<PAGE>
[Graphic Omitted]
[Logo]
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
SEMIANNUAL REPORT
FEBRUARY 28, 1998
o MFS(R) CORE
GROWTH FUND
o MFS(R) SPECIAL
OPPORTUNITIES FUND
o MFS(R) BLUE
CHIP FUND
o MFS(R) CONVERTIBLE
SECURITIES FUND
o MFS(R) SCIENCE AND
TECHNOLOGY FUND
<PAGE>
IN MEMORIAM
A. KEITH BRODKIN
1935 - 1998
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MFS INVESTMENT MANAGEMENT(SM)
- ---------------------------
[Photo of A. Keith Brodkin]
- ---------------------------
On February 2, 1998, Keith Brodkin, a friend and leader to everyone at MFS, died
unexpectedly at age 62. His thoughtful letters to shareholders on the markets
and economy have been an integral part of MFS shareholder reports like this one
for many years.
Keith joined MFS in 1970 as the firm's first fixed-income manager, managing the
bond portion of MFS(R) Total Return Fund. He went on to manage our first pure
bond fund, MFS(R) Bond Fund, when it was introduced in 1974, and he was
considered a pioneer in the art of active bond management.
Keith was named President and Chief Investment Officer of MFS in 1987 and four
years later became Chairman and Chief Executive Officer. During his stewardship,
MFS has achieved significant growth in total assets under management, rising
from some $25 billion in 1991 to the over $70 billion today entrusted to us by
three million individual and institutional investors worldwide. Under Keith's
leadership, MFS has carefully but steadily built its domestic and international
investment capabilities through the introduction of a range of new products and
a still-growing staff that now numbers over 100 equity and fixed-income
professionals.
Throughout his career, Keith was very active in a wide range of charitable
endeavors. He is survived by his wife and three children.
His leadership, friendship, and wise counsel will be sorely missed.
<PAGE>
<TABLE>
<S> <C>
MFS(R) CORE GROWTH FUND MFS(R) CONVERTIBLE SECURITIES FUND
MFS(R) SPECIAL OPPORTUNITIES FUND MFS(R) SCIENCE AND TECHNOLOGY FUND
MFS(R) BLUE CHIP FUND
SECRETARY
TRUSTEES Stephen E. Cavan*
Richard B. Bailey* - Private Investor;
Former Chairman and Director (until 1991), ASSISTANT SECRETARY
MFS Investment Management James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor CUSTODIAN
State Street Bank and Trust Company
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery,
Brigham and Women's Hospital; Professor of Surgery, INVESTOR INFORMATION
Harvard Medical School For MFS stock and bond market outlooks, call toll free:
1-800-637-4458 anytime from a touch-tone telephone.
The Hon. Sir J. David Gibbons, KBE - Chief Executive
Officer, Edmund Gibbons Ltd. For information on MFS mutual funds, call your financial
adviser or, for an information kit, call toll free:
Abby M. O'Neill - Private Investor 1-800-637-2929 any business day from 9 a.m. to 5 p.m.
Eastern time (or leave a message anytime).
Walter E. Robb, III - President and Treasurer, Benchmark
Advisors, Inc. (corporate financial consultants); INVESTOR SERVICE
President, Benchmark Consulting Group, Inc. (office MFS Service Center, Inc.
services) P.O. Box 2281
Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive Vice President,
Director, and Secretary, MFS Investment Management For general information, call toll free: 1-800-225-2606
any business day from 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - Chairman, Chief Executive Officer,
and Director, MFS Investment Management For service to speech- or hearing-impaired, call toll
free: 1-800-637-6576 any business day from 9 a.m. to 5
J. Dale Sherratt - President, Insight Resources, Inc. p.m. Eastern time. (To use this service, your phone must
(acquisition planning specialists) be equipped with a Telecommunications Device for the
Deaf.)
Ward Smith - Former Chairman (until 1994), NACCO
Industries (holding company) Investment Adviser For share prices, account balances, and exchanges, call
toll free: 1-800-MFS-TALK (1-800-637-8255) anytime from
INVESTMENT ADVISER a touch-tone telephone.
Massachusetts Financial Services Company
500 Boylston Street World Wide Web
Boston, MA 02116-3741 www.mfs.com
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGERS
Irfan Ali*
John F. Brennan, Jr.*
Mitchell D. Dynan*
Judith Noelle Lamb*
Robert J. Manning*
Brian E. Stack*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders:
As investment managers we take a long-term view of the world's economies, as
well as of the stock and bond markets, and try to avoid getting caught up in
short-term fluctuations. However, it is hard to ignore unexpected events such
as the Asian economic turmoil or closely watched companies that miss their
quarterly earnings estimates. Given the potential for these events and their
possible impact on major market indices, we think it's important to offer some
perspective about recent market behavior and to let you know what MFS is doing
in an effort to provide you with favorable long-term investment performance.
The most notable recent event affecting investment markets has been the Asian
turmoil, which began in the summer of 1997 as a result of slowing growth rates
in the region and excess speculation in real estate markets. Since then, most
countries in the region have begun to implement the economic and regulatory
restructuring needed to put themselves on a stronger financial foundation. While
it may be a few years before some of these countries return to solid economic
footing, and while there will probably be a relatively short-term impact on the
U.S. economy, we believe the long-term outlook for the region is quite positive.
The Asian situation has brought home the lesson that major events can quickly
impact investment markets around the world, including those of the United
States. Although U.S. equities have enjoyed
a bull market lasting more than 15 years and have continued to set records in
the first several weeks
of 1998, there have been brief bouts of volatility associated with the Asian
turmoil, as well as with perceived downturns for certain industries such as
technology.
While we believe the long-term outlook for the equity markets is favorable,
other, unforeseen events can trigger fairly extended periods during which
prices decline or remain relatively flat. Since no one can predict market
cycles, that makes it that much more important to find companies that can keep
growing in the face of the occasional downturn and even gain market share. For
us, this means using original, bottom-up research to examine each company's
earnings potential and position as well as the overall prospects for its
industry. To that end, MFS continues to increase the research support
available to portfolio managers of MFS funds.
On the fixed-income side, MFS uses active portfolio management based on
extensive research and credit analysis to reduce the potential for price
declines and enhance the opportunity for price appreciation. For both equity
and fixed-income managers, this means visiting and meeting with thousands of
companies and issuers of credit every year, as well as attending many
presentations and closely following sources of industry research.
We believe this approach, based on thorough research, teamwork, innovative
thinking, and the free exchange of ideas, is the best way to get the most
performance for shareholders in MFS funds - in
any market environment.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management
March 16, 1998
Jeffrey L. Shames, a graduate of Wesleyan University and the Massachusetts
Institute of Technology Sloan School of Management, joined MFS in 1983. After
four years as an industry analyst and portfolio manager, he was named Chief
Equity Officer in 1987 and President and a member of the Board of Directors in
1993. Mr. Shames was appointed Chairman and Chief Executive Officer in
February 1998.
<PAGE>
PORTFOLIO MANAGERS' OVERVIEWS
MFS Core Growth Fund
For the six months ended February 28, 1998, Class A shares of the Fund provided
a total return of 18.10%, and Class I shares returned 18.16%. These returns,
which assume the reinvestment of distributions but exclude the effects of any
sales charges, compare to a 17.62% return for the Standard & Poor's 500
Composite Index (the S&P 500), a popular, unmanaged index of common stock total
return performance, and to a 14.69% return for the average growth fund as
tracked by Lipper Analytical Services, Inc., an independent firm that reports
mutual fund performance.
In an extremely favorable backdrop for U.S. equities, including a robust
economy, low interest rates, and solid corporate profitability, there were
still concerns about the effects of turmoil in Asia. However, we used this as
an opportunity to add to the Fund's technology holdings, including Cadence
Design Systems and Network Associates, while reducing its exposure to the
electronics industry. Companies benefiting from strong consumer spending,
including Royal Caribbean Cruise Lines, were added to the portfolio, as were
companies exposed to strong advertising demand, such as Viacom and Time
Warner. Holdings were also added in companies expected to benefit from record
housing activity, including Linens 'N Things, as well as in mortgage finance
companies such as the Federal Home Loan Mortgage Corp. Health care remains a
favorite theme, as positive demographic trends, new pharmaceutical approvals,
and managed-care penetration continue to drive record volume for drug
products. Continuing this theme, retail drug stores remain a favorite sector
for the Fund.
/s/ Stephen Pesek
Stephen Pesek
Portfolio Manager
MFS Special Opportunities
Fund For the six months ended February 28, 1998, Class A shares of the Fund
provided a total return of 12.00%, and Class I shares returned 12.04%. These
returns, which assume the reinvestment of distributions but exclude the effects
of any sales charges, compare to a 17.62% return for the S&P 500 and to a 6.43%
return for the average high-yield corporate bond fund as tracked by
CDA/Wiesenberger, an independent firm that reports mutual fund performance.
We have the majority of the Fund's assets in common stocks because we believe
opportunities in the distressed and high-yield markets are limited due to the
domestic economy's continued strength. The Fund's holdings can be classified
into three categories: companies that have emerged from bankruptcy, such as
Phar Mor and Musicland; companies with leveraged balance sheets, such as
Gaylord Container and NL Industries; and companies that we feel have
significant earnings power and that trade at substantial discounts to their
anticipated long-term growth rates, such as Fred Meyer and Harrah's
Entertainment. The Fund has also benefited from companies that have been taken
over at substantial premiums to our purchase price, such as Telemundo and
Thermadyne. We will continue to pursue the Fund's value-oriented style, and we
will wait for the market to present us with interesting opportunities.
/s/ John F. Brennan, Jr. /s/ Robert J. Manning
John F. Brennan, Jr. Robert J. Manning
Portfolio Manager Portfolio Manager
MFS Blue Chip Fund
For the six months ended February 28, 1998, both Class A and Class I shares of
the Fund provided a total return of 19.37%. These returns, which assume the
reinvestment of distributions but exclude the effects of any sales charges,
compare to a 17.62% return for the S&P 500 for the same period.
The Fund's investment strategy continues to be based on the assumption that
the global economy will grow slowly during 1998 and that interest rates in the
United States will remain flat or decline. As a result, the Fund is positioned
relatively defensively, with the majority of its investments in companies that
we believe can continue to increase earnings in a slow-growth environment.
Although the Fund's holdings are diverse, it is overweighted in the consumer
staples, health care, and utilities and communications sectors. In addition,
the Fund continues to have an above-market weighting in financial services,
with an emphasis on insurance and regional banks. Conversely, the Fund is
underweighted in more economically sensitive areas such as basic materials,
technology, and autos.
The Fund continues to emphasize large-cap, blue-chip companies. As of February
28, 1998, the average weighted market capitalization of the stocks in the Fund
was $49 billion. The Fund's beta, or price volatility, is currently about
0.93, or 0.70% less than that of the S&P 500. The top five holdings are Tyco
International, Kroger, General Electric, DST Systems, and Exxon.
/s/ Mitchell D. Dynan
Mitchell D. Dynan
Portfolio Manager
MFS Convertible Securities Fund
For the six months ended February 28, 1998, Class A shares of the Fund provided
a total return of 11.65%, and Class I shares returned 11.66%. These returns,
which assume the reinvestment of distributions but exclude the effects of any
sales charges, compare to an 8.60% return for the Merrill Lynch All Convertibles
Index, an unmanaged index of 542 securities, and to a 6.88% return for the
average convertible securities fund for the same period as tracked by Lipper
Analytical Services, Inc. The Fund's equity sensitivity has been increased
slightly during the period by reducing its convertible weighting. Convertible
securities now comprise 74% of the portfolio versus 80% six months ago.
The Fund's overall strategy is to invest in companies that we believe are
benefiting from one or more of the following trends: industry consolidation,
market dominance, and cost containment. Performance was favorably impacted by
overweightings in leisure companies such as Royal Caribbean and American
Radio, retailers such as Home Depot and Rite Aid, and financial services
companies such as Finova and MGIC Investment Corp. Conversely, positions in
the oil services sector and Fine Host Corp. detracted from results. We will
continue to use a value-oriented approach to evaluate company fundamentals and
the technical aspects of convertible securities.
/s/ Judith Noelle Lamb
Judith Noelle Lamb
Portfolio Manager
MFS Science and Technology Fund
For the six months ended February 28, 1998, both Class A and Class I shares of
the Fund provided a total return of 15.92%. These returns, which assume the
reinvestment of distributions but exclude the effects of any sales charges,
compare to an 11.54% return for the NASDAQ Composite Index, an unmanaged index
of common stocks traded on NASDAQ, and to a 5.70% return for the average
technology fund as tracked by CDA/Wiesenberger.
The Fund continues to seek companies that we believe are fast growing and that
have market share leadership and defensible strategic positions. Holdings
remain focused in the computer software, networking, business services, and
semiconductor sectors. The Fund's investments in the health care sector remain
highly selective.
The Fund's performance reflected a turbulent technology market and fears of a
precipitous slowdown in Asian business. While this volatility provided
attractive buying opportunities in selected names, few technology stocks saw
sustained price appreciation during the quarter. Top holdings include
Microsoft, Cadence Design Systems, and Computer Associates. We continue to see
exciting investment opportunities in the technology sector, driven by industry
growth and market share consolidation.
/s/ Irfan Ali
Irfan Ali
Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are only through the end of the period of the report as stated on the cover.
The managers' views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
PORTFOLIO MANAGERS' PROFILES
Each portfolio manager has acted in that capacity since the commencement of
investment operations of each Fund.
MFS CORE GROWTH FUND
Stephen Pesek joined MFS in 1994 as a research analyst and that year was named
Vice President - Investments. He is a graduate of the University of
Pennsylvania and Columbia University.
MFS SPECIAL OPPORTUNITIES FUND
John F. Brennan, Jr., joined MFS in 1985 as an industry specialist and was
named Assistant Vice President - Investments in 1987, Vice President -
Investments in 1988, and Senior Vice President in 1995. He is a graduate of
the University of Rhode Island and the Stanford University Graduate School of
Business Administration.
Robert J. Manning joined MFS in 1984 as a research analyst in the High Yield
Bond Department and was named Vice President - Investments in 1988 and Senior
Vice President in 1993. He is a graduate of the University of Lowell and the
Boston College Graduate School of Management.
MFS BLUE CHIP FUND
Mitchell D. Dynan joined MFS in 1986 as a research analyst and was named
Assistant Vice President - Investments in 1987 and Vice President - Investments
in 1988. He is a graduate of Tufts University.
MFS CONVERTIBLE SECURITIES FUND
Judith Noelle Lamb joined MFS in 1992 as a Vice President and industry
specialist. She became a convertible securities specialist in 1994. She is a
graduate of New York University and the New York University Graduate School of
Business.
Note to Shareholders: Effective April 1, 1998, the Fund is being managed by
Constantinos Mokas, who succeeds Judith Noelle Lamb. Mr. Mokas joined MFS in
1990 as an industry specialist and has covered the computer hardware, money
center and regional bank, savings and loan, and metals industries. He was
named Assistant Vice President - Investments in 1994 and Vice President -
Investments in 1996. Mr. Mokas is a graduate of Dartmouth College and the Amos
Tuck School of Business at Dartmouth College.
MFS SCIENCE AND TECHNOLOGY FUND
Irfan Ali joined MFS in 1993 as an industry specialist and was named Assistant
Vice President - Investments in 1996 and Vice President - Investments in 1997.
He is a graduate of Harvard College and the Harvard University Graduate School
of Business Administration.
<PAGE>
FUND FACTS
Currently each Fund offers only Class A and Class I shares, 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 CORE GROWTH FUND
Objective: Seeks capital appreciation.
Commencement of investment operations: January 2, 1996
Class inception: Class A - January 2, 1996 Class I - January 2, 1997
Size: $3.4 million net assets as of February 28, 1998
MFS SPECIAL OPPORTUNITIES FUND
Objective: Seeks capital appreciation.
Commencement of investment operations: January 2, 1996
Class inception: Class A - January 2, 1996 Class I - January 2, 1997
Size: $3.8 million net assets as of February 28, 1998
MFS BLUE CHIP FUND
Objective: Seeks capital appreciation.
Commencement of investment operations: January 2, 1997
Class inception: Class A - January 2, 1997 Class I - January 2, 1997
Size: $0.9 million net assets as of February 28, 1998
MFS CONVERTIBLE SECURITIES FUND
Objective: Seeks high total return through a combination of current income
and capital appreciation.
Commencement of investment operations: January 2, 1997
Class inception: Class A - January 2, 1997 Class I - January 2, 1997
Size: $0.7 million net assets as of February 28, 1998
MFS SCIENCE AND TECHNOLOGY FUND
Objective: Seeks capital appreciation.
Commencement of investment operations: January 2, 1997
Class inception: Class A - January 2, 1997 Class I - January 2, 1997
Size: $3.0 million net assets as of February 28, 1998
<PAGE>
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods.
MFS CORE GROWTH FUND
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF FEBRUARY 28, 1998
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +18.10% +38.17% +111.45%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +38.17% + 41.46%
- -------------------------------------------------------------------------------
SEC Results -- +31.65% + 38.30%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +18.16% +38.13% +111.71%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +38.13% + 41.54%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1996, through February 28, 1998.
MFS SPECIAL OPPORTUNITIES FUND
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF FEBRUARY 28, 1998
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +12.00% +31.14% + 67.73%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +31.14% + 27.07%
- -------------------------------------------------------------------------------
SEC Results -- +24.89% + 24.23%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +12.04% +31.36% + 68.30%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +31.36% + 27.27%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1996, through February 28, 1998.
MFS BLUE CHIP FUND
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF FEBRUARY 28, 1998
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +19.37% +34.70% +40.50%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +34.70% +34.19%
- -------------------------------------------------------------------------------
SEC Results -- +28.31% +28.64%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +19.37% +34.70% +40.50%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +34.70% +34.19%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through February 28, 1998.
MFS CONVERTIBLE SECURITIES FUND
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
AS OF FEBRUARY 28, 1998
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +11.65% +26.17% +28.07%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +26.17% +23.86%
- -------------------------------------------------------------------------------
SEC Results -- +20.14% +18.74%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +11.66% +26.20% +27.96%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +26.20% +23.77%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through February 28, 1998.
MFS SCIENCE AND TECHNOLOGY FUND
This fund may focus its investments in certain sectors, thereby increasing its
vulnerability to any single economic, political, or regulatory development.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF FEBRUARY 28, 1998
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +15.92% +44.09% +45.24%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +44.09% +38.10%
- -------------------------------------------------------------------------------
SEC Results -- +37.28% +32.40%
- -------------------------------------------------------------------------------
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year Life of Fund*
- -------------------------------------------------------------------------------
Cumulative Total Return +15.92% +44.23% +45.24%
- -------------------------------------------------------------------------------
Average Annual Total Return -- +44.23% +38.10%
- -------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through February 28, 1998.
All results represent past performance and are not necessarily an indication
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - February 28, 1998
MFS CORE GROWTH FUND
Stocks - 97.4%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 93.6%
Advertising - 0.1%
Doubleclick, Inc.* 100 $ 3,194
- --------------------------------------------------------------------------------
Aerospace - 2.3%
Lockheed Martin Corp. 200 $ 23,337
Raytheon Co. 600 34,800
Thiokol Corp. 200 19,125
-----------
$ 77,262
- --------------------------------------------------------------------------------
Airlines - 0.5%
Southwest Airlines Co. 600 $ 17,213
- --------------------------------------------------------------------------------
Banks and Credit Companies - 0.8%
Compass Bancshares, Inc. 200 $ 9,200
Washington Mutual, Inc. 250 16,781
-----------
$ 25,981
- --------------------------------------------------------------------------------
Business Machines - 2.2%
Affiliated Computer Services, Inc., "A"* 1,500 $ 48,281
Dell Computer Corp.* 100 13,988
Sun Microsystems, Inc.* 300 14,287
-----------
$ 76,556
- --------------------------------------------------------------------------------
Business Services - 2.6%
AccuStaff, Inc.* 600 $ 16,950
At Home Corp.* 100 3,413
Ceridian Corp.* 400 18,625
Ikon Office Solutions, Inc. 450 14,709
Service Corp. International 600 22,725
SunGard Data Systems, Inc.* 400 13,675
-----------
$ 90,097
- --------------------------------------------------------------------------------
Cellular Telephones - 2.0%
Cellstar Corp.* 1,000 $ 32,312
Century Telephone Enterprises, Inc. 600 36,600
-----------
$ 68,912
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 4.2%
Microsoft Corp.* 1,200 $ 101,700
Networks Associates, Inc.* 650 42,006
-----------
$ 143,706
- --------------------------------------------------------------------------------
Computer Software - Systems - 8.8%
BMC Software, Inc.* 800 $ 61,200
Cadence Design Systems, Inc.* 1,450 50,659
Computer Associates International, Inc. 1,000 47,125
Compuware Corp.* 1,200 50,550
EMC Corp.* 500 19,125
Keane, Inc.* 600 27,900
Oracle Corp.* 1,700 41,863
Synopsys, Inc.* 100 3,494
-----------
$ 301,916
- --------------------------------------------------------------------------------
Consumer Goods and Services - 8.1%
Clorox Co. 190 $ 16,673
Gillette Co. 300 32,362
Newell Co. 700 32,112
Philip Morris Cos., Inc. 750 32,578
Revlon, Inc., "A"* 500 23,469
RJR Nabisco Holdings Corp. 300 10,369
Tyco International Ltd. 2,564 130,123
-----------
$ 277,686
- --------------------------------------------------------------------------------
Electrical Equipment - 1.9%
Black & Decker Corp. 400 $ 20,150
General Electric Co. 375 29,156
Hubbell, Inc. 300 15,113
-----------
$ 64,419
- --------------------------------------------------------------------------------
Electronics - 3.7%
Altera Corp.* 500 $ 21,562
Analog Devices, Inc.* 600 19,350
Integrated Process Equipment Corp.* 900 16,650
Intel Corp. 250 22,422
Micron Technology, Inc.* 300 9,956
Novellus Systems, Inc.* 200 9,588
PMC-Sierra, Inc.* 400 14,400
Xilinx, Inc.* 300 13,163
-----------
$ 127,091
- --------------------------------------------------------------------------------
Entertainment - 6.2%
American Radio Systems Corp., "A"* 200 $ 11,950
Clear Channel Communications, Inc.* 200 18,125
Gemstar International Group Ltd.* 1,200 36,900
Harrah's Entertainment, Inc.* 300 6,319
Heftel Broadcasting Corp.* 300 14,213
Jacor Communications, Inc., "A"* 450 26,044
Time Warner, Inc. 325 21,937
Univision Communications, Inc., "A"* 1,100 42,212
Viacom, Inc., "B"* 750 36,000
-----------
$ 213,700
- --------------------------------------------------------------------------------
Financial Institutions - 5.1%
American Express Co. 225 $ 20,264
Associates First Capital Corp., "A" 200 16,000
CIT Group, Inc., "A"* 500 16,500
Federal Home Loan Mortgage Corp. 800 37,800
Federal National Mortgage Assn 300 19,144
Franklin Resources, Inc. 500 25,500
Merrill Lynch & Co., Inc. 250 17,891
Morgan Stanley, Dean Witter, Discover & Co. 300 20,906
-----------
$ 174,005
- --------------------------------------------------------------------------------
Food and Beverage Products - 2.2%
Dean Foods Co. 300 $ 16,500
Flowers Industries, Inc. 900 22,894
Ralcorp Holdings, Inc.* 800 13,550
Tootsie Roll Industries, Inc. 300 22,387
-----------
$ 75,331
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.1%
Kimberly-Clark Corp. 700 $ 38,981
- --------------------------------------------------------------------------------
Insurance - 6.6%
Allstate Corp. 300 $ 27,975
Chubb Corp. 375 29,930
Conseco, Inc. 700 32,856
ESG Re Ltd.* 100 2,650
Executive Risk, Inc. 100 6,819
Lincoln National Corp. 475 39,781
Progressive Corp. 150 17,381
Reliastar Financial Corp. 700 33,294
Torchmark Corp. 400 18,625
Travelers Group, Inc. 275 15,331
-----------
$ 224,642
- --------------------------------------------------------------------------------
Medical and Health Products - 5.2%
American Home Products Corp. 375 $ 35,156
AmeriSource Health Corp., "A"* 200 11,700
Boston Scientific Corp.* 300 17,925
Bristol-Myers Squibb Co. 500 50,094
Mentor Corp. 350 10,216
Pfizer, Inc. 150 13,275
Warner-Lambert Co. 260 38,025
-----------
$ 176,391
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 5.9%
Cytyc Corp.* 100 $ 2,300
HBO & Co. 600 32,475
HEALTHSOUTH Corp.* 1,400 37,800
Province Healthcare Co.* 100 2,075
Tenet Healthcare Corp.* 700 26,119
Total Renal Care Holdings, Inc.* 1,200 38,625
United Healthcare Corp. 1,040 63,115
-----------
$ 202,509
- --------------------------------------------------------------------------------
Office Equipment - 0.1%
Steelcase, Inc., "A"* 100 $ 3,606
- --------------------------------------------------------------------------------
Oil Services - 0.2%
Diamond Offshore Drilling, Inc. 150 $ 6,797
- --------------------------------------------------------------------------------
Printing and Publishing - 1.0%
Scholastic Corp.* 900 $ 35,662
- --------------------------------------------------------------------------------
Restaurants and Lodging - 2.1%
Cendant Corp.* 1,900 $ 71,250
- --------------------------------------------------------------------------------
Stores - 8.4%
BJ's Wholesale Club, Inc.* 600 $ 20,325
CVS Corp. 650 48,141
Duane Reade, Inc.* 100 2,237
Home Depot, Inc. 400 25,525
Linens 'N Things, Inc.* 850 42,819
Office Depot, Inc.* 1,800 49,612
Rite Aid Corp. 3,000 97,125
-----------
$ 285,784
- --------------------------------------------------------------------------------
Supermarkets - 3.4%
Kroger Co.* 500 $ 21,125
Meyer (Fred), Inc.* 1,100 48,881
Safeway, Inc.* 1,300 45,338
-----------
$ 115,344
- --------------------------------------------------------------------------------
Telecommunications - 7.6%
Ascend Communications, Inc.* 500 $ 18,719
Aspect Telecommunications Corp.* 600 15,825
Bay Networks, Inc.* 700 23,713
Cisco Systems, Inc.* 713 46,936
Global TeleSystems Group, Inc.* 300 10,988
LCI International, Inc.* 900 29,700
Lucent Technologies, Inc. 300 32,512
Teleport Communications Group, Inc., "A"* 500 27,312
Tellabs, Inc.* 400 24,150
WorldCom, Inc.* 800 30,550
-----------
$ 260,405
- --------------------------------------------------------------------------------
Utilities - Electric - 0.5%
AES Corp.* 400 $ 17,600
- --------------------------------------------------------------------------------
Utilities - Gas - 0.5%
KN Energy, Inc. 350 $ 18,178
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.3%
MCI Communications Corp. 200 $ 9,563
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 3,203,781
- --------------------------------------------------------------------------------
Foreign Stocks - 3.8%
Germany - 1.0%
Schering Plough Corp. (Pharmaceuticals) 460 $ 34,989
- --------------------------------------------------------------------------------
Netherlands - 1.4%
Akzo Nobel N.V. (Chemicals) 225 $ 45,693
- --------------------------------------------------------------------------------
Sweden - 0.7%
Skandia Forsakrings AB (Insurance) 400 $ 22,600
- --------------------------------------------------------------------------------
United Kingdom - 0.7%
Danka Business Systems, ADR
(Business Services) 1,000 $ 17,875
SmithKline-Beecham PLC, ADR
(Medical and Health Products) 100 6,187
-----------
$ 24,062
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 127,344
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,829,136) $ 3,331,125
- --------------------------------------------------------------------------------
Short-Term Obligations - 6.4%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
due 3/02/98, at Amortized Cost $ 220 $ 219,966
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $3,049,102) $ 3,551,091
Other Assets, Less Liabilities - (3.8)% (128,713)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 3,422,378
- --------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - February 28, 1998
MFS SPECIAL OPPORTUNITIES FUND
Stocks - 96.2%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 84.6%
Aerospace - 4.4%
Allied Signal, Inc. 200 $ 8,513
B.E. Aerospace, Inc.* 3,000 88,312
Howmet International, Inc.* 300 5,400
Moog, Inc.* 1,600 56,400
Thiokol Corp. 103 9,849
-----------
$ 168,474
- --------------------------------------------------------------------------------
Airlines - 0.4%
Southwest Airlines Co. 380 $ 10,902
US Airways Group, Inc.* 100 6,331
-----------
$ 17,233
- --------------------------------------------------------------------------------
Banks and Credit Companies - 0.7%
National City Corp. 150 $ 9,787
Wells Fargo & Co. 47 15,134
-----------
$ 24,921
- --------------------------------------------------------------------------------
Building - 4.0%
Newport News Shipbuilding, Inc. 183 $ 4,987
Nortek, Inc.* 2,000 62,250
Walter Industries, Inc.* 4,500 85,781
-----------
$ 153,018
- --------------------------------------------------------------------------------
Business Machines - 0.3%
Affiliated Computer Services, Inc., "A"* 300 $ 9,656
- --------------------------------------------------------------------------------
Chemicals - 2.7%
Cambrex Corp. 167 $ 8,266
NL Industries, Inc.* 5,000 74,375
Polymer Group, Inc.* 1,500 19,500
-----------
$ 102,141
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 0.7%
Compaq Computer Corp. 780 $ 25,009
- --------------------------------------------------------------------------------
Computer Software - Systems - 2.5%
Adobe Systems, Inc. 100 $ 4,419
Computer Associates International, Inc. 847 39,915
Oracle Corp.* 1,000 24,625
Synopsys, Inc.* 742 25,923
-----------
$ 94,882
- --------------------------------------------------------------------------------
Conglomerate - 1.8%
MAXXAM, Inc.* 1,300 $ 69,225
- --------------------------------------------------------------------------------
Construction Services - 0.4%
Martin Marietta Materials, Inc. 450 $ 17,128
- --------------------------------------------------------------------------------
Consumer Goods and Services - 13.9%
Darling International, Inc.* 5,750 $ 46,719
Dollar Thrifty Automotive Group* 100 2,000
Philip Morris Cos., Inc. 435 18,895
Thermadyne Industries Holdings Corp.* 4,000 135,750
Tyco International Ltd. 5,272 267,554
Westpoint Stevens, Inc.* 1,100 58,713
-----------
$ 529,631
- --------------------------------------------------------------------------------
Containers - 4.1%
Atlantis Plastics, Inc.* 5,750 $ 38,094
Gaylord Container Corp.* 15,000 99,375
Jefferson Smurfit Corp.* 639 9,545
Stone Container Corp.* 866 9,742
-----------
$ 156,756
- --------------------------------------------------------------------------------
Electrical Equipment - 0.8%
Black & Decker Corp. 200 $ 10,075
GTECH Holdings Corp.* 550 19,422
-----------
$ 29,497
- --------------------------------------------------------------------------------
Electronics - 2.0%
Altera Corp.* 100 $ 4,313
Analog Devices, Inc.* 512 16,512
Raytheon Co. 750 43,500
Teradyne, Inc.* 237 11,183
-----------
$ 75,508
- --------------------------------------------------------------------------------
Entertainment - 9.2%
American Radio Systems Corp., "A"* 1,800 $ 107,550
Casino America, Inc.* 656 1,886
Granite Broadcasting Corp.* 1,731 20,447
Harrah's Entertainment, Inc.* 2,187 46,064
LIN Television Corp.* 146 8,048
Telemundo Group, Inc.* 2,400 100,800
USA Networks Inc.* 1,275 65,663
-----------
$ 350,458
- --------------------------------------------------------------------------------
Financial Institutions - 0.8%
Beneficial Corp. 100 $ 11,800
Federal Home Loan Mortgage Corp. 383 18,097
-----------
$ 29,897
- --------------------------------------------------------------------------------
Forest and Paper Products - 0.3%
Temple-Inland, Inc. 211 $ 12,581
- --------------------------------------------------------------------------------
Insurance - 2.7%
Chubb Corp. 240 $ 19,155
CIGNA Corp. 74 14,134
Hartford Financial Services Group, Inc. 154 15,130
Lincoln National Corp. 185 15,494
Nationwide Financial Services, Inc., "A" 200 8,800
PennCorp Financial Group, Inc. 370 12,858
Reliastar Financial Corp. 379 18,026
-----------
$ 103,597
- --------------------------------------------------------------------------------
Machinery - 0.9%
Johnstown America Industries, Inc.* 1,750 $ 21,000
Newcor Inc. 1,225 11,867
-----------
$ 32,867
- --------------------------------------------------------------------------------
Medical and Health Products - 0.8%
AmeriSource Health Corp., "A"* 219 $ 12,812
Bristol-Myers Squibb Co. 182 18,234
-----------
$ 31,046
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.1%
Tenet Healthcare Corp.* 425 $ 15,858
United Healthcare Corp. 447 27,127
-----------
$ 42,985
- --------------------------------------------------------------------------------
Metals and Minerals - 1.0%
Aluminum Cos. of America 100 $ 7,337
Commonwealth Industries, Inc. 2,000 29,125
-----------
$ 36,462
- --------------------------------------------------------------------------------
Oil Services - 0.7%
Dawson Production Services, Inc.* 2,100 $ 25,331
- --------------------------------------------------------------------------------
Oils - 0.3%
Enron Oil & Gas Co. 621 $ 13,274
- --------------------------------------------------------------------------------
Photographic Products - 1.6%
Anacomp, Inc.* 3,725 $ 59,833
- --------------------------------------------------------------------------------
Pollution Control - 0.2%
Waste Management, Inc. 381 $ 9,525
- --------------------------------------------------------------------------------
Railroads - 0.3%
Wisconsin Central Transportation Corp.* 477 $ 12,939
- --------------------------------------------------------------------------------
Restaurants and Lodging - 2.1%
Hilton Hotels Corp. 209 $ 6,231
Promus Hotel Corp.* 829 39,999
Red Roof Inns, Inc.* 2,000 35,875
-----------
$ 82,105
- --------------------------------------------------------------------------------
Steel - 1.1%
WHX Corp.* 3,100 $ 42,237
- --------------------------------------------------------------------------------
Stores - 8.2%
Edison Brothers Stores, Inc.* 9,000 $ 68,625
Gantos, Inc.* 15,000 8,438
Gymboree Corp.* 120 3,225
Liz Claiborne, Inc. 240 12,000
Musicland Stores Corp.* 2,000 18,750
Phar Mor, Inc.* 4,775 49,541
Proffitts, Inc.* 3,150 106,706
Rite Aid Corp. 798 25,835
Sears, Roebuck & Co. 400 21,225
-----------
$ 314,345
- --------------------------------------------------------------------------------
Supermarkets - 6.5%
Dominicks Supermarkets, Inc.* 800 $ 36,400
Ingles Markets, Inc. 3,900 48,750
Meyer (Fred), Inc.* 3,276 145,577
Safeway, Inc.* 506 17,647
-----------
$ 248,374
- --------------------------------------------------------------------------------
Telecommunications - 6.1%
Cellular Communications International Inc.* 2,600 $ 124,150
Century Telephone Enterprises, Inc. 700 42,700
Commonwealth Telephone Enterprises Inc.* 1,533 42,924
Global TeleSystems Group, Inc.* 100 3,662
NTL Inc.* 50 1,663
Teleport Communications Group, Inc., "A"* 350 19,119
-----------
$ 234,218
- --------------------------------------------------------------------------------
Utilities - Electric - 1.2%
El Paso Electric Co.* 6,800 $ 46,325
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.8%
LCI International, Inc.* 700 $ 23,100
Sprint Corp. 102 6,732
-----------
$ 29,832
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 3,231,310
- --------------------------------------------------------------------------------
Foreign Stocks - 11.6%
Canada - 2.7%
International Utility Structures, Inc.
(Utilities - Electric)* 17,000 $ 43,590
Canadian National Railway Co. (Railroads) 298 18,513
Gulf Canada Resources Ltd. (Oil Services)* 7,000 41,125
-----------
$ 103,228
- --------------------------------------------------------------------------------
Finland - 0.3%
Nokia Corp., ADR (Telecommunications) 130 $ 13,097
- --------------------------------------------------------------------------------
France - 3.1%
Alcatel Alsthom Compagnie (Telecommunications) 123 $ 16,008
Sanofi SA (Medical and Health Products) 900 102,046
-----------
$ 118,054
- --------------------------------------------------------------------------------
Hong Kong - 0.3%
Semi-Tech (Global) Ltd. (Electronics)* 88,880 $ 10,332
- --------------------------------------------------------------------------------
Malaysia - 0.2%
New Straits Times Press Berhad (Printing and
Publishing) 3,000 $ 4,647
- --------------------------------------------------------------------------------
Mexico - 0.6%
Tubos de Acero de Mexico S.A. (Steel)* 1,300 $ 22,587
- --------------------------------------------------------------------------------
Netherlands - 0.8%
Akzo Nobel N.V. (Chemicals) 51 $ 10,357
Benckiser N.V. (Consumer Goods and Services)* 100 4,294
Elsag Bailey Process Automation N.V
(Machinery) 1,000 17,625
-----------
$ 32,276
- --------------------------------------------------------------------------------
Portugal - 0.4%
Banco Totta E Acores (Banks and Credit Cos.) 487 $ 13,497
- --------------------------------------------------------------------------------
South Korea - 0.2%
SK Telecom Ltd., ADR (Telecommunications)* 1,061 $ 9,151
- --------------------------------------------------------------------------------
Switzerland - 0.7%
Novartis AG (Pharmaceuticals) 15 $ 27,428
- --------------------------------------------------------------------------------
United Kingdom - 2.3%
British Petroleum PLC, ADR (Oils) 189 $ 15,628
News Corp. Ltd., ADR (Entertainment) 2,900 62,894
Tanjong PLC (Entertainment) 4,000 9,185
-----------
$ 87,707
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 442,004
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,955,568) $ 3,673,314
- --------------------------------------------------------------------------------
Bonds - 1.0%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Entertainment - 0.1%
Marvel Holdings, Inc., 0s, 1998 ** $ 30 $ 1,200
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.9%
Santa Fe Hotel, Inc., 11s, 2000 $ 35 $ 35,000
- --------------------------------------------------------------------------------
Total Bonds (Identified Cost, $31,829) $ 36,200
- --------------------------------------------------------------------------------
Preferred Stock - 0.7%
- --------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------
Renaissance Cosmetics, Inc. (Consumer Goods
and Services)# 30 $ 3,000
Supermarkets General Holdings Corp.
(Supermarket 1,485 24,502
- --------------------------------------------------------------------------------
Total Preferred Stock (Identified Cost, $60,008) $ 27,502
- --------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------
Renaissance Cosmetics, Inc. 26 $ 0
Semi-Tech (Global) Ltd.* 2,100 3
- --------------------------------------------------------------------------------
Total Warrants (Identified Cost, $2,041) $ 3
- --------------------------------------------------------------------------------
Short-Term Obligations - 2.1%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Federal Home Loan Bank, due 3/02/98,
at Amortized Cost $ 80 $ 79,988
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $3,129,434) $ 3,817,007
- --------------------------------------------------------------------------------
Securities Sold Short - (0.4)%
- --------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------
Advanced Micro Devices, Inc.* (500) $ (11,750)
Jayhawk Acceptance Corp.* (2,800) (2,800)
- --------------------------------------------------------------------------------
Total Securities Sold Short
(Proceeds Received, $24,057) $ (14,550)
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities - 0.4% $ 14,645
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 3,817,102
- --------------------------------------------------------------------------------
*Non-income producing security.
**Non-income producing security - in default.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - February 28, 1998
MFS BLUE CHIP FUND
Stocks - 98.7%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 97.6%
Aerospace - 4.8%
General Dynamics Corp. 100 $ 8,675
Goodrich (B.F.) Co. 170 8,426
Lockheed Martin Corp. 150 17,503
United Technologies Corp. 80 7,145
-----------
$ 41,749
- --------------------------------------------------------------------------------
Banks and Credit Companies - 8.6%
Chase Manhattan Corp. 110 $ 13,647
Comerica, Inc. 145 14,618
Fleet Financial Group, Inc. 110 8,669
National City Corp. 170 11,093
Norwest Corp. 240 9,825
US Bancorp Delaware 150 17,259
-----------
$ 75,111
- --------------------------------------------------------------------------------
Building - 0.8%
Sherwin Williams Co. 200 $ 6,687
- --------------------------------------------------------------------------------
Business Machines - 1.6%
International Business Machines Corp. 130 $ 13,577
- --------------------------------------------------------------------------------
Business Services - 5.2%
Cendant Corp.* 360 $ 13,500
DST Systems, Inc.* 380 20,092
Service Corp. International 300 11,363
-----------
$ 44,955
- --------------------------------------------------------------------------------
Cellular Telephones - 1.1%
AirTouch Communications, Inc.* 220 $ 9,886
- --------------------------------------------------------------------------------
Chemicals - 2.4%
Air Products & Chemicals, Inc. 100 $ 8,394
duPont (E.I.) de Nemours & Co., Inc. 100 6,131
Praxair, Inc. 130 6,216
-----------
$ 20,741
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 2.1%
Microsoft Corp.* 220 $ 18,645
- --------------------------------------------------------------------------------
Computer Software - Systems - 2.7%
BMC Software, Inc.* 150 $ 11,475
Computer Associates International, Inc. 125 5,891
Oracle Corp.* 240 5,910
-----------
$ 23,276
- --------------------------------------------------------------------------------
Conglomerates - 2.3%
Tyco International Ltd. 400 $ 20,300
- --------------------------------------------------------------------------------
Consumer Goods and Services - 5.5%
Colgate-Palmolive Co. 80 $ 6,495
Gillette Co. 160 17,260
Philip Morris Cos., Inc. 270 11,728
Procter & Gamble Co. 140 11,891
-----------
$ 47,374
- --------------------------------------------------------------------------------
Electrical Equipment - 3.2%
General Electric Co. 260 $ 20,215
Honeywell, Inc. 100 7,925
-----------
$ 28,140
- --------------------------------------------------------------------------------
Electronics - 0.7%
Raytheon Co. 100 $ 5,800
- --------------------------------------------------------------------------------
Financial Institutions - 2.3%
Federal Home Loan Mortgage Corp. 235 $ 11,104
Household International, Inc. 70 9,091
-----------
$ 20,195
- --------------------------------------------------------------------------------
Financial Services - 1.0%
Washington Mutual, Inc. 125 $ 8,391
- --------------------------------------------------------------------------------
Food and Beverage Products - 8.8%
Bestfoods 80 $ 8,430
Coca-Cola Co. 140 9,616
Hershey Foods Corp. 170 11,337
Interstate Bakeries Corp. 350 11,725
McCormick & Co., Inc. 330 9,467
Nabisco Holdings Corp. 170 8,022
Pepsi Co., Inc. 190 6,947
Ralston-Ralston Purina Co. 110 11,158
-----------
$ 76,702
- --------------------------------------------------------------------------------
Forest and Paper Products - 0.8%
Kimberly-Clark Corp. 120 $ 6,682
- --------------------------------------------------------------------------------
Insurance - 6.4%
Allstate Corp. 140 $ 13,055
CIGNA Corp. 60 11,460
Hartford Financial Services Group, Inc. 120 11,790
Progressive Corp. 80 9,270
Torchmark Corp. 220 10,244
-----------
$ 55,819
- --------------------------------------------------------------------------------
Machinery - 1.0%
Deere & Co., Inc. 150 $ 8,419
- --------------------------------------------------------------------------------
Medical and Health Products - 9.8%
American Home Products Corp. 100 $ 9,375
Bristol-Myers Squibb Co. 190 19,036
Eli Lilly & Co. 160 10,530
Johnson & Johnson 200 15,100
Merck & Co., Inc. 100 12,756
Pfizer, Inc. 210 18,585
-----------
$ 85,382
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 3.3%
HEALTHSOUTH Corp.* 300 $ 8,100
Tenet Healthcare Corp.* 250 9,328
United Healthcare Corp. 180 10,924
-----------
$ 28,352
- --------------------------------------------------------------------------------
Oils - 5.1%
Chevron Corp. 100 $ 8,113
Exxon Corp. 300 19,162
Mobil Corp. 140 10,141
Texaco, Inc. 120 6,698
-----------
$ 44,114
- --------------------------------------------------------------------------------
Railroads - 1.1%
Burlington Northern Santa Fe Railway Co. 100 $ 9,962
- --------------------------------------------------------------------------------
Stores - 1.8%
Rite Aid Corp. 480 $ 15,540
- --------------------------------------------------------------------------------
Supermarkets - 4.1%
Kroger Co.* 480 $ 20,280
Safeway, Inc.* 440 15,345
-----------
$ 35,625
- --------------------------------------------------------------------------------
Utilities - Electric - 3.6%
Cinergy Corp. 210 $ 7,310
CMS Energy Corp. 160 7,080
Pinnacle West Capital Corp. 170 6,938
Unicom Corp. 300 9,619
-----------
$ 30,947
- --------------------------------------------------------------------------------
Utilities - Gas - 1.6%
Columbia Gas System, Inc. 110 $ 8,394
Pacific Enterprises 150 5,447
-----------
$ 13,841
- --------------------------------------------------------------------------------
Utilities - Telephone - 5.9%
AT&T Corp. 225 $ 13,697
Bell Atlantic Corp. 100 8,975
BellSouth Corp. 155 9,455
SBC Communications, Inc. 125 9,453
Sprint Corp. 150 9,900
-----------
$ 51,480
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 847,692
- --------------------------------------------------------------------------------
Foreign Stocks - 1.1%
United Kingdom - 1.1%
British Petroleum PLC, ADR (Oils)
(Identified Cost $7,555) 110 $ 9,096
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $645,308) $ 856,788
- --------------------------------------------------------------------------------
Short-Term Obligations - 1.7%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Federal Home Loan Bank, due 3/02/98,
at Amortized Cost $ 15 $ 14,997
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $660,305) $ 871,785
Other Assets, Less Liabilities - (0.4)% (3,302)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 868,483
- --------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - February 28, 1998
MFS CONVERTIBLE SECURITIES FUND
Convertible Bond - 25.9%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------
Aerospace - 1.3%
Hexcel Corp., 7s, 2003 $ 5 $ 8,819
- --------------------------------------------------------------------------------
Biotechnology - 0.3%
Sepracor, Inc., 6.25s, 2005## $ 2 $ 2,178
- --------------------------------------------------------------------------------
Building - 0.6%
Continental Homes Holding Corp., 6.875s, 2002 $ 2 $ 4,072
- --------------------------------------------------------------------------------
Business Services - 2.8%
Personnel Group Of America, Inc., 5.75s, 2004## 6 $ 8,010
Protection One Alarm Monitoring, 6.75s, 2003 9 11,160
---------
$ 19,170
- --------------------------------------------------------------------------------
Computer Software - Systems - 3.8%
Adaptec, Inc., 4.75s, 2004## $ 8 $ 7,260
Network Associates, Inc., 0s, 2018## 20 8,900
Solectron Corp., 6s, 2006## 3 4,567
System Software Associates, Inc., 7s, 2002 3 2,528
Wind River Systems Inc., 5s, 2002## 3 3,150
---------
$ 26,405
- --------------------------------------------------------------------------------
Electrical Equipment - 0.6%
Intergrated Process Equipment Corp., 6.25s, 2004## $ 5 $ 4,381
- --------------------------------------------------------------------------------
Electronics - 1.9%
Photronics, Inc., 6s, 2004 $ 2 $ 2,595
Xilinx, Inc., 5.25s, 2002## 10 10,687
---------
$ 13,282
- --------------------------------------------------------------------------------
Medical and Health Products - 0.3%
North American Vaccine, Inc., 6.5s, 2003## $ 2 $ 1,745
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.3%
Dura Pharmaceuticals, Inc., 3.5s, 2002 $ 3 $ 2,625
Omnicare, Inc., 5s, 2007## 3 3,413
Quintiles Transnational Corp., 4.25s, 2000 5 6,412
Sunrise Assisted Living, Inc., 5.5s, 2002## 3 3,859
---------
$ 16,309
- --------------------------------------------------------------------------------
Oil Services - 3.1%
Diamond Offshore Drilling, Inc., 3.75s, 2007 $ 5 $ 6,369
Halter Marine Group, Inc., 4.5s, 2004## 5 4,644
Key Energy, 5s, 2004## 5 4,163
Parker Drilling Co., 5.5s, 2004 6 6,247
---------
$ 21,423
- --------------------------------------------------------------------------------
Pollution Control - 3.2%
Sanifill, Inc., 5s, 2006 $ 5 $ 7,856
U.S. Filter Corp., 6s, 2005 5 9,250
USA Waste Services, Inc., 4s, 2002 5 5,700
---------
$ 22,806
- --------------------------------------------------------------------------------
Restaurants and Lodging - 1.5%
Capstar Hotel Co., 4.75s, 2004 $ 5 $ 4,719
Hilton Hotels Corp., 5s, 2006 5 5,400
---------
$ 10,119
- --------------------------------------------------------------------------------
Stores - 2.2%
Home Depot, Inc., 3.25s, 2001 $ 5 $ 7,237
Office Depot, Inc., 0s, 2008 5 3,538
Saks Holdings, Inc., 5.5s, 2006 5 4,675
---------
$ 15,450
- --------------------------------------------------------------------------------
Telecommunications - 2.0%
Smarttalk Teleservices, Inc., 5.75s, 2004## $ 5 $ 6,562
World Access Inc., 4.5s, 2002## 8 7,020
---------
$ 13,582
- --------------------------------------------------------------------------------
Total Convertible Bond (Identified Cost, $163,104) $ 179,741
- --------------------------------------------------------------------------------
Stocks - 23.1%
- --------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------
U.S. Stocks - 20.5%
Aerospace - 0.5%
United Technologies Corp. 40 $ 3,572
- --------------------------------------------------------------------------------
Chemicals - 0.2%
duPont (E.I.) de Nemours & Co., Inc. 25 $ 1,533
- --------------------------------------------------------------------------------
Computer Hardware - Systems - 0.6%
EMC Corp.* 100 $ 3,825
- --------------------------------------------------------------------------------
Computer Software - Systems - 0.5%
Oracle Corp.* 150 $ 3,694
- --------------------------------------------------------------------------------
Consumer Goods and Services - 3.5%
Colgate-Palmolive Co. 60 $ 4,871
Gillette Co. 60 6,473
Procter & Gamble Co. 50 4,247
Revlon, Inc., "A"* 75 3,520
Tyco International Ltd. 96 4,872
---------
$ 23,983
- --------------------------------------------------------------------------------
Electrical Equipment - 0.5%
General Electric Co. 40 $ 3,110
- --------------------------------------------------------------------------------
Electronics - 0.9%
Photronics, Inc.* 100 $ 2,938
Sony Corp. 35 3,165
---------
$ 6,103
- --------------------------------------------------------------------------------
Entertainment - 1.5%
American Radio Systems Corp., "A"* 75 $ 4,481
Jacor Communications, Inc.* 100 5,788
---------
$ 10,269
- --------------------------------------------------------------------------------
Financial Institutions - 0.5%
Lehman Brothers Holdings, Inc. 50 $ 3,153
- --------------------------------------------------------------------------------
Financial Services - 0.2%
Washington Mutual, Inc. 25 $ 1,678
- --------------------------------------------------------------------------------
Insurance - 0.6%
Hartford Life, Inc., "A" 100 $ 4,306
- --------------------------------------------------------------------------------
Media - 0.6%
Chancellor Media Corp.* 100 $ 4,475
- --------------------------------------------------------------------------------
Medical and Health Products - 3.1%
American Home Products Corp. 90 $ 8,437
Boston Scientific Corp.* 50 2,988
Bristol-Myers Squibb Co. 75 7,514
McKesson Corp. 50 2,606
---------
$ 21,545
- --------------------------------------------------------------------------------
Pollution Control - 0.2%
U.S. Filter Corp.* 50 $ 1,697
- --------------------------------------------------------------------------------
Special Products and Services - 2.0%
Newport News Shipbuilding, Inc. 200 $ 5,995
Royal Caribbean Cruises Ltd. 50 2,738
Stanley Works 100 4,781
---------
$ 13,514
- --------------------------------------------------------------------------------
Stores - 1.1%
Petco Animal Supplies, Inc.* 50 $ 716
Rite Aid Corp. 150 4,856
U.S. Office Products Co.* 100 1,850
---------
$ 7,422
- --------------------------------------------------------------------------------
Telecommunications - 4.0%
Cisco Systems, Inc.* 25 $ 1,647
Global TeleSystems Group, Inc.* 100 3,662
Intermedia Communications, Inc.* 1 76
IXC Communications Inc.* 50 2,897
Lucent Technologies, Inc. 85 9,212
Nextlink Communications, Inc., "A"* 100 3,013
Qwest Communications International, Inc.* 200 7,025
---------
$ 27,532
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 141,411
- --------------------------------------------------------------------------------
Foreign Stocks - 2.6%
Ireland - 0.6%
Allied Irish Banks (Banks and Credit Cos.)* 300 $ 3,875
- --------------------------------------------------------------------------------
Sweden - 0.5%
Skandia Forsakrings AB (Insurance) 65 $ 3,672
- --------------------------------------------------------------------------------
Switzerland - 1.0%
Novartis AG (Pharmaceuticals) 4 $ 7,314
- --------------------------------------------------------------------------------
United Kingdom - 0.5%
British Petroleum PLC, ADR (Oils) 20 $ 1,654
Sema Group PLC (Computer Software - Systems) 50 1,608
---------
$ 3,262
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 18,123
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $122,676) $ 159,534
- --------------------------------------------------------------------------------
Convertible Preferred Stock - 46.7%
- --------------------------------------------------------------------------------
Airlines - 1.7%
Continental Airlines Finance Trust, 8.5% 50 $ 5,294
- --------------------------------------------------------------------------------
Banks and Credit Companies - 1.6%
McKesson Financing Trust, 5%## 100 $ 7,506
National Australia Bank Ltd., 7.875% 115 3,263
---------
$ 10,769
- --------------------------------------------------------------------------------
Computer Software - Services - 0.7%
Cendant Corp.* 100 $ 5,000
- --------------------------------------------------------------------------------
Consumer Goods and Services - 2.5%
Corning Delaware L.P., 6% 60 $ 3,907
Newell Financial Trust Co.*## 100 5,475
Readers Digest* 300 7,819
---------
$ 17,201
- --------------------------------------------------------------------------------
Entertainment - 6.8%
American Radio Systems Corp., 7%## 225 $ 15,750
Golden Books Financing Trust, 8.75%*## 200 11,550
Houston Industries, Inc., 7% 100 6,187
Royal Caribbean Cruises Ltd., 7.25% 150 13,275
---------
$ 46,762
- --------------------------------------------------------------------------------
Financial Institutions - 14.4%
Finova Finance Trust, 5.5% 250 $ 19,125
Greenfield Capital Trust* 250 13,125
Jefferson Pilot Corp., 7.25% 75 8,813
Merrill Lynch & Co., Inc. 100 3,837
Merrill Lynch & Co., Inc. 150 18,450
Salomon, Inc., 6.25% 175 10,806
Salomon, Inc., 7.625% 300 12,919
Tosco Financing Trust, 5.75%## 200 12,625
---------
$ 99,700
- --------------------------------------------------------------------------------
Food and Beverage Products - 3.5%
Dole Food Co., 7% 325 $ 15,905
Ralston Purina Co., 7%* 125 8,031
---------
$ 23,936
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.1%
International Paper Capital Trust, 5.25% 150 $ 7,725
- --------------------------------------------------------------------------------
Insurance - 5.6%
Conseco, Inc., 7% 100 $ 16,150
Frontier Financing Trust, 6.25%*## 100 6,000
SunAmerica, Inc., $3.10 25 3,425
SunAmerica, Inc., $3.188 150 7,163
American Heritage Life Investment Corp., 8.5% 100 6,006
---------
$ 38,744
- --------------------------------------------------------------------------------
Metals and Minerals - 0.7%
Timet Capital Trust, 6.625%##* 100 $ 5,075
- --------------------------------------------------------------------------------
Oil Services - 1.3%
EVI Inc.*## 200 $ 8,900
- --------------------------------------------------------------------------------
Pollution Control - 0.5%
Browning Ferris Industries, Inc., 7.25% 120 $ 3,855
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.4%
Host Marriott Financial Trust, 6.25%* 50 $ 2,913
- --------------------------------------------------------------------------------
Special Products and Services - 0.8%
Fleetwood Capital Trust*## 100 $ 5,800
- --------------------------------------------------------------------------------
Steel - 0.7%
USX-Marathon Group, 6.75%* 200 $ 4,550
- --------------------------------------------------------------------------------
Stores - 1.4%
K-mart Financing I, 7.75% 100 $ 5,600
AnnTaylor Finance Trust, 8.5%* 75 3,825
---------
$ 9,425
- --------------------------------------------------------------------------------
Telecommunications - 3.1%
ICG Funding LLC, 6.75%*## 100 $ 6,600
Intermedia Communications, Inc.* 50 2,125
Intermedia Communications, Inc., 7%*## 100 5,100
IXC Communications, Inc., 7.25%*## 20 5,120
Qualcomm Financial Trust I* 25 1,178
Qualcomm Financial Trust I, 5.75%*## 25 1,175
---------
$ 21,298
- --------------------------------------------------------------------------------
Utilities - Electric - 0.6%
Calenergy Capital Trust III, 6.5%*## 100 $ 4,312
- --------------------------------------------------------------------------------
Utilities - Gas - 0.2%
Devon Financing Trust* 25 $ 1,597
- --------------------------------------------------------------------------------
Total Convertible Preferred Stock
(Identified Cost, $261,091) $ 322,856
- --------------------------------------------------------------------------------
Preferred Stock - 1.3%
- --------------------------------------------------------------------------------
Aerospace - 1.3%
Loral Space & Communications*
(Identified Cost $7,225) 125 $ 8,688
- --------------------------------------------------------------------------------
Short-Term Obligations - 2.2%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------
Federal Home Loan Bank, due 3/02/98,
at Amortized Cost $ 15 $ 14,998
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $569,094) $ 685,817
Other Assets, Less Liabilities - 0.8% 5,325
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 691,142
- --------------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - February 28, 1998
MFS SCIENCE AND TECHNOLOGY FUND
Stocks - 96.0%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 90.2%
Advertising - 0.1%
Doubleclick Inc.* 100 $ 3,194
- --------------------------------------------------------------------------------
Business Machines - 3.9%
Affiliated Computer Services, Inc., "A"* 1,980 $ 63,731
Silicon Graphics, Inc.* 500 7,531
Sun Microsystems, Inc.* 940 44,768
-----------
$ 116,030
- --------------------------------------------------------------------------------
Business Services - 3.2%
AccuStaff, Inc.* 2,180 $ 61,585
Acsys Inc.* 100 1,313
C.H. Robinson Worldwide, Inc. 100 2,275
First Consulting Group, Inc.* 100 1,875
Galileo International, Inc. 100 3,950
Hall Kinion & Associates, Inc.* 100 1,388
Lamalie Associates, Inc.* 100 1,956
Paymentech, Inc.* 620 10,230
PRT Group, Inc.* 100 2,081
Teletech Holdings, Inc.* 1,000 9,562
-----------
$ 96,215
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 14.7%
Activision, Inc.* 1,500 $ 20,719
Autodesk, Inc. 1,710 81,011
Compaq Computer Corp. 400 12,825
Electronic Arts, Inc.* 1,400 61,775
Microprose, Inc.* 4,600 9,056
Microsoft Corp.* 2,680 227,130
Midway Games, Inc.* 960 21,120
-----------
$ 433,636
- --------------------------------------------------------------------------------
Computer Software - Services - 1.0%
Ingram Micro, Inc.* 750 $ 28,969
Micromuse Inc.* 100 1,900
-----------
$ 30,869
- --------------------------------------------------------------------------------
Computer Software - Systems - 38.6%
Adobe Systems, Inc. 925 $ 40,873
Aspen Technology, Inc.* 2,400 95,400
BMC Software, Inc.* 1,680 128,520
Cadence Design Systems, Inc.* 5,362 187,335
Computer Associates International, Inc. 1,862 87,747
Compuware Corp.* 3,720 156,705
Edwards (J.D.) & Co.* 100 3,300
Engineering Animation, Inc.* 120 7,350
Great Plains Software, Inc.* 100 3,325
Oracle Corp.* 5,280 130,020
Peoplesoft, Inc.* 1,520 67,925
Peritus Software Services, Inc.* 100 1,600
Rational Software Corp.* 1,510 20,385
Scopus Technology, Inc.* 400 5,650
Security Dynamics Technologies, Inc.* 200 7,125
Simulation Sciences, Inc.*## 1,900 19,475
Summit Design, Inc.* 4,050 56,700
Sybase, Inc.* 380 3,990
Synopsys, Inc.* 3,180 111,101
System Software Associates, Inc.* 1,200 8,925
-----------
$ 1,143,451
- --------------------------------------------------------------------------------
Consumer Goods and Services - 0.7%
1 800 Contacts* 100 $ 1,425
Avis Rent A Car, Inc.* 400 11,450
CD Now Inc.* 100 2,287
Industrial Distribution Group, Inc.* 100 1,813
N2K, Inc.* 100 2,562
-----------
$ 19,537
- --------------------------------------------------------------------------------
Electronics - 5.5%
Atmel Corp.* 440 $ 7,150
Intel Corp. 640 57,400
Sony Corp. 510 46,123
Teradyne, Inc.* 1,080 50,963
-----------
$ 161,636
- --------------------------------------------------------------------------------
Entertainment - 0.5%
Hearst-Argyle Television, Inc.* 400 $ 14,050
- --------------------------------------------------------------------------------
Financial Institutions - 0.1%
Conning Corp.* 100 $ 1,875
Franchise Mortgage Acceptance Co.* 100 1,800
-----------
$ 3,675
- --------------------------------------------------------------------------------
Financial Services - 0.1%
CIT Group, Inc., "A"* 100 $ 3,300
- --------------------------------------------------------------------------------
Medical and Health Products - 2.1%
Bristol-Myers Squibb Co. 610 $ 61,114
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 7.9%
Castle Dental Centers, Inc.* 100 $ 1,100
Centennial Healthcare Corp.* 100 2,250
HBO & Co. 2,170 117,451
HEALTHSOUTH Corp.* 590 15,930
Monarch Dental Corp.* 100 1,550
Ocular Sciences, Inc.* 100 2,263
Oxford Health Plans, Inc.* 520 8,937
PacifiCare Health Systems, Inc., "B"* 70 4,375
Priority Healthcare Corp.* 100 1,563
Province Healthcare Co.* 100 2,075
United Healthcare Corp. 1,240 75,252
-----------
$ 232,746
- --------------------------------------------------------------------------------
Oil Services
Domain Energy Corp.* 100 $ 1,313
- --------------------------------------------------------------------------------
Printing and Publishing - 0.2%
CMP Media, Inc.* 100 $ 2,363
Petersen Cos., Inc.* 100 2,562
-----------
$ 4,925
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.1%
Friendly Ice Cream Corp.* 100 $ 1,875
- --------------------------------------------------------------------------------
Special Products and Services - 0.2%
Edutrek International, Inc., "A"* 100 $ 2,200
Visual Networks Inc.* 100 2,012
White Cap Industries Corp.* 100 1,700
-----------
$ 5,912
- --------------------------------------------------------------------------------
Stores - 0.3%
CVS Corp. 100 $ 7,406
Duane Reade, Inc.* 100 2,238
-----------
$ 9,644
- --------------------------------------------------------------------------------
Telecommunications - 9.5%
Ascend Communications, Inc.* 805 $ 30,137
Aspect Telecommunications Corp.* 2,770 73,059
Cabletron Systems, Inc.* 300 4,650
Cisco Systems, Inc.* 1,583 104,247
Global TeleSystems Group, Inc.* 100 3,663
Lucent Technologies, Inc. 350 37,931
Network Solutions, Inc.* 100 2,025
Nextlink Communications, Inc., "A"* 100 3,013
WorldCom, Inc.* 600 22,912
-----------
$ 281,637
- --------------------------------------------------------------------------------
Utilities - Telephone - 1.5%
MCI Communications Corp. 910 $ 43,509
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 2,668,268
- --------------------------------------------------------------------------------
Foreign Stocks - 5.8%
Canada
Microcell Telecommunications, "B"
(Telecommunications)* 100 $ 719
- --------------------------------------------------------------------------------
France - 1.5%
Dassault Systemes S.A., ADR
(Computer Software - Systems) 960 $ 37,080
Dassault Systemes S.A
(Computer Software - Systems) 200 8,085
-----------
$ 45,165
- --------------------------------------------------------------------------------
Germany - 2.3%
Sap AG, Preferred (Computer Software - Systems) 165 $ 68,026
- --------------------------------------------------------------------------------
Hong Kong - 0.3%
Asia Electronics Holding, Inc. (Electronics)* 1,000 $ 8,125
- --------------------------------------------------------------------------------
Japan - 1.7%
Canon, Inc., ADR (Special Products
and Services) 80 $ 9,150
Meitec Corp. (Computer Software - Service) 400 12,356
Sony Corp. (Electronics) 300 27,158
-----------
$ 48,664
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 170,699
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,141,940) $ 2,838,967
- --------------------------------------------------------------------------------
Short-Term Obligations - 3.5%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Federal Home Loan Bank, due 3/02/98,
at Amortized Cost $ 105 $ 104,984
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,246,924) $ 2,943,951
Other Assets, Less Liabilities - 0.5% 14,599
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 2,958,550
- --------------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
Statements of Assets and Liabilities (Unaudited)
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CORE SPECIAL BLUE
GROWTH OPPORTUNITIES CHIP
FEBRUARY 28, 1998 FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at value (identified cost, $3,049,102,
$3,129,434, and $660,305, respectively) $3,551,091 $3,817,007 $871,785
Cash 3,766 2,192 1,368
Deposit with brokers for securities sold short -- 17,152 --
Dividends and interest receivable 975 1,478 1,119
Receivable for investments sold 93,725 56,298 --
Net receivable for forward currency exchange contracts
subject to master netting agreements -- 370 --
Receivable from investment adviser -- 17,514 --
Deferred organization expenses 1,458 1,473 --
---------- ---------- --------
Total assets $3,651,015 $3,913,484 $874,272
---------- ---------- --------
Liabilities:
Securities sold short, at value
(proceeds received, $24,057) $ -- $ 14,550 $ --
Payable for investments purchased 206,517 73,184 5,718
Payable to affiliates -
Investment adviser 7,969 -- --
Shareholder servicing agent fee 1,526 23 --
Administrative fee 3 4 --
Accrued expenses and other liabilities 12,622 8,621 71
---------- ---------- --------
Total liabilities $ 228,637 $ 96,382 $ 5,789
---------- ---------- --------
Net assets $3,422,378 $3,817,102 $868,483
========== ========== ========
Net assets consist of:
Paid-in capital $2,779,115 $2,993,677 $641,222
Unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies 501,989 697,456 211,480
Accumulated undistributed net realized gain on
investments and foreign currency transactions 149,132 120,067 15,889
Accumulated undistributed (distributions in excess
of) net investment income (7,858) 5,902 (108)
---------- ---------- --------
Total $3,422,378 $3,817,102 $868,483
========== ========== ========
Shares of beneficial interest outstanding:
Class A 94,134 158,778 41,274
Class I 124,122 131,855 22,291
---------- ---------- --------
Total shares of beneficial interest outstanding 218,256 290,633 63,565
========== ========== ========
Net assets:
Class A $1,474,492 $2,081,903 $563,900
Class I 1,947,886 1,735,199 304,583
---------- ---------- --------
Total net assets $3,422,378 $3,817,102 $868,483
========== ========== ========
Class A shares:
Net asset value, offering price, and redemption
price per share (net assets / shares of beneficial
interest outstanding) $15.66 $13.11 $13.66
====== ====== ======
Class I shares:
Net asset value, offering price, and redemption price
per share (net assets / shares of beneficial interest
outstanding) $15.69 $13.16 $13.66
====== ====== ======
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Assets and Liabilities (Unaudited) - continued
<CAPTION>
- ---------------------------------------------------------------------------------------------------
CONVERTIBLE SCIENCE AND
SECURITIES TECHNOLOGY
FEBRUARY 28, 1998 FUND FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost,
$569,094 and $2,246,924, respectively) $685,817 $2,943,951
Cash 3,307 476
Receivable for Fund shares sold -- 32,449
Receivable for investments sold 18,687 --
Interest and dividends receivable 2,488 69
Other assets -- 8,711
-------- ----------
Total assets $710,299 $2,985,656
-------- ----------
Liabilities:
Payable for investments purchased $ 19,099 $ 18,440
Payable to affiliates -
Shareholder servicing agent fee -- 18
Administrative fee -- 2
Accrued expenses and other liabilities 58 8,646
-------- ----------
Total liabilities $ 19,157 $ 27,106
-------- ----------
Net assets $691,142 $2,958,550
======== ==========
Net assets consist of:
Paid-in capital $565,523 $2,263,044
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 116,724 697,027
Accumulated undistributed net realized gain on investments and
foreign currency transactions 4,994 5,149
Accumulated distributions in excess of net investment income (3,859) (8,946)
-------- ----------
Total $683,382 $2,956,274
======== ==========
Shares of beneficial interest outstanding:
Class A 52,833 80,450
Class I 3,868 140,386
-------- ----------
Total shares of beneficial interest outstanding 56,701 220,836
======== ==========
Net assets:
Class A $644,042 $1,078,013
Class I 47,100 1,880,537
-------- ----------
Total net assets $691,142 $2,958,550
======== ==========
Class A shares:
Net asset value and offering price and redemption price per share
(net assets / shares of beneficial interest outstanding) $12.19 $13.40
====== ======
Class I shares:
Net asset value and offering price and redemption price per share
(net assets / shares of beneficial interest outstanding) $12.18 $13.40
====== ======
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Operations (Unaudited)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
CORE SPECIAL BLUE
GROWTH OPPORTUNITIES CHIP
SIX MONTHS ENDED FEBRUARY 28, 1998 FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Income -
Dividends $ 9,917 $ 8,032 $ 5,409
Interest 3,148 5,960 256
Foreign taxes withheld -- (218) (23)
-------- -------- --------
Total investment income $ 13,065 $ 13,774 $ 5,642
-------- -------- --------
Expenses -
Management fee $ 10,927 $ 14,179 $ 2,484
Shareholder servicing agent fee 1,800 2,253 465
Distribution and service fee - (Class A) 2,900 9,632 1,288
Administrative fee 197 253 51
Registration fees 2,614 -- 3,697
Auditing fees 5,600 2,765 5,500
Printing 3,347 1,040 2,273
Postage 128 35 166
Legal fees 292 1,250 25
Custodian fees 878 1,614 1,273
Amortization of organization expenses 434 215 --
Miscellaneous 1,697 -- --
-------- -------- --------
Total expenses $ 30,814 $ 33,236 $ 17,222
Fees paid indirectly (512) (746) (131)
Preliminary reduction of expenses by investment
adviser and distributor (13,827) (26,064) (11,377)
-------- -------- --------
Net expenses $ 16,475 $ 6,426 $ 5,714
-------- -------- --------
Net investment income (loss) $ (3,410) $ 7,348 $ (72)
======== ======== ========
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $286,356 $311,511 $ 22,992
Foreign currency transactions 158 (350) --
-------- -------- --------
Net realized gain on investments and
foreign currency transactions $286,514 $311,161 $ 22,992
-------- -------- --------
Change in unrealized appreciation (depreciation) -
Investments $219,228 $ 85,114 $115,539
Securities sold short -- 13,914 --
Translation of assets and liabilities in foreign
currencies (8) 203 --
-------- -------- --------
Net unrealized gain on investments and foreign
currency translation $219,220 $ 99,231 $115,539
-------- -------- --------
Net realized and unrealized gain on
investments and foreign currency $505,734 $410,392 $138,531
-------- -------- --------
Increase in net assets from operations $502,324 $417,740 $138,459
======== ======== ========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Operations (Unaudited) - continued
<CAPTION>
- ---------------------------------------------------------------------------------------------------
CONVERTIBLE SCIENCE AND
SECURITIES TECHNOLOGY
SIX MONTHS ENDED FEBRUARY 28, 1998 FUND FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income:
Income -
Dividends $ 8,466 $ 7,502
Interest 4,722 1,834
Foreign taxes withheld -- (30)
------- --------
Total investment income $13,188 $ 9,306
------- --------
Expenses -
Management fee $ 2,098 $ 9,547
Shareholder servicing agent fee - 399 256
Distribution and service fee - Class A 1,490 2,276
Administrative fee 43 172
Registration fees 8,803 3,047
Auditing fees 4,800 5,200
Postage 25 170
Printing 363 1,271
Legal fees 2,053 --
Custodian fee 1,308 1,381
Miscellaneous -- 851
------- --------
Total expenses $21,382 $ 24,171
Fees paid indirectly (58) (238)
Preliminary reduction of expenses by investment adviser and
distributor (16,505) (11,823)
------- --------
Net expenses $ 4,819 $ 12,110
------- --------
Net investment income (loss) $ 8,369 $ (2,805)
======= ========
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $19,474 $ 74,699
Foreign currency transactions (14) (5)
------- --------
Net realized gain on investments and foreign currency
transactions $19,460 $ 74,694
------- --------
Change in unrealized appreciation -
Investments $45,097 $321,008
Translation of assets and liabilities in foreign currencies -- 1
------- --------
Net unrealized gain on investments and foreign currency
translation $45,097 $321,009
------- --------
Net realized and unrealized gain on investments and
foreign currency $64,557 $395,703
------- --------
Increase in net assets from operations $72,926 $392,898
======= ========
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
CORE GROWTH FUND (UNAUDITED)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (3,410) $ 200,677
Net realized gain on investments and foreign
currency transactions 286,514 147,772
Net unrealized gain on investments and foreign
currency translation 219,220 264,818
---------- ----------
Net increase in net assets from operations $ 502,324 $ 613,267
---------- ----------
Distributions declared to shareholders -
From net investment income - Class A $ (81,330) $ --
From net investment income - Class I (123,670) --
From net realized gain on investments and foreign
currency transactions - Class A (97,297) (106,559)
From net realized gain on investments and foreign
currency transactions - Class I (147,949) --
---------- ----------
Total distributions declared to shareholders $ (450,246) $ (106,559)
---------- ----------
Net increase in net assets from Fund share transactions $ 614,180 $1,563,262
---------- ----------
Total increase in net assets $ 666,258 $2,069,970
Net assets:
At beginning of period 2,756,120 686,150
---------- ----------
At end of period (including accumulated
undistributed (distributions in excess of) net
investment income of $(7,858) and $200,552,
respectively) $3,422,378 $2,756,120
========== ==========
See notes to financial statements
</TABLE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
SPECIAL OPPORTUNITIES FUND (UNAUDITED)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 7,348 $ 27,650
Net realized gain on investments and foreign
currency transactions 311,161 307,876
Net unrealized gain on investments and foreign
currency translation 99,231 557,043
---------- ----------
Increase in net assets from operations $ 417,740 $ 892,569
---------- ----------
Distributions declared to shareholders -
From net investment income - Class A $ (16,329) $ (8,950)
From net investment income - Class I (13,660) --
From net realized gain on investments and foreign
currency transactions - Class A (236,984) (232,385)
From net realized gain on investments and foreign
currency transactions - Class I (198,261) --
---------- ----------
Total distributions declared to shareholders $ (465,234) $ (241,335)
---------- ----------
Net increase (decrease) in net assets from Fund share transactions $ (90,215) $1,044,942
---------- ----------
Total increase (decrease) in net assets $ (137,709) $1,696,176
Net assets:
At beginning of period 3,954,811 2,258,635
---------- ----------
At end of period (including accumulated
undistributed net investment income of $5,902
and $28,543, respectively) $3,817,102 $3,954,811
========== ==========
See notes to financial statements
</TABLE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
BLUE CHIP FUND (UNAUDITED)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (72) $ 1,194
Net realized gain on investments and foreign
currency transactions 22,992 12,379
Net unrealized gain on investments and foreign
currency translation 115,539 95,941
-------- --------
Net increase in net assets from operations $138,459 $109,514
-------- --------
Distributions declared to shareholders -
From net investment income - Class A $ (847) $ --
From net investment income - Class I (393) --
From net realized gain on investments and foreign
currency transactions - Class A (13,308) --
From net realized gain on investments and foreign
currency transactions - Class I (6,164) --
-------- --------
Total distributions declared to shareholders $(20,712) $ --
-------- --------
Net increase in net assets from Fund share transactions $ 23,247 $617,975
-------- --------
Total increase in net assets $140,994 $727,489
Net assets:
At beginning of period 727,489 --
-------- --------
At end of period (including accumulated undistributed
(distributions in excess of) net investment income of
$(108) and $1,204, respectively) $868,483 $727,489
======== ========
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1997.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets - continued
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
CONVERTIBLE SECURITIES FUND (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 8,369 $ 12,104
Net realized gain (loss) on investments and
foreign currency transactions 19,460 (1,195)
Net unrealized gain on investments and foreign
currency translation 45,097 71,627
-------- --------
Increase in net assets from operations $ 72,926 $ 82,536
-------- --------
Distributions declared to shareholders -
From net investment income - Class A $(15,475) $ --
From net investment income - Class I (1,099) --
From net realized gain on investments and foreign currency
transactions - Class A (12,390) --
From net realized gain on investments and foreign currency
transactions - Class I (880) --
-------- --------
Total distributions declared to shareholders $(29,844) $ --
-------- --------
Net increase in net assets from Fund share transactions $ 7,533 $557,991
-------- --------
Total increase in net assets $ 50,615 $640,527
Net assets:
At beginning of period 640,527 --
-------- --------
At end of period (including accumulated
undistributed (distributions in excess of) net investment
income of $(3,859) and $12,106, respectively) $691,142 $640,527
======== ========
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through
August 31, 1997.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets - continued
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
SCIENCE AND TECHNOLOGY FUND (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (2,805) $ 176,025
Net realized gain (loss) on investments and
foreign currency transactions 74,694 (69,413)
Net unrealized gain on investments and foreign
currency translation 321,009 376,018
---------- ----------
Increase in net assets from operations $ 392,898 $ 482,630
---------- ----------
Distributions declared to shareholders -
From net investment income - Class A $ (64,127) $ --
From net investment income - Class I (115,896) --
---------- ----------
Total distributions declared to shareholders $ (180,023) $ --
---------- ----------
Net increase in net assets from Fund share transactions $ 226,925 $2,036,120
---------- ----------
Total increase in net assets $ 439,800 $2,518,750
Net assets:
At beginning of period 2,518,750 --
---------- ----------
At end of period (including accumulated undistributed
(distributions in excess of) net investment income of
$(8,946) and $176,158, respectively) $2,958,550 $2,518,750
========== ==========
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through
August 31, 1997.
See notes to financial statements
</TABLE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996*
CORE GROWTH FUND (UNAUDITED)
- --------------------------------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 15.82 $ 12.33 $ 10.00
------- ------- -------
Income from investment operations# -
Net investment income (loss)(S) $ (0.03) $ 1.24 $ (0.01)
Net realized and unrealized gain on
investments and foreign currency transactions 2.50 3.93 2.34
------- ------- -------
Total from investment operations $ 2.47 $ 5.17 $ 2.33
------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (1.20) $ (1.68) $ --
From net realized gain on investments and
foreign currency transactions (1.43) -- --
------- ------- -------
Total distributions declared
to shareholders $ (2.63) $ (1.68) $ --
------- ------- -------
Net asset value - end of period $ 15.66 $ 15.82 $ 12.33
======= ======= =======
Total return 18.10%++ 45.22% 23.30%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.17%+## 1.45%## 1.50%+
Net investment income (loss) (0.37)%+ 9.12% (0.11)%+
Portfolio turnover 143% 1,043% 204%
Average commission rate $0.0523 $0.0248 $0.0411
Net assets at end of period (000 omitted) $ 1,474 $ 1,061 $ 686
* For the period from the commencement of the Fund's investment operations,
January 2, 1996, through August 31, 1996
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the
Fund at not more than 1.50% of the Fund's average daily net assets. The investment adviser and
distributor did not impose any of their fees for the periods indicated If the fees had been incurred
by the Fund and/or if actual expenses had been over/under this limitation, the net investment income
(loss) per share and the ratios would have been:
Net investment income (loss) $ (0.13) $ 1.06 $ (0.18)
Ratios (to average net assets):
Expenses## 2.42%+ 2.82% 4.28%+
Net investment income (loss) (1.62)%+ 7.75% (2.34)%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997**
CORE GROWTH FUND (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 15.84 $ 12.99
------- -------
Income from investment operations# -
Net investment income (loss)(S) $ (0.01) $ 1.50
Net realized and unrealized gain on investments
and foreign currency transactions 2.49 1.35
------- -------
Total from investment operations $ 2.48 $ 2.85
------- -------
Less distributions declared to shareholders -
From net investment income $ (1.20) $ --
From net realized gain on investments and foreign
currency transactions (1.43) --
------- -------
Total distributions declared to shareholders $ (2.63) $ --
------- -------
Net asset value - end of period $ 15.69 $ 15.84
======= =======
Total return 18.16%++ 21.94%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.17%+ 1.48%+
Net investment income (loss) (0.15)%+ 14.08%+
Portfolio turnover 143% 1,043%
Average commission rate $0.0523 $0.0248
Net assets at end of period (000 omitted) $ 1,948 $ 1,695
** For the period from the inception of Class I, January 2, 1997, through August 31, 1997
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the Fund at
not more than 1.50% of the Fund's average daily net assets. The investment adviser and distributor did not
impose any of their fees for the periods indicated. If the fees had been incurred by the Fund and/or if
actual expenses had been over/under this limitation, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $ (0.07) $ 1.40
Ratios (to average net assets):
Expenses## 1.92% 2.35%+
Net investment income (loss) (0.90)% 13.20%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996*
SPECIAL OPPORTUNITIES FUND (UNAUDITED)
- --------------------------------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 13.62 $ 11.36 $ 10.00
------- ------- -------
Income from investment operations# -
Net investment income(S) $ 0.03 $ 0.08 $ 0.06
Net realized and unrealized gain on
investments and foreign currency
transactions 1.32 3.35 1.30
------- ------- -------
Total from investment operations $ 1.35 $ 3.43 $ 1.36
------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.12) $ (0.04) $ --
From net realized gain on investments
and foreign currency transactions (1.74) (1.13) --
------- ------- -------
Total distributions declared to
shareholders $ (1.86) $ (1.17) $ --
------- ------- -------
Net asset value - end of period $ 13.11 $ 13.62 $ 11.36
======= ======= =======
Total return 12.00%++ 31.84% 13.60%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 0.39%+## 0.74%## 1.50%+
Net investment income 0.39%+ 0.65% 0.78%+
Portfolio turnover 63% 161% 108%
Average commission rate $0.0470 $0.0387 $0.0361
Net assets at end of period (000
omitted) $ 2,082 $ 1,920 $ 2,259
* For the period from the commencement of the Fund's investment operations,
January 2, 1996, through
August 31, 1996
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid
indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to
maintain the expenses of the Fund at not more than 1.50% of the Fund's
average daily net assets. The investment adviser and distributor did not
impose any of their fees for the periods indicated If the fees had been
incurred by the Fund and/or if actual expenses had been over/under this
limitation, the net investment loss per share and the ratios would have been:
Net investment loss $ (0.06) $ (0.06) $ (0.01)
Ratios (to average net assets):
Expenses## 1.76%+ 1.92% 2.97%+
Net investment loss (0.98)%+ (0.53)% (0.16)%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997**
SPECIAL OPPORTUNITIES FUND (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout
each period):
Net asset value - beginning of period $ 13.64 $ 11.39
------- -------
Income from investment operations# -
Net investment income(S) $ 0.03 $ 0.11
Net realized and unrealized gain on investments and foreign
currency transactions 1.35 2.14
------- -------
Total from investment operations $ 1.38 $ 2.25
------- -------
Less distributions declared to shareholders -
From net investment income $ (0.12) $ --
From net realized gain on investments and foreign
currency transactions (1.74) --
------- -------
Total distributions declared to shareholders $ (1.86) $ --
------- -------
Net asset value - end of period $ 13.16 $ 13.64
======= =======
Total return 12.04%++ 19.75%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.39%+ 0.40%+
Net investment income 0.40%+ 1.26%+
Portfolio turnover 63% 161%
Average commission rate $0.0470 $0.0387
Net assets at end of period (000 omitted) $ 1,735 $ 2,035
** For the period from the inception of Class I, January 2, 1997, through August 31, 1997
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the Fund at
not more than 1.50% of the Fund's average daily net assets. The investment adviser and distributor did not
impose any of their fees for the periods indicated. If the fees had been incurred by the Fund and/or if
actual expenses had been over/under this limitation, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $ (0.03) $ 0.01
Ratios (to average net assets):
Expenses## 1.26%+ 1.36%+
Net investment income (loss) (0.47)%+ 0.08%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997* FEBRUARY 28, 1998 AUGUST 31, 1997*
BLUE CHIP FUND (UNAUDITED) (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.77 $ 10.00 $ 11.77 $ 10.00
------- ------- ------- -------
Income from investment operations# -
Net investment income(S) $ -- $ 0.02 $ -- $ 0.02
Net realized and unrealized gain on investments
and foreign currency transactions 2.24 1.75 2.24 1.75
------- ------- ------- -------
Total from investment operations $ 2.24 $ 1.77 $ 2.24 $ 1.77
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.02) $ -- $ (0.02) $ --
From net realized gain on investments and
foreign currency transactions (0.33) -- (0.33) --
------- ------- ------- -------
Total distributions declared shareholders $ (0.35) $ -- $ (0.35) $ --
------- ------- ------- -------
Net asset value - end of period $ 13.66 $ 11.77 $ 13.66 $ 11.77
======= ======= ======= =======
Total return 19.37%++ 17.70%++ 19.37%++ 17.70%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.50%+ 1.50%+ 1.50%+ 1.50%+
Net investment income (loss) (0.02)%+ 0.28%+ (0.01)%+ 0.24%+
Portfolio turnover 18% 32% 18% 32%
Average commission rate $0.0549 $0.0427 $0.0549 $0.0427
Net assets at end of period (000 omitted) $ 564 $ 486 $ 305 $ 241
* For the period from the commencement of the Fund's investment operations, January 2, 1997, through August 31, 1997
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1
50% of the Fund's average daily net assets. The investment adviser and distributor did not impose any of their fees for the
periods indicated. If the fees had been incurred by the Fund and/or if actual expenses had been over/under this limitation,
the net investment loss per share and the ratios would have been:
Net investment loss $ (0.20) $ (0.26) $ (0.15) $ (0.23)
Ratios (to average net assets):
Expenses## 4.62%+ 5.04%+ 4.00%+ 4.54%+
Net investment loss (3.14)%+ (3.25)%+ (2.51)%+ (2.80)%+
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997* FEBRUARY 28, 1998 AUGUST 31, 1997*
CONVERTIBLE SECURITIES FUND (UNAUDITED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.48 $ 10.00 $ 11.47 $ 10.00
------- ------- ------- -------
Income from investment operations# -
Net investment income(S) $ 0.15 $ 0.25 $ 0.15 $ 0.26
Net realized and unrealized gain on investments 1.12 1.23 1.12 1.21
------- ------- ------- -------
Total from investment operations $ 1.27 $ 1.48 $ 1.27 $ 1.47
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.31) $ -- $ (0.31) $ --
From net realized gain on investments
and foreign currency transactions (0.25) -- (0.25) --
------- ------- ------- -------
Total distributions declared to shareholders $ (0.56) $ -- $ (0.56) $ --
------- ------- ------- -------
Net asset value - end of period $ 12.19 $ 11.48 $ 12.18 $ 11.47
======= ======= ======= =======
Total return 11.65%++ 14.70%++ 11.66%++ 14.60%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.50%+ 1.50%+ 1.50%+ 1.50%+
Net investment
income 2.61%+ 3.16%+ 2.58%+ 3.19%+
Portfolio turnover 47% 76% 47% 76%
Average commission rate $0.0464 $0.0453 $0.0464 $0.0453
Net assets at end of period (000 omitted) $ 644 $ 577 $ 47 $ 64
* For the period from the commencement of the Fund's investment operations, January 2, 1997, through August 31, 1997
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1
50% of the Fund's average daily net assets. The investment adviser and distributor did not impose any of their fees for the
periods indicated. If the fees had been incurred by the Fund and/or if actual expenses had been over/under this limitation,
the net investment loss per share and the ratios would have been:
Net
investment loss $ (0.15) $ (0.04) $ (0.12) $ --
Ratios (to average net assets):
Expenses## 6.68%+ 5.19%+ 6.18%+ 4.69%+
Net investment loss (2.57)%+ (53.00)%+ (2.10)%+ -- +
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997* FEBRUARY 28, 1998 AUGUST 31, 1997*
SCIENCE AND TECHNOLOGY FUND (UNAUDITED) (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 12.53 $ 10.00 $ 12.53 $ 10.00
------- ------- ------- -------
Income from investment operations# -
Net investment income (loss)(S) $ (0.01) $ 0.84 $ (0.01) $ 1.05
Net realized and unrealized gain on investments 1.79 1.69 1.79 1.48
------- ------- ------- -------
Total from investment operations $ 1.78 $ 2.53 $ 1.78 $ 2.53
------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.91) $ -- $ (0.91) $ --
------- ------- ------- -------
Total distributions declared to
shareholders $ (0.91) $ -- $ (0.91) $ --
------- ------- ------- -------
Net asset value - end of period $ 13.40 $ 12.53 $ 13.40 $ 12.53
======= ======= ======= =======
Total return 15.92%++ 14.70%++ 15.92%++ 25.30%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.98%+ 1.40%+ 0.97%+ 1.41%+
Net investment income (loss) (0.24)%+ 10.73%+ (0.21)%+ 13.11%+
Portfolio turnover 19% 792% 19% 792%
Average commission rate $0.0622 $0.0243 $0.0622 $0.0243
Net assets at end of period (000 omitted) $ 1,078 $ 882 $ 1,881 $ 1,637
* For the period from the commencement of the Fund's investment operations, January 2, 1997, through August 31, 1997
+ Annualized
++ Not annualized
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly
(S) Subject to reimbursement by the Fund, the adviser voluntarily agreed to maintain the expenses of the Fund at not more than 1
50% of the Fund's average daily net assets. The investment adviser and distributor did not impose any of their fees for the
periods indicated. If the fees had been incurred by the Fund and/or if actual expenses had been over/under this limitation,
the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $ (0.09) $ 0.73 $ (0.09) $0.98
Ratios (to average net assets):
Expenses## 2.25%+ 2.77%+ 2.24%+ 2.28%+
Net investment income (loss) (1.51)%+ 9.36%+ (1.48)%+ 12.24%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Core Growth Fund, MFS Special Opportunities Fund, MFS Blue Chip Fund, MFS
Convertible Securities Fund, MFS Science and Technology Fund, (each Fund) are
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. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. 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 result from fluctuations in foreign currency
exchange rates is not separately disclosed.
Deferred Organization Expenses - Costs incurred by each 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 each Fund's operations.
Forward Foreign Currency Exchange Contracts - Each 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. Each Fund will enter
into forward contracts for hedging purposes as well as for non-hedging
purposes. For hedging purposes, each 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, each Fund 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 as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains
or losses on foreign currency transactions.
Short Sales - The Special Opportunities Fund, the Convertible Securities Fund,
and the Science and Technology Fund may enter into short sales. A short sale
transaction involves selling a security which a Fund does not own with the
intent of purchasing it later at a lower price. A Fund will realize a gain if
the security price decreases and a loss if the security price increases between
the date of the short sale and the date on which a Fund must replace the
borrowed security. Losses can exceed the proceeds from short sales and can be
greater than losses from the actual purchase of a security. The amount of any
gain will be decreased, and the amount of any loss increased, by the amount of
the premium, dividends, or interest a Fund may be required to pay in connection
with a short sale. Whenever a Fund engages in short sales, its custodian
segregates cash or marketable securities in an amount that, when combined with
the amount of collateral deposited with the broker in connection with the short
sale, at least equals the current market value of the security sold short.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend 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 and the Convertible Securities 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.
These Funds use the effective interest method for reporting interest income on
payment-in-kind (PIK) bonds. 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 additions 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
expensed.
Fees Paid Indirectly - Each Fund's custody fee is calculated as a percentage
of each Fund's average daily net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - Each 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. 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.
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.
Multiple Classes of Shares of Beneficial Interest - The Funds offer multiple
classes of shares. The classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of each Fund based
on average daily net assets of each class, without distinction between share
classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
(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 0.65% of average daily net assets for the Blue Chip Fund and the
Convertible Securities Fund and at an annual rate of 0.75% of average daily
net assets for the Core Growth Fund, the Science and Technology Fund, and the
Special Opportunities Fund. For the six months ended February 28, 1998, the
investment adviser has voluntarily agreed to waive its fee, which is reflected
as a preliminary reduction of expenses in the Statement of Operations.
The Blue Chip Fund and the Convertible Securities Fund have a temporary
expense reimbursement agreements whereby MFS has voluntarily agreed to pay all
of each Fund's operating expenses, exclusive of management, distribution, and
service fees. Each Fund in turn will pay MFS an expense reimbursement fee not
greater than 1.50% of average daily net assets. 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. For the six month period ended
February 28, 1998, the aggregate unreimbursed expenses owed to MFS by each
Fund amounted to:
CONVERTIBLE
BLUE CHIP FUND SECURITIES FUND
-----------------------------------------
$16,985 $29,955
Administrator - The Funds have an administrative services agreement with MFS
to provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Funds pay MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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 officers and
Trustees of each 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 each Fund.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, did not
receive any sales charges on sales on Class A shares of each Fund for the six
months ended February 28, 1998.
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:
Each Fund's 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 currently being waived.
Purchases over $1 million of Class A shares and certain purchases by
retirement plans are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following such purchase.
There were no contingent deferred sales charges imposed during the six months
ended February 28, 1998, 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 servicing agent. The fee is calculated as
a percentage of the average daily net assets of each Fund at an effective
annual rate of 0.1125%. Prior to January 1, 1998, the fee was calculated as a
percentage of the average daily net assets of each Fund at an effective annual
rate of 0.13%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
<TABLE>
<CAPTION>
CORE SPECIAL BLUE CONVERTIBLE SCIENCE AND
GROWTH OPPORTUNITIES CHIP SECURITIES TECHNOLOGY
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases
- ---------
U.S. government
securities $ 50,759 $ -- $ -- $ -- $ --
Investments (non-U.S
government securities) $4,212,185 $2,221,679 $ 142,504 $ 298,72 $ 679,736
---------- ---------- ---------- ---------- ----------
Sales
- -----
U.S. government
securities $ 28,872 $ -- $ -- $ -- $ --
Investments (non-U.S
government securities) $4,062,397 $2,337,178 $ 144,316 $ 296,55 $ 463,055
---------- ---------- ---------- ---------- ----------
</TABLE>
The cost and unrealized appreciation or depreciation in value of the
investments owned by each Fund, as computed on a federal income tax basis, are
as follows:
<TABLE>
<CAPTION>
CORE SPECIAL BLUE CONVERTIBLE SCIENCE AND
GROWTH OPPORTUNITIES CHIP SECURITIES TECHNOLOGY
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate cost $3,049,102 $3,129,434 $ 660,305 $ 569,094 $2,246,924
---------- ---------- ---------- ---------- ----------
Gross unrealized
appreciation $ 513,571 $ 885,812 $ 212,895 $ 130,326 $ 825,925
Gross unrealized depreciation (11,582) (198,239) (1,415) (13,603) (128,898)
---------- ---------- ---------- ---------- ----------
Net unrealized appreciation $ 501,989 $ 687,573 $ 211,480 $ 116,723 $ 697,027
========== ========== ========== ========== ==========
</TABLE>
(5) Shares of Beneficial Interest
Each 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:
Class A Shares
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28, 1998
-------------------------------------------------------------------------------
CORE GROWTH FUND SPECIAL OPPORTUNITIES FUND BLUE CHIP FUND
-------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 14,242 $ 215,875 2,842 $ 38,735 172 $ 2,167
Shares issued to
shareholders in
reinvestment of
distributions 13,095 178,613 21,613 253,304 1,150 14,153
Shares reacquired (235) (3,637) (6,602) (92,095) (1,364) (16,819)
-------- --------- -------- --------- -------- ---------
Net increase
(decrease) 27,102 $ 390,851 17,853 $ 199,944 (42) $ (499)
======== ========= ======== ========= ======== =========
</TABLE>
Class A Shares
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28, 1998
----------------------------------------------------------
CONVERTIBLE SECURITIES FUND SCIENCE AND TECHNOLOGY FUND
----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 25 $ 300 4,724 $ 60,917
Shares issued to
shareholders in
reinvestment of
distributions 2,542 27,863 5,932 64,123
Shares reacquired 0 (3) (565) (7,088)
-------- --------- -------- ---------
Net increase 2,567 $ 28,160 10,091 $ 117,952
======== ========= ======== =========
</TABLE>
Class A Shares
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1997
-------------------------------------------------------------------------------
CORE GROWTH FUND SPECIAL OPPORTUNITIES FUND BLUE CHIP FUND*
-------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 59,769 $ 808,314 80,611 $ 941,341 46,967 $ 474,750
Shares issued to
shareholders in
reinvestment of
distributions 8,292 106,552 21,566 241,330 -- --
Shares reacquired (56,691) (726,457) (160,079) (1,817,353) (5,651) (56,185)
-------- --------- -------- --------- -------- ---------
Net increase
(decrease) 11,370 $ 188,409 (57,902) $(634,682) 41,316 $ 418,565
======== ========= ======== ========= ======== =========
</TABLE>
Class A Shares
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1997
-----------------------------------------------------------
CONVERTIBLE SECURITIES FUND* SCIENCE AND TECHNOLOGY FUND*
-----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 50,444 $ 504,497 49,967 $ 474,749
Shares reacquired (178) (1,847) (5,651) (56,184)
-------- --------- -------- ---------
Net increase 50,266 $ 502,650 44,316 $ 418,565
======== ========= ======== =========
</TABLE>
Class I Shares
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28, 1998
-------------------------------------------------------------------------------
CORE GROWTH FUND SPECIAL OPPORTUNITIES FUND BLUE CHIP FUND
-------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,932 $ 60,994 7,332 $ 99,308 4,005 $ 51,178
Shares issued to
shareholders in
reinvestment of
distributions 19,898 271,610 18,020 211,913 532 6,554
Shares reacquired (6,764) (109,275) (42,727) (601,380) (2,760) (33,986)
-------- --------- -------- --------- -------- ---------
Net increase
(decrease) 17,066 $ 223,329 (17,375) $(290,159) 1,777 $ 23,746
======== ========= ======== ========= ======== =========
</TABLE>
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1997.
Class I Shares
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28, 1998
------------------------------------------------------------
CONVERTIBLE SECURITIES FUND SCIENCE AND TECHNOLOGY FUND
------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 224 $ 2,625 15,846 $ 203,200
Shares issued to
shareholders in
reinvestment of
distributions 180 1,976 10,721 115,891
Shares reacquired (2,092) (25,228) (16,789) (210,118)
-------- --------- -------- ---------
Net increase
(decrease) (1,688) $ (20,627) 9,778 $ 108,973
======== ========= ======== =========
</TABLE>
Class I Shares
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1997
---------------------------------------------------------------------------------------------
CORE GROWTH FUND SPECIAL OPPORTUNITIES BLUE CHIP FUND*
---------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 113,207 $1,465,484 163,990 $1,857,489 24,471 $ 246,209
Shares reacquired (6,150) (90,631) (14,760) (177,865) (3,957) (46,799)
-------- --------- -------- ---------- -------- ---------
Net increase 107,057 $1,374,853 149,230 $1,679,624 20,514 $ 199,410
======== ========== ======== ========== ======== =========
</TABLE>
Class I Shares
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1997
-------------------------------------------------------
CONVERTIBLE SECURITIES* SCIENCE AND TECHNOLOGY*
-------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 5,555 $ 55,341 164,633 $1,659,463
Shares reacquired -- -- (34,025) (355,226)
-------- --------- -------- ---------
Net increase 5,555 $ 55,341 130,608 $1,304,237
======== ========= ======== =========
</TABLE>
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1997.
(6) Line of Credit
Each Fund and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
each Fund's 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 Fund for the six months ended February 28, 1998, were as
follows:
<TABLE>
<CAPTION>
CORE SPECIAL BLUE CONVERTIBLE SCIENCE AND
GROWTH OPPORTUNITIES CHIP SECURITIES TECHNOLOGY
FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5 $11 $ 0 $ 1 $ 6
</TABLE>
(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 exchange rates. The
financial instruments are forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
the Funds have 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 purchases and sales under master netting agreements
for the Special Opportunities Fund amounted to a net receivable of $370 with
Deutschebank at February 28, 1998.
At February 28, 1998, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.
--------------------------------------------
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) CORE GROWTH FUND
MFS(R) SPECIAL OPPORTUNITIES FUND
MFS(R) BLUE CHIP FUND
MFS(R) CONVERTIBLE SECURITIES FUND
MFS(R) SCIENCE AND TECHNOLOGY FUND
[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
500 Boylston Street
Boston, MA 02116-3741
[DALBAR LOGO]
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
INC-3 4/98 2.8M
