 8.4%
Colgate-Palmolive Co. 3,020 $ 312,570
Estee Lauder Cos., "A" 3,650 169,725
Gillette Co. 3,540 280,102
Philip Morris Cos., Inc. 3,990 539,149
Procter & Gamble Co. 1,680 201,810
Revlon, Inc., "A"* 4,060 157,832
Sherwin Williams Co. 4,150 232,919
Tupperware Corp. 4,800 214,800
Tyco International Ltd. 4,260 251,340
-----------
$ 2,360,247
- -------------------------------------------------------------------------------
Electrical Equipment - 0.8%
Honeywell, Inc. 3,290 $ 234,001
- -------------------------------------------------------------------------------
Electronics - 2.2%
Atmel Corp.* 3,950 $ 147,631
Intel Corp. 3,380 479,538
-----------
$ 627,169
- -------------------------------------------------------------------------------
Entertainment - 1.7%
Clear Channel Communications, Inc.* 5,150 $ 246,556
ITT Corp.* 1,800 101,700
Jacor Communications, Inc., "A"* 4,160 122,460
-----------
$ 470,716
- -------------------------------------------------------------------------------
Financial Institutions - 3.2%
Advanta Corp., "B" 4,950 $ 198,619
American Express Co. 1,900 124,212
Beneficial Corp. 4,250 293,781
Federal National Mortgage Assn. 7,000 280,000
-----------
$ 896,612
- -------------------------------------------------------------------------------
Food and Beverage Products - 2.9%
Chiquita Brands International, Inc. 8,710 $ 117,585
Coca-Cola Co. 5,400 329,400
PepsiCo, Inc. 4,060 133,473
Wrigley (Wm) Junior Co. 4,060 243,092
-----------
$ 823,550
- -------------------------------------------------------------------------------
Forest and Paper Products - 1.0%
Kimberly-Clark Corp. 2,760 $ 292,560
- -------------------------------------------------------------------------------
Insurance - 6.0%
Allstate Corp. 4,560 $ 288,990
Chubb Corp. 4,930 289,021
CIGNA Corp. 2,750 420,406
ITT Hartford Group, Inc. 4,160 312,000
Reliastar Financial Corp. 200 12,400
Security Connecticut Corp. 2,600 120,900
Travelers Group, Inc. 4,700 252,038
-----------
$ 1,695,755
- -------------------------------------------------------------------------------
Machinery - 0.8%
Deere & Co., Inc. 5,300 $ 225,913
- --------------------------------------------------------------------------------
Medical and Health Products - 4.5%
Bristol-Myers Squibb Co. 3,100 $ 404,550
Lilly (Eli) & Co. 3,190 278,726
Pacificare Health Systems* 1,550 124,000
Pharmacia & Upjohn, Inc. 6,650 245,219
Rhone-Poulenc Rorer, Inc. 3,160 224,360
-----------
$ 1,276,855
- -------------------------------------------------------------------------------
Medical and Health Technology and Services - 4.5%
Cardinal Health, Inc. 2,600 $ 159,900
Medtronic, Inc. 6,300 407,925
St. Jude Medical, Inc.* 8,510 336,145
United Healthcare Corp. 7,190 358,601
-----------
$ 1,262,571
- -------------------------------------------------------------------------------
Metals and Minerals - 0.9%
Aluminum Company of America 3,380 $ 240,825
- -------------------------------------------------------------------------------
Oils - 4.0%
Chevron Corp. 4,300 $ 277,350
Exxon Corp. 4,260 425,467
Mobil Corp. 3,380 414,895
-----------
$ 1,117,712
- -------------------------------------------------------------------------------
Pollution Control - 0.9%
Browning Ferris Industries, Inc. 4,300 $ 134,913
WMX Technologies, Inc. 3,800 120,175
-----------
$ 255,088
- -------------------------------------------------------------------------------
Printing and Publishing - 1.0%
Gannett Co., Inc. 3,515 $ 280,321
- -------------------------------------------------------------------------------
Railroads - 1.0%
Burlington Northern Santa Fe Railway Co. 3,490 $ 290,543
- -------------------------------------------------------------------------------
Real Estate Investment Trusts - 5.6%
American General Hospitality Corp. 9,190 $ 251,576
Golf Trust America, Inc.* 5,950 144,288
Innkeepers USA Trust 19,770 276,780
Prentiss Properties Trust 8,810 237,870
Storage Trust Reality 14,310 384,581
TriNet Corporate Realty Trust, Inc. 8,500 290,062
-----------
$ 1,585,157
- -------------------------------------------------------------------------------
Restaurants and Lodging - 0.7%
Host Marriott Corp.* 11,570 $ 208,260
- -------------------------------------------------------------------------------
Stores - 2.4%
Lowes Co., Inc. 4,930 $ 179,945
Rite-Aid Corp. 6,600 278,025
Sears, Roebuck & Co. 3,750 203,438
-----------
$ 661,408
- -------------------------------------------------------------------------------
Supermarkets - 0.7%
Safeway, Inc.* 4,260 $ 205,013
- -------------------------------------------------------------------------------
Telecommunications - 0.8%
Lucent Technologies, Inc. 4,260 $ 229,508
- -------------------------------------------------------------------------------
Utilities - Electric - 2.8%
CMS Energy Corp. 8,710 $ 285,252
Pinnacle West Capital Corp. 9,010 281,563
Public Service Co. 11,200 205,800
-----------
$ 772,615
- -------------------------------------------------------------------------------
Utilities - Gas - 0.8%
Coastal Corp. 4,930 $ 224,315
PanEnergy Corp. 300 12,788
-----------
$ 237,103
- -------------------------------------------------------------------------------
Utilities - Telephone - 3.9%
GTE Corp. 9,050 $ 423,087
MCI Communications Corp. 9,190 328,543
Pacific Telesis Group 8,500 346,375
-----------
$ 1,098,005
- -------------------------------------------------------------------------------
Total U.S. Stocks $23,721,091
- -------------------------------------------------------------------------------
Foreign Stocks - 8.5%
Finland - 0.6%
Huhtamaki Oy Group (Food Products) 3,660 $ 171,879
- -------------------------------------------------------------------------------
Hong Kong - 1.0%
Hong Kong Electric Holdings Ltd. (Utilities -
Electric) 33,000 $ 114,219
Hysan Development Co. (Real Estate) 33,000 113,793
Wharf Holdings Ltd. (Real Estate) 13,000 57,756
-----------
$ 285,768
- -------------------------------------------------------------------------------
Japan - 0.7%
Sony Corp. (Electronics) 2,800 $ 202,189
- -------------------------------------------------------------------------------
Portugal - 0.1%
Banco Totta E Acores (Financial Institutions) 1,450 $ 21,574
- -------------------------------------------------------------------------------
Singapore - 0.3%
DBS Land, Ltd. (Real Estate Investment Trusts) 23,000 $ 89,579
- -------------------------------------------------------------------------------
Sweden - 1.4%
Astra AB, Free Shares, "B" ADR (Pharmaceuticals) 3,650 $ 170,592
Sparbanken Sverige AB (Banks and Credit Companies) 10,740 211,654
-----------
$ 382,246
- -------------------------------------------------------------------------------
Switzerland - 0.4%
Ciba Specialty Chemicals AG (Chemicals)* 90 $ 5,698
Novartis AG (Pharmaceuticals)* 90 102,909
-----------
$ 108,607
- -------------------------------------------------------------------------------
United Kingdom - 4.0%
British Aerospace PLC (Aerospace)* 7,710 $ 160,314
British Petroleum PLC, ADR (Oils) 3,215 425,586
Grand Metropolitan (Food and Beverage Products)* 31,800 235,917
Lloyds TSB Group PLC (Banks and Credit Companies)* 10,560 87,812
PowerGen PLC (Utilities - Electric)* 20,950 211,102
-----------
$ 1,120,731
- -------------------------------------------------------------------------------
Total Foreign Stocks $ 2,382,573
- -------------------------------------------------------------------------------
Total Stocks (Identified Cost,$ 26,051,328) $26,103,664
- -------------------------------------------------------------------------------
Convertible Preferred Stocks - 0.7%
- -------------------------------------------------------------------------------
Host Marriott Financial Trust*##
(Identified Cost, $201,450) 3,520 $ 203,280
- -------------------------------------------------------------------------------
Short-Term Obligations - 3.1%
- -------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -------------------------------------------------------------------------------
Federal Home Loan Bank, due 03/03/97
at Amortized Cost $875 $ 874,742
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $27,127,520) $27,181,686
Other Assets, Less Liabilities - 3.3% 915,849
- -------------------------------------------------------------------------------
Net Assets - 100.0% $28,097,535
- -------------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A Restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- -------------------------------------------------------------------------------
FEBRUARY 28, 1997
- -------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $27,127,520) $27,181,686
Cash 2,437
Receivable for Fund shares sold 4,084,255
Receivable for investments sold 454,317
Dividends and interest receivable 22,521
Deferred organization expenses 1,669
Other assets 1,650
-----------
Total assets $31,748,535
-----------
Liabilities:
Payable for investments purchased $ 3,640,715
Payable for Fund shares reaquired 566
Accrued expenses and other liabilities 9,719
-----------
Total liabilities $ 3,651,000
-----------
Net assets $28,097,535
===========
Net assets consist of:
Paid-in capital $27,968,331
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 53,791
Accumulated undistributed net realized gain on investments
and foreign currency transactions 69,055
Accumulated undistributed net investment income 6,358
-----------
Total $28,097,535
===========
Shares of beneficial interest outstanding 2,255,337
=========
Class A shares:
Net asset value per share
(net assets of $12,643,133 / 1,015,860 shares of
beneficial interest outstanding) $12.45
======
Offering price per share (100 / 94.25) $13.21
======
Class B shares:
Net asset value and offering price per share
(net assets of $12,661,219 / 1,015,140 shares of
beneficial interest outstanding) $12.47
======
Class C shares:
Net asset value and offering price per share
(net assets of $2,161,029 / 173,684 shares of
beneficial interest outstanding) $12.44
======
Class I shares:
Net asset value per share
(net assets of $632,154 / 50,653 shares of
beneficial interest outstanding) $12.48
======
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
STATEMENT OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 28, 1997
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 30,459
Interest 8,503
---------
Total investment income $ 38,962
---------
Expenses -
Management fee $ 11,333
Shareholder servicing agent fee (Common) 2,223
Distribution and service fee (Class A) 3,071
Distribution and service fee (Class B) 6,199
Distribution and service fee (Class C) 1,214
Registration fees 50,620
Printing 17,108
Auditing fees 2,500
Custodian fee 2,213
Legal fees 828
Postage 243
Amortization of organization expenses 215
Miscellaneous 736
---------
Total expenses $ 98,503
Fees paid indirectly (140)
Reduction of expenses by investment adviser,
distributor and shareholder servicing agent (67,360)
---------
Net expenses $ 31,003
---------
Net investment income $ 7,959
---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 74,959
Foreign currency transactions 83
---------
Net realized gain on investments and foreign
currency transactions $ 75,042
---------
Change in unrealized appreciation -
Investments $ 47,511
Translation of assets and liabilities in foreign
currencies (378)
---------
Net unrealized gain on investments and foreign
currency translation $ 47,133
---------
Net realized and unrealized gain on investments
and foreign currency $ 122,175
---------
Increase in net assets from operations $ 130,134
=========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1997 PERIOD ENDED
(UNAUDITED) AUGUST 31, 1996*
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment income $ 7,959 $ 1,821
Net realized gain on investments and foreign
currency transactions 75,042 29,981
Net unrealized gain on investments and foreign
currency translation 47,133 6,658
----------- --------
Increase in net assets from operations $ 130,134 $ 38,460
----------- --------
Distributions declared to shareholders -
From net investment income (Class A) $ (3,370) $ --
From net realized gain on investments (Class A) (36,020) --
----------- --------
Total distributions declared to shareholders $ (39,390) $ --
----------- --------
Fund share (principal) transactions -
Net proceeds from sale of shares $28,165,972 $453,843
Net asset value of shares issued to shareholders
in reinvestment of distributions 39,386 --
Cost of shares reacquired (690,880) --
----------- --------
Increase in net assets from Fund share transactions $27,514,478 $453,843
----------- --------
Total increase in net assets $27,605,222 $492,303
Net assets:
At beginning of period 492,313 10
----------- --------
At end of period (including accumulated
undistributed net investment income of $6,358 and
$1,769, respectively) $28,097,535 $492,313
=========== ========
*For the period from the commencement of investment operations, January 2, 1996 to August 31, 1996.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1997 PERIOD ENDED
(UNAUDITED) AUGUST 31, 1996*
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $11.13 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.03 $ 0.05
Net realized and unrealized
gain on investments and
foreign currency transactions 2.14 1.08
------ ------
Total from investment operations $ 2.17 $ 1.13
------ ------
Less distributions declared to
shareholders --
From net investment income $(0.07) $ --
From net realized gain on
investments and foreign
currency transactions (0.78) --
------ ------
Total distributions declared to
shareholders $(0.85) $ --
------ ------
Net asset value - end of period $12.45 $11.13
====== ======
Total return(+) 19.85%++ 11.30%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses 1.50%+ 1.50%+
Net investment income (loss) 0.79%+ 0.65%+
Portfolio turnover 38% 58%
Average commission rate### $0.0318 $0.0113
Net assets at end of period (000 omitted) $12,643 $ 492
*For the period from the commencement of investment operations,
January 2, 1996 to August 31, 1996.
+Annualized.
++Not annualized.
#Per share data is based on average shares outstanding.
##For the 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.
(S)The investment adviser voluntarily agreed to maintain the expenses of
the Fund at not more than 1.50% of the average daily net assets. To
the extent actual expenses were over/ under the limitation, the net
investment loss per share and the ratios would have been:
Net investment income (loss) $(0.11) $(0.13)
Ratios (to average net assets):
Expenses## 5.52%+ 4.58%+
Net investment income (loss) (2.85)%+ (1.86)%+
The reduction of expenses by fees
paid indirectly, as a percentage
of net assets, amounted to: (0.02)%+ (0.03)%+
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (UNAUDITED) - CONTINUED
- -----------------------------------------------------------------------------------------------------------------------------
PERIOD ENDED FEBRUARY 28, 1997
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B* CLASS C** CLASS I*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $12.01 $12.00 $11.93
------ ------ ------
Income from investment operations# -
Net investment income(S) $ -- $ -- $ --
Net realized and unrealized gain on investments and
foreign currency transactions 0.46 0.44 0.55
------ ------ ------
Total from investment operations $ 0.46 $ 0.44 $ 0.55
------ ------ ------
Net asset value - end of period $12.47 $12.44 $12.48
====== ====== ======
Total return 3.91%++ 3.75%++ 4.61%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 2.25%+ 2.25%+ 1.50%+
Net investment income (loss) 0.01%+ 0.03%+ 0.99%+
Portfolio turnover 38% 38% 38%
Average commission rate### $0.0318 $0.0318 $0.0318
Net assets at end of period (000 omitted) $12,661 $2,161 $632
*For the period from the commencement of offering of Class B and Class I shares, January 2, 1997 to February 28, 1997.
**For the period from the commencement of offering of Class C shares, January 3, 1997 to February 28, 1997.
+Annualized.
++Not annualized.
#Per share data 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.
(S)The investment adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1.50% for Class I shares and
2.25% for Class B and Class C shares of average daily net assets. To the extent actual expenses were over/under the limitation,
the net investment loss per share and the ratios would have been:
Net investment income (loss) $(0.07) $(0.07) $(0.02)
Ratios (to average net assets):
Expenses## 6.12%+ 6.11%+ 5.37%+
Net investment income (loss) (4.70)%+ (4.08)%+ (0.54)%+
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) BUSINESS AND ORGANIZATION
MFS Research Growth and Income Fund (the Fund) is a 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
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 of 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 gain and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately
disclosed.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its 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 the Fund.
Forward Foreign Currency Exchange Contracts - The Fund 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 counterparties 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 Fund will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund 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 Fund may enter into
contracts with the intent of changing the relative exposure of the 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 payments received in additional securities are recorded on the
ex-dividend date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's 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.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Distributions to
shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest
The Fund offers Class A, Class B, Class C and Class I shares. The four Classes
of shares differ in their respective 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 annual rate of 0.65% of
average daily net assets. The investment adviser did not impose a portion 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 the Fund's operating expenses exclusive of management,
distribution and service fees. The Fund in turn will pay MFS an expense
reimbursement fee such that the total operating expenses do not exceed 1.50%,
2.25%, 2.25% and 1.25% of average daily net assets of its Class A, Class B,
Class C and Class I shares, respectively. To the extent that the expense
reimbursement fee exceeds the Fund's actual expenses, the excess will be applied
to amounts paid by MFS in prior years. At February 28, 1997, the aggregate
unreimbursed expenses owed to MFS by the Fund amounted to $67,682, including
$63,151 incurred in the current period.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD) and
MFS Service Center, Inc. (MFSC).
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$467,647 for the six months ended February 28, 1997, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A 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 $0 for the six months
ended February 28, 1997. Payment of the 0.10% per annum Class A distribution fee
is currently being waived. Fees incurred under the distribution plan during the
six months ended February 28, 1997 were 0.25% of average daily net assets
attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be additional consideration for
services rendered by the dealer with respect to Class B and Class C shares. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $0 and $0 for Class B and Class C shares, respectively, for
the six months ended February 28, 1997. Fees incurred under the distribution
plan during the six months ended February 28, 1997 were 1.00% of average daily
net assets attributable to Class B and Class C shares on an annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such 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.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class C shares in the event of a shareholder redemption within 12 months of
purchases made on or after April 1, 1996. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the period ended
February 28, 1997 were $0, $1,000 and $150 for Class A, Class B and Class C
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.13%. Prior to January 1, 1997, the fee was calculated as a percentage of the
average daily net assets of Class A shares at an effective annual rate of up to
0.15%.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities $ 285,900 $ --
Investments (non-U.S. government securities) 27,420,562 1,991,909
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 $27,127,520
===========
Gross unrealized appreciation $ 431,165
Gross unrealized depreciation (376,999)
-----------
Net unrealized depreciation $ 54,166
===========
</TABLE>
(5) SHARES OF BENEFICIAL INTEREST
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED FEBRUARY 28, 1997 1996*
---------------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,020,010 $12,673,475 44,239 $453,843
Shares issued to shareholders in reinvestment
of distributions 3,290 39,386 -- --
Shares transferred to Class I (50,883) (607,034) -- --
Shares reacquired (797) (14,590) -- --
--------- ----------- ------ --------
Net increase 971,620 $12,091,237 44,239 $453,843
========= =========== ====== ========
</TABLE>
CLASS B SHARES
PERIOD ENDED FEBRUARY 28, 1997**
--------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 1,019,243 $12,714,096
Shares reacquired (4,103) (50,835)
--------- -----------
Net increase 1,015,140 $12,663,261
========= ===========
*For the period from the commencement of investment operations, January 2, 1996
to August 31, 1996.
**For the period from the commencement of offering of Class B shares, January
2, 1997 to February 28, 1997.
CLASS C SHARES
PERIOD ENDED FEBRUARY 28, 1997*
--------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 174,954 $2,171,367
Shares reacquired (1,270) (15,558)
------- ----------
Net increase 173,684 $2,155,809
======= ==========
CLASS I SHARES
PERIOD ENDED FEBRUARY 28, 1997**
--------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares transferred from Class A 50,883 $ 607,034
Shares reacquired (230) (2,863)
------ ----------
Net increase 50,653 $ 604,171
====== ==========
*For the period from the commencement of offering of Class C shares, January
3, 1997 to February 28, 1997.
**For the period from the commencement of offering of Class I shares, January
2, 1997 to February 28, 1997.
(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 $400 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended
February 28, 1997 was $3.
--------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
MFS(R) RESEARCH GROWTH AND INCOME FUND
<TABLE>
<C> <C>
TRUSTEES ASSISTANT SECRETARY
A. Keith Brodkin* - Chairman and President James R. Bordewick, Jr.*
Richard B. Bailey* - Private Investor; Former CUSTODIAN
Chairman and Director (until 1991), State Street Bank and Trust Company
Massachusetts Financial Services Company;
Director, Cambridge Bancorp; Director, INVESTOR INFORMATION
Cambridge Trust Company
For MFS stock and bond market outlooks, call
Marshall N. Cohan - Private Investor toll free: 1-800-637-4458 anytime from a
touch-tone telephone.
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; For information on MFS mutual funds, call
Professor of Surgery, Harvard Medical School your financial adviser or, for an information
kit, call toll free: 1-800-637-2929 any
The Hon. Sir J. David Gibbons, KBE - Chief business day from 9 a.m. to 5 p.m. Eastern
Executive Officer, Edmund Gibbons Ltd.; time (or leave a message anytime).
Chairman, Bank of N.T. Butterfield & Son Ltd.
Abby M. O'Neill - Private Investor; INVESTOR SERVICE
Director, Rockefeller Financial Services, Inc. MFS Service Center, Inc.
(investment advisers) P.O. Box 2281
Boston, MA 02107-9906
Walter E. Robb, III - President and
Treasurer, Benchmark Advisors, Inc. For general information, call toll free:
(corporate financial consultants); President, 1-800-225-2606 any business day from
Benchmark Consulting Group, Inc. (office 8 a.m. to 8 p.m. Eastern time.
services); Trustee, Landmark Funds (mutual funds)
For service to speech- or hearing-impaired,
Arnold D. Scott* - Senior Executive Vice call toll free: 1-800-637-6576 any business
President, Director and Secretary, day from 9 a.m. to 5 p.m. Eastern time. (To
Massachusetts Financial Services Company use this service, your phone must be equipped
with a Telecommunications Device for the Deaf.)
Jeffrey L. Shames* - President and Director,
Massachusetts Financial Services Company
For share prices, account balances, and
J. Dale Sherratt - President, Insight exchanges, call toll free: 1-800-MFS-TALK
Resources, Inc. (acquisition planning specialists) (1-800-637-8255) anytime from a touch-tone telephone.
Ward Smith - Former Chairman (until 1994), WORLD WIDE WEB
NACCO Industries; Director, Sundstrand www.mfs.com
Corporation
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street --------------------------------------------
Boston, MA 02116-3741
[DALBAR For the third year in a row,
DISTRIBUTOR LOGO] MFS earned a #1 ranking in
MFS Fund Distributors, Inc. TOP RATED the DALBAR, Inc. Broker/Dealer
500 Boylston Street SERVICE Survey, Main Office Operations
Boston, MA 02116-3741 Service Quality Category. The
firm achieved a 3.48 overall score on a
DIRECTOR OF RESEARCH scale of 1 to 4 in the 1996 survey. A total
Kevin R. Parke* of 110 firms responded, offering input on the
quality of service they received from 29
TREASURER mutual fund companies nationwide. The survey
W. Thomas London* contained questions about service quality in
15 categories, including "knowledge of phone
ASSISTANT TREASURER service contacts," "accuracy of transaction
James O. Yost* processing," and "overall ease of doing
business with the firm."
SECRETARY ----------------------------------------------
Stephen E. Cavan*
*Affiliated with the Investment Adviser
</TABLE>
