<PAGE>
[Logo] M F S (R) ANNUAL REPORT
INVESTMENT MANAGEMENT AUGUST 31, 1999
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[Graphic Omitted]
MFS(R) BLUE CHIP FUND
MFS(R) CONVERTIBLE
SECURITIES FUND
MFS(R) CORE GROWTH FUND
MFS(R) SCIENCE
AND TECHNOLOGY FUND
<PAGE>
<TABLE>
<S> <C>
MFS(R) BLUE CHIP FUND MFS(R) CORE GROWTH FUND
MFS(R) CONVERTIBLE SECURITIES FUND MFS(R) SCIENCE AND TECHNOLOGY FUND
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management(R) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
CUSTODIAN
Lawrence H. Cohn, M.D. - Chief of Cardiac State Street Bank and Trust Company
Surgery, Brigham and Women's Hospital;
Professor of Surgery, Harvard Medical School AUDITOR
Ernst & Young LLP
The Hon. Sir J. David Gibbons, KBE - Chief
Executive Officer, Edmund Gibbons Ltd.; INVESTOR INFORMATION
Chairman, Colonial Insurance Company, Ltd. For MFS stock and bond market outlooks, call
toll free: 1-800-637-4458 anytime from a
Abby M. O'Neill - Private Investor touch-tone telephone.
Walter E. Robb, III - President and Treasurer, For information on MFS mutual funds, call your
Benchmark Advisors, Inc.; President, Benchmark financial consultant or, for an information
Consulting Group, Inc. kit, call toll free: 1-800-637-2929 any
business day from 9 a.m. to 5 p.m. Eastern time
Arnold D. Scott* - Senior Executive Vice (or leave a message anytime).
President, Director, and Secretary, MFS
Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman, Chief Executive P.O. Box 2281
Officer, and Director, MFS Investment Boston, MA 02107-9906
Management
For general information, call toll free:
J. Dale Sherratt - President, Insight 1-800-225-2606 any business day from 8 a.m. to
Resources, Inc.; Managing General Partner, 8 p.m. Eastern time.
Wellfleet Investments; Chief Executive Officer,
Cambridge Nutraceuticals For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business day
Ward Smith - Former Chairman (until 1994), from 9 a.m. to 5 p.m. Eastern time. (To use
NACCO Industries this service, your phone must be equipped with
a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER
Massachusetts Financial Services Company For share prices, account balances, and
500 Boylston Street exchanges, call toll free: 1-800-MFS-TALK
Boston, MA 02116-3741 (1-800-637-8255) anytime from a touch-tone
telephone.
DISTRIBUTOR
MFS Fund Distributors, Inc. WORLD WIDE WEB
500 Boylston Street www.mfs.com
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGERS
S. Irfan Ali*
Mitchell D. Dynan*
Constantinos Mokas*
Stephen Pesek*
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,
The current investment and economic environment bears little resemblance to last
year's. One year ago, global economies were floundering, and the crisis in Asia
threatened an already weak U.S. economy. Corporate earnings were flat, and
economists used the word "deflation" for the first time in recent memory.
Entering 1999, expectations for corporate earnings growth were lowered
dramatically. In an attempt to foster U.S. growth, the Federal Reserve Board
(the Fed) lowered interest rates.
As a result, this year the U.S. economy is booming and unemployment is low. Many
corporations are focused on improving their profitability, and investors have
been rewarded with positive surprises across a variety of industries. Our
analysts predict that corporate earnings growth for 1999 will average 12% - 15%.
Global economies also are showing signs of strength, and the Asian crisis has
passed. In fact, Japan's economic woes seem to have reached bottom. Although the
process is in its infancy, some Japanese corporations not only are talking about
restructuring and cost cutting, they also are beginning to take action, looking
within to become more competitive and improve returns on equity. While still
lagging the United States, Europe is beginning to restructure and consolidate.
These signs of international growth have contributed to concerns that the U.S.
economy now may be too strong. In June, and again in August, the Fed raised
rates by one-quarter of a percentage point to help ward off the specter of
inflation.
After an unprecedented four years of 20% annual returns in the U.S. equity
market, we fear that many investors have become accustomed to high returns and
have lost sight of the risks they take on to achieve them. In the current market
many investors are taking on additional risk - whether through day trading or
investing in speculative Internet stocks.
Risks are as much a part of the market today as they were one year ago. We
believe the market remains overvalued, with stocks priced 30% above our
analysts' earnings projections. And market narrowness has not abated; the top 25
stocks in the Standard & Poor's 500 Composite Index, a popular, unmanaged index
of common stock total return performance, are still the most overvalued. Such
extreme overvaluation makes the stock market sensitive to interest-rate news and
any negative earnings surprises. The Year 2000 (Y2K) computer problem is another
factor causing investor concern. While we believe corporate America is well
prepared to address any Y2K situations that may arise at year-end, no one can
predict investor behavior. In our opinion, it is investor behavior that has the
greatest potential to create market volatility.
We believe the best way to address Y2K and other market risks is through our
continuing commitment to MFS Original Research(R) and our fundamental investment
tenet of long-term investing. Whether markets are up or down, MFS analysts focus
on analyzing industries and visiting companies to determine the long-term
winners and the prices that will make them attractive opportunities. Because all
companies will not benefit equally from the improving international environment,
bottom-up research remains critical to identifying those that we believe are
successfully restructuring, consolidating, and gaining market share.
Changes in market and economic conditions can't be predicted but should always
be expected. The changes we have seen over the past year only reinforce our
commitment to long-term planning and investing. We believe volatility helps to
create opportunity for long-term investors to buy solid companies at attractive
prices. For this reason, we are continuing to expand our domestic and
international capabilities to ensure that MFS has primary, in-house research on
companies worldwide. We believe that we have built the right investment team,
backed by MFS Original Research, to take advantage of those opportunities for
our shareholders.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey Shames
_______________________
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
September 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
MFS Blue Chip Fund
Dear Shareholders,
For the 12 months ended August 31, 1999, Class A shares of the Fund provided a
total return of 40.38% and Class I Shares 40.27%. These returns, which assume
the reinvestment of any distributions but exclude the effects of any sales
charges, compare to a 39.83% 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 31.14% return for the average growth and income fund
tracked by Lipper Analytical Services, Inc. (Lipper), an independent firm that
reports mutual fund performance.
The Fund seeks capital appreciation by emphasizing well-known, stable, and
established companies that we believe have sustainable growth potential.
The Fund has performed extremely well over the past year, beating the S&P 500
slightly and exceeding the average peer group return by more than 900 basis
points (9.00%). One of the reasons for our performance is that we have made more
concentrated bets over the past year, focusing on sectors such as technology and
utilities, both of which have been positive contributors to performance.
Specific companies include General Electric and United Technologies. Due to the
enormous increase in voice and data traffic, telecommunications companies also
have been strong performers. In this area, the Fund has benefited from positions
in MCI WorldCom, Alltel, and Bell Atlantic.
Another company that has helped performance is United Healthcare. Previously,
costs rose in the HMO industry causing margin compression. However, this
situation now has reversed, so companies have started to price their products
more rationally. United Healthcare's earnings have grown for the past several
quarters and investors have developed more confidence in their outlook for the
company.
Respectfully,
/s/ Mitch Dynan
- --------------------
Mitchell D. Dynan
Portfolio Manager
MFS Convertible Securities Fund
Dear Shareholders,
For the 12 months ended August 31, 1999, Class A shares of the Fund provided a
total return of 45.85% and Class I shares 45.94%. These returns, which assume
the reinvestment of any distributions but exclude the effects of any sales
charges, compare to a 28.89% return for the Merrill Lynch All Quality, All
Convertibles Index, an unmanaged index of convertible securities, and to a
23.25% return for the average convertible securities fund tracked by Lipper.
The Fund seeks to maximize total return through a combination of current income
and capital appreciation by investing in companies that we feel have good
long-term growth potential. We look for companies that have one or more
sustainable competitive edges over their competitors. For example, we may invest
in companies with strong product development, new marketing and distribution
partnerships, or consolidation opportunities.
The convertible bond market's volatility during the third quarter of 1998 was
driven by the combination of weak equity markets and a lack of liquidity in the
market as a whole. As the fourth quarter rebound took hold, liquidity improved
and interest rates came down. Though rates have gone up slightly in 1999,
causing bond prices to fall, the equity markets remain strong. These factors
have contributed to a healthy convertibles market and, coupled with strong
performance from individual securities positively impacted the Fund's
performance.
The Fund benefited from its technology and telecommunication holdings. An
example is QUALCOMM, a leader in the wireless market that is currently
experiencing explosive growth. Some of the Fund's positions in semiconductor
companies such as Atmel and Conexant contributed positively to performance. As
suppliers of the memory chips used in wireless communications, they benefited
from the explosive growth in telecommunications and the Asian recovery. Time
Warner was a strong performer for the Fund, but we have sold our position. This
is a company that has been able to adapt its product line over time and that had
benefited the portfolio.
MFS Original Research(R) is key to gathering firsthand information on factors
that can influence a company's financial performance. For convertible bond
investing, research must also take into consideration a variety of technical
factors that are unique to this asset class. For example, one critical technical
issue is "change of control" language written into convertible bond contracts.
This language comes into play during a merger or acquisition situation and
directs how, and at what price, your investment is bought out. Research allows
us to gain an intimate understanding of this language so we may approach each
investment with a full base of knowledge before committing shareholders' money.
In this way, we think we can minimize the negative impact of acquisition
surprises and manage the Fund more consistently for shareholders.
Respectfully,
/s/ Constantinos Mokas
- --------------------------
Constantinos Mokas
Portfolio Manager
MFS Core Growth Fund
Dear Shareholders,
For the 12 months ended August 31, 1999, Class A shares of the Fund provided a
total return of 54.33% and Class I shares 54.40%. These returns, which assume
the reinvestment of any distributions but exclude the effects of any sales
charges, compare to a 39.83% return for the S&P 500 and to a 40.56% return for
the average growth fund tracked by Lipper.
The Fund seeks capital appreciation by emphasizing companies that exhibit a
sustainable competitive advantage, market share, low production costs, research
and development strength, distribution expertise, earnings consistency and
predictability, and good consumer service. In addition, we look for companies
with the potential to benefit from mismatches in supply and demand versus their
competitors.
Overall, the Fund's performance has benefited from growth in the technology
sector. Technology continues to increase the productivity and efficiency of U.S.
businesses. Semiconductors, an essential part of computer chips, have been an
especially strong subsector of technology. Semiconductors have benefited from a
supply/demand imbalance. Demand in Asian markets has dramatically increased as
these economies have recovered from the turmoil they suffered in 1998. LSI
Logic, Analog Devices, and Texas Instruments are examples of semiconductor
companies that have capitalized on this trend.
The leisure and media sector, namely radio- and TV-related stocks, also has
contributed positively to the Fund's performance. Advertising revenues are
experiencing a period of strong growth driven by several factors, including the
upcoming cycle of political elections, the proliferation of new Internet
companies, and advertising prompted by the millennium. Infinity Broadcasting,
Time Warner, and CBS are examples of media stocks that we currently favor.
Respectfully,
/s/ Stephen Pesek
- ----------------------
Stephen Pesek
Portfolio Manager
MFS Science & Technology Fund
Dear Shareholders,
For the 12 months ended August 31, 1999, both Class A and Class I shares of the
Fund provided a total return of 65.25%. These returns, which assume the
reinvestment of any distributions but exclude the effects of any sales charges,
compare to a 83.02% return over the same period for the NASDAQ Composite Index,
an unmanaged index of common stocks traded on NASDAQ, and to a 122.55% return
for the average science and technology fund as reported by Lipper.
The Fund invests in companies that benefit from scientific and technological
advances and improvements. We concentrate on finding established market leaders
that meet these criteria: high-quality products, strong cash flows, high gross
margins, and the ability to sustain strong, earnings growth. We aggressively
employ MFS Original Research(R) to drive our bottom-up stock selection process.
Although the Fund performed well overall, its underweighting in Internet stocks
caused the Fund to underperform relative to the NASDAQ index and the Lipper
average. We consider many of these stocks to be highly speculative and very
expensive. We concentrate on finding established market leaders with
high-quality products, strong cash flows, high gross margins, and sustainable
earnings growth. We believe this investment style helps us manage risk.
With more than half of the Fund's assets invested in the technology sector, we
believe the Fund's performance has benefited from our semiconductor holdings.
Additionally, the utilities and communications companies participating in the
cellular phone boom, especially the telephone service providers and wireless
phone manufacturers, have contributed to performance.
Analog Devices, one of our top ten holdings whose price per share has risen
steadily since the beginning of 1999, is taking advantage of the synergy between
semiconductors and utilities and communications. Its products -- specialized
computer chips that process analog signals, which the human voice, for example,
produces -- go into any electronic device that interacts with its user or
environment. Portable computers and digital cellular phones both have high
analog content. The chips rely on engineering know-how and are often highly
customized, compared to the more common digital chips whose design can be
automated and which are capital intensive to manufacture. We believe Analog
Devices has room to grow along with the rest of the semiconductor industry.
Respectfully,
/s/ S. Irfan Ali
- -------------------------
S. Irfan Ali
Portfolio Manager
The opinions expressed in this report are those of the portfolio managers and
are current 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.
PERFORMANCE SUMMARY
Currently, each Fund offers only Class A and Class I shares, which are available
for purchase at net asset value only by residents of the Commonwealth of
Massachusetts who are employees (or certain relatives of employees) of MFS and
its affiliates or members of the governing boards of the various funds sponsored
by MFS.
The following information illustrates the historical performance of each Fund's
Class A shares in comparison to various market indicators. Performance results
reflect the percentage change in net asset value, including the reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary for more information.) It
is not possible to invest directly in an index.
MFS BLUE CHIP FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the Fund's commencement of investment operations, January
2, 1997, through August 31, 1999. Index information is from January 1, 1997.)
[Graphic Omitted]
MFS Blue Chip Fund -- Class A S&P 500 Composite Index
----------------------------- -----------------------
January, 1997 $10,000 $10,000
August, 1997 11,770 12,291
August, 1998 12,970 13,286
August, 1999 18,207 18,577
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH AUGUST 31, 1999
CLASS A
1 Year Life*
- -----------------------------------------------------------------------------
Cumulative Total Return +40.38% +82.07%
- -----------------------------------------------------------------------------
Average Annual Total Return +40.38% +25.26%
- -----------------------------------------------------------------------------
SEC Results +33.71% +22.99%
- -----------------------------------------------------------------------------
CLASS I
1 Year Life*
- -----------------------------------------------------------------------------
Cumulative Total Return +40.27% +82.07%
- -----------------------------------------------------------------------------
Average Annual Total Return +40.27% +25.26%
- -----------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- -----------------------------------------------------------------------------
Average growth and income fund** +31.14% +17.49%
- -----------------------------------------------------------------------------
Standard & Poor's 500 Composite Index+ +39.83% +26.14%
- -----------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1999. Index information is from
January 1, 1997.
**Source: Lipper Analytical Services, Inc.
+Source: Standard & Poor's Micropal, Inc.
MFS CONVERTIBLE SECURITIES FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the Fund's commencement of investment operations, January
2, 1997, through August 31, 1999.
Index information is from January 1, 1997.)
MFS Convertible Merrill Lynch All Quality
Securities Fund -- Class A All Convertibles Index
--------------------------- -------------------------
January, 1997 $10,000 $10,000
August, 1997 11,470 11,535
August, 1998 11,252 11,224
August, 1999 16,410 14,466
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH AUGUST 31, 1999
CLASS A
1 Year Life*
- ---------------------------------------------------------------------------
Cumulative Total Return +45.85% +64.10%
- ---------------------------------------------------------------------------
Average Annual Total Return +45.85% +20.47%
- ---------------------------------------------------------------------------
SEC Results +38.92% +18.28%
- ---------------------------------------------------------------------------
CLASS I
1 Year Life*
- ---------------------------------------------------------------------------
Cumulative Total Return +45.94% +63.90%
- ---------------------------------------------------------------------------
Average Annual Total Return +45.94% +20.41%
- ---------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- ---------------------------------------------------------------------------
Average convertible securities fund** +23.25% +12.32%
- ---------------------------------------------------------------------------
Merrill Lynch All Quality, All Convertibles Index+ +28.89% +14.85%
- ---------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1999. Index information is from
January 1, 1997.
**Source: Lipper Analytical Services, Inc.
+Source: Bloomberg.
MFS CORE GROWTH FUND
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the Fund's commencement of investment operations, January
2, 1996, through August 31, 1999. Index information is from January 1, 1996.)
MFS Core Growth Fund -- Class A S&P 500 Composite Index
------------------------------- -----------------------
January, 1996 $10,000 $10,000
August, 1996 12,330 10,745
August, 1997 17,905 15,113
August, 1998 19,472 16,336
August, 1999 30,051 22,842
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH AUGUST 31, 1999
CLASS A
1 Year 3 Years Life*
- --------------------------------------------------------------------------------
Cumulative Total Return +54.33% +143.72% +200.51%
- --------------------------------------------------------------------------------
Average Annual Total Return +54.33% + 34.58% + 35.04%
- --------------------------------------------------------------------------------
SEC Results +47.00% + 32.41% + 33.26%
- --------------------------------------------------------------------------------
CLASS I
1 Year 3 Years Life*
- --------------------------------------------------------------------------------
Cumulative Total Return +54.40% +146.04% +203.37%
- --------------------------------------------------------------------------------
Average Annual Total Return +54.40% + 34.65% + 35.10%
- --------------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year 3 Years Life*
- --------------------------------------------------------------------------------
Average growth fund** +40.56% + 22.36% + 20.01%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index+ +39.83% + 28.58% + 25.27%
- --------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1996, through August 31, 1999.
Index information is from January 1, 1996.
**Source: Lipper Analytical Services, Inc.
+Source: Standard & Poor's Micropal, Inc.
MFS SCIENCE AND TECHNOLOGY FUND(1)
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from the Fund's commencement of investment operations, January
2, 1997, through August 31, 1999.
Index information is from January 1, 1997.)
MFS Science and Technology
Fund -- Class A NASDAQ Composite Index
--------------------------- -------------------------
January, 1997 $10,000 $10,000
August, 1997 12,530 12,319
August, 1998 12,454 11,662
August, 1999 20,580 21,345
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH AUGUST 31, 1999
CLASS A
1 Year Life*
- --------------------------------------------------------------------------------
Cumulative Total Return + 65.25% +105.80%
- --------------------------------------------------------------------------------
Average Annual Total Return + 65.25% + 31.17%
- --------------------------------------------------------------------------------
SEC Results + 57.40% + 28.79%
- --------------------------------------------------------------------------------
CLASS I
1 Year Life*
- --------------------------------------------------------------------------------
Cumulative Total Return + 65.25% +105.80%
- --------------------------------------------------------------------------------
Average Annual Total Return + 65.25% + 31.17%
- --------------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year Life*
- --------------------------------------------------------------------------------
Average science and technology fund** +122.55% + 34.26%
- --------------------------------------------------------------------------------
NASDAQ Composite Index+ + 83.02% + 32.89%
- --------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1997, through August 31, 1999.
Index information is from January 1, 1997.
**Source: Lipper Analytical Services, Inc.
+Source: Standard & Poor's Micropal, Inc.
NOTES TO PERFORMANCE SUMMARY
Performance results reflect any applicable subsidies and waivers, without which
the results would have been less favorable. Subsidies and waivers may be
rescinded at any time. See the prospectus for details. All results are
historical and include the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
(1) The Fund may focus its investments in certain sectors, thereby increasing
its vulnerability to any single economic, political, or regulatory development.
See the prospectus for details.
<PAGE>
PORTFOLIO OF INVESTMENTS -- August 31, 1999
MFS BLUE CHIP FUND
Stocks - 86.6%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 85.8%
Aerospace - 2.2%
General Dynamics Corp. 249 $ 15,687
United Technologies Corp. 130 8,596
-----------
$ 24,283
- --------------------------------------------------------------------------------
Banks and Credit Companies - 4.3%
Comerica, Inc. 178 $ 9,267
Fleet Financial Group, Inc. 180 7,166
National City Corp. 188 5,194
Northern Trust Corp. 100 8,481
US Bancorp 300 9,263
Wells Fargo Co. 197 7,843
-----------
$ 47,214
- --------------------------------------------------------------------------------
Biotechnology - 0.5%
Guidant Corp. 100 $ 5,869
- --------------------------------------------------------------------------------
Business Services - 1.9%
DST Systems, Inc.* 312 $ 20,748
- --------------------------------------------------------------------------------
Chemicals - 0.5%
E.I. du Pont de Nemours & Co., Inc. 82 $ 5,197
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.7%
Microsoft Corp.* 200 $ 18,513
- --------------------------------------------------------------------------------
Computer Software - Systems - 1.4%
BMC Software, Inc.* 98 $ 5,274
Computer Associates International, Inc. 187 10,565
-----------
$ 15,839
- --------------------------------------------------------------------------------
Conglomerates - 4.1%
AlliedSignal, Inc. 200 $ 12,250
Tyco International Ltd. 328 33,230
-----------
$ 45,480
- --------------------------------------------------------------------------------
Construction Services - 1.0%
Martin Marietta Materials, Inc. 254 $ 11,589
- --------------------------------------------------------------------------------
Consumer Goods and Services - 7.6%
Clorox Co. 270 $ 12,217
Colgate-Palmolive Co. 200 10,700
Dial Corp. 250 6,938
Gillette Co. 320 14,920
Philip Morris Cos., Inc. 245 9,172
Procter & Gamble Co. 300 29,775
-----------
$ 83,722
- --------------------------------------------------------------------------------
Electrical Equipment - 2.1%
General Electric Co. 213 $ 23,923
- --------------------------------------------------------------------------------
Entertainment - 0.7%
Time Warner, Inc. 140 $ 8,304
- --------------------------------------------------------------------------------
Financial Institutions - 2.6%
Associates First Capital Corp., "A" 188 $ 6,451
Citigroup, Inc. 230 10,220
Federal Home Loan Mortgage Corp. 230 11,845
-----------
$ 28,516
- --------------------------------------------------------------------------------
Food and Beverage Products - 5.4%
Anheuser-Busch Cos., Inc. 270 $ 20,790
Bestfoods Co. 230 11,299
Coca-Cola Co. 65 3,888
Hershey Foods Corp. 83 4,446
Interstate Bakeries Corp. 195 4,668
PepsiCo., Inc. 156 5,323
Ralston-Ralston Purina Co. 330 9,075
-----------
$ 59,489
- --------------------------------------------------------------------------------
Insurance - 7.9%
Allstate Corp. 330 $ 10,828
CIGNA Corp. 287 25,776
Hartford Financial Services Group, Inc. 456 20,719
Lincoln National Corp. 164 7,687
Marsh & McLennan Cos., Inc. 70 5,097
MBIA, Inc. 100 5,188
Progressive Corp. 66 6,732
Torchmark Corp. 181 5,159
-----------
$ 87,186
- --------------------------------------------------------------------------------
Medical and Health Products - 11.3%
American Home Products Corp. 270 $ 11,205
Bristol-Myers Squibb Co. 260 18,297
Johnson & Johnson Co. 274 28,016
Pfizer, Inc. 480 18,120
Pharmacia & Upjohn, Inc. 170 8,883
Schering Plough Corp. 410 21,551
Warner-Lambert Co. 285 18,881
-----------
$ 124,953
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 3.5%
HEALTHSOUTH Corp.* 400 3,275
Medtronic, Inc. 125 9,781
United Healthcare Corp. 422 25,663
-----------
$ 38,719
- --------------------------------------------------------------------------------
Oils - 5.2%
Chevron Corp. 182 $ 16,789
Conoco, Inc. 420 11,288
Exxon Corp. 221 17,431
Mobil Corp. 115 11,773
-----------
$ 57,281
- --------------------------------------------------------------------------------
Restaurants and Lodging - 1.1%
McDonald's Corp. 300 $ 12,413
- --------------------------------------------------------------------------------
Special Products and Services - 0.8%
Xerox Corp. 200 $ 9,550
- --------------------------------------------------------------------------------
Stores - 1.8%
CVS Corp. 220 9,171
Office Depot, Inc.* 150 1,566
Wal-Mart Stores, Inc. 215 9,527
-----------
$ 20,264
- --------------------------------------------------------------------------------
Supermarkets - 4.4%
Kroger Co.* 1,068 $ 24,698
Safeway, Inc.* 507 23,607
-----------
$ 48,305
- --------------------------------------------------------------------------------
Telecommunications - 5.7%
Alltel Corp. 100 $ 6,763
Bell Atlantic Corp. 315 19,294
MCI WorldCom, Inc.* 170 12,877
SBC Communications, Inc. 185 8,880
Sprint Corp. 260 11,537
Sprint Corp. (PCS Group)* 61 3,645
-----------
$ 62,996
- --------------------------------------------------------------------------------
Utilities - Electric - 6.8%
CMS Energy Corp. 331 $ 13,095
GPU, Inc. 200 6,825
NiSource, Inc. 300 7,125
Peco Energy Co. 300 12,187
Pinnacle West Capital Corp. 300 11,400
Texas Utilities Co. 290 11,727
Unicom Corp. 326 12,592
-----------
$ 74,951
- --------------------------------------------------------------------------------
Utilities - Gas - 0.7%
Columbia Energy Group 135 $ 7,973
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.6%
BellSouth Corp. 139 6,290
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 949,567
- --------------------------------------------------------------------------------
Foreign Stocks - 0.8%
United Kingdom - 0.8%
BP Amoco PLC, ADR (Oils) 80 $ 8,970
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $801,148) $ 958,537
- --------------------------------------------------------------------------------
Short-Term Obligations - 14.5%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due
9/01/99, at Amortized Cost $ 160 $ 160,000
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $961,148) $ 1,118,537
Other Assets, Less Liabilities - (1.1)% (12,518)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 1,106,019
- --------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS -- August 31, 1999
MFS CONVERTIBLE SECURITIES FUND
Convertible Preferred Stocks - 46.3%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 45.4%
Business Services - 1.1%
EVI, Inc., 5%## 250 $ 9,406
- --------------------------------------------------------------------------------
Consumer Goods and Services - 2.8%
Newell Financial Trust I, 5.25% 100 $ 5,025
Newell Financial Trust I, 5.25%## 200 10,050
Readers Digest, $1.9336* 300 8,888
-----------
$ 23,963
- --------------------------------------------------------------------------------
Containers - 2.6%
Owens Illinois, Inc., 4.75% 230 $ 8,424
Sealed Air Corp., $2.00 250 14,250
-----------
$ 22,674
- --------------------------------------------------------------------------------
Entertainment - 2.4%
MediaOne Group, Inc., 4.5% 60 $ 7,717
MediaOne Group, Inc., 6.25% 150 13,472
-----------
$ 21,189
- --------------------------------------------------------------------------------
Financial Institutions - 5.8%
Finova Finance Trust, 5.5% 230 $ 12,650
Jefferson Pilot Corp., 7.25% 75 7,687
Merrill Lynch & Co., Inc., 5.75% 1,100 12,925
Merrill Lynch & Co., Inc., 6.25% 250 4,719
Salomon, Inc., 6.25% 180 12,420
-----------
$ 50,401
- --------------------------------------------------------------------------------
Food and Beverage Products - 5.1%
Ralston Purina Co., 7% 340 $ 16,320
Seagram Co. Ltd., 7.50%* 260 13,601
Suiza Capital Trust II, 5.5% 450 14,513
-----------
$ 44,434
- --------------------------------------------------------------------------------
Insurance - 1.7%
Lincoln National Corp., 1.85% 710 $ 14,910
- --------------------------------------------------------------------------------
Oil Services - 0.8%
Kerr-Mcgee Corp., 5.5% 200 $ 7,325
- --------------------------------------------------------------------------------
Oils - 2.6%
Apache Corp., 6.5%* 280 $ 11,515
Coastal Corp., 5.58% 50 1,188
Coastal Corp., 6.625% 250 6,859
Newfield Financial Trust I, 6.5% 60 3,112
-----------
$ 22,674
- --------------------------------------------------------------------------------
Telecommunications - 10.1%
Global Telesystems Group, Inc., 7.25%## 150 $ 8,531
Intermedia Communications, Inc., $3.25* 285 9,405
Intermedia Communications, Inc., 7%*## 100 3,588
McLeodUSA, Inc. 17 5,576
PSINet, Inc., 6.75% 320 15,520
QUALCOMM Financial Trust I, 5.75%* 35 8,893
Qwest Trends Trust, 5.75%*## 190 9,215
UnitedGlobalCom, 7% 250 12,875
Winstar Communications, Inc., 7% 200 11,075
Winstar Communications, Inc., 7.25%## 3 2,895
-----------
$ 87,573
- --------------------------------------------------------------------------------
Utilities - Electric - 6.6%
CalEnergy Capital Trust III, 6.5% 190 $ 8,313
CalEnergy Capital Trust III, 6.5%## 100 4,375
CMS Energy Corp., 8.75% 100 4,038
Houston Industries, Inc., 7.00% 140 14,420
NiSource, Inc., 7.75% 260 11,862
Texas Utilities Co., 3.315% 200 8,900
Texas Utilities Co., 9.25% 100 5,200
-----------
$ 57,108
- --------------------------------------------------------------------------------
Utilities - Gas - 3.8%
Devon Financing Trust, $3.25* 90 $ 5,805
El Paso Energy Capital Trust I, 4.75% 320 15,720
Enron Corp., 7% 500 11,585
-----------
$ 33,110
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 394,767
- --------------------------------------------------------------------------------
Foreign Stocks - 0.9%
Canada - 0.9%
Canadian National Railway Co., 5.25% (Railroads) 150 $ 7,912
- --------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost, $382,135) $ 402,679
- --------------------------------------------------------------------------------
Preferred Stocks - 8.3%
- --------------------------------------------------------------------------------
Automotive - 3.2%
Federal Mogul Financing Trust, 7.00% 250 $ 13,094
Tower Automotive Capital Trust, 6.75% 140 6,177
Tower Automotive Capital Trust, 6.75%## 200 8,700
-----------
$ 27,971
- --------------------------------------------------------------------------------
Financial Services - 1.0%
Morgan Stanley Group, Inc., 6% 1,100 $ 8,800
- --------------------------------------------------------------------------------
Medical and Health Products - 2.4%
Alkermes, Inc., 6.5% 300 $ 20,400
- --------------------------------------------------------------------------------
Telecommunications - 1.7%
Cox Communications, Inc., 0.25% 325 $ 14,830
- --------------------------------------------------------------------------------
Total Preferred Stocks (Identified Cost, $71,900) $ 72,001
- --------------------------------------------------------------------------------
Convertible Bonds - 39.3%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
U.S. Bonds - 37.9%
Advertising - 0.5%
Lamar Advertising Co., 5.25s, 2006 $ 4 $ 4,460
- --------------------------------------------------------------------------------
Business Services - 1.7%
Interim Services, Inc., 4.5s, 2005 $ 11 $ 9,254
Safeguard Scientifics, Inc.##, 5s, 2006 5 5,425
-----------
$ 14,679
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.8%
America Online, Inc., 4s, 2002 $ 1 $ 7,146
Veritas Software Corp., 1.856s, 2006 10 8,625
-----------
$ 15,771
- --------------------------------------------------------------------------------
Computer Software - Services - 2.4%
Affiliated Computer Services, Inc., 4s, 2005 $ 5 $ 6,268
Affiliated Computer Services, Inc., 4s, 2005## 5 5,844
Sportsline USA, Inc., 5s, 2006## 13 8,629
-----------
$ 20,741
- --------------------------------------------------------------------------------
Computer Software - Systems - 2.8%
EMC Corp., 3.25s, 2002 $ 3 $ 15,698
Ingram Micro, Inc., 0s, 2018 25 8,500
-----------
$ 24,198
- --------------------------------------------------------------------------------
Consumer Goods and Services - 1.1%
At Home Corp., 0s, 2018## $ 15 $ 9,225
- --------------------------------------------------------------------------------
Electrical Equipment - 1.6%
LSI Logic Corp., 4.25s, 2004## $ 7 $ 13,580
- --------------------------------------------------------------------------------
Electronics - 5.0%
Atmel Corporation, 0s, 2018## $ 29 $ 17,327
Conexant Systems, Inc., 4.25s, 2006## 6 10,139
Solectron Corp., 0s, 2019## 26 16,282
-----------
$ 43,748
- --------------------------------------------------------------------------------
Financial Institutions - 4.9%
ADT Operations, Inc., 0s, 2010 $ 7 $ 19,031
Goldman Sachs Group, Inc., 2s, 2006 10 9,625
Merrill Lynch & Co., Inc., 0s, 2006 5 4,625
Merrill Lynch & Co., Inc., 1s, 2006 11 9,034
-----------
$ 42,315
- --------------------------------------------------------------------------------
Financial Services - 4.2%
Bell Atlantic Financial Services, Inc.,
4.25s, 2005## $ 19 $ 20,188
Elan Finance Corporation Ltd., 0s, 2018## 29 16,240
-----------
$ 36,428
- --------------------------------------------------------------------------------
Insurance - 0.6%
Mutual Risk Management Ltd., 0s, 2015 $ 9 $ 5,378
- --------------------------------------------------------------------------------
Medical and Health Products - 2.8%
Alpharma, Inc., 3s, 2006## $ 10 $ 11,651
Sepracor, Inc., 6.25s, 2005 5 8,469
Sepracor, Inc., 7s, 2005## 5 4,675
-----------
$ 24,795
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.7%
Total Renal Care Holdings, Inc., 7s, 2009## $ 10 $ 6,550
- --------------------------------------------------------------------------------
Oil Services - 1.2%
Diamond Offshore Drilling, Inc., 3.75s, 2007 $ 9 $ 10,226
- --------------------------------------------------------------------------------
Stores - 4.4%
Home Depot, Inc., 3.25s, 2001 $ 6 $ 16,207
Office Depot, Inc., 0s, 2008 5 3,350
Office Depot, Inc., 0s, 2007 10 6,850
Rite Aid Corp., 5.25s, 2002 13 12,285
-----------
$ 38,692
- --------------------------------------------------------------------------------
Telecommunications - 2.2%
Global Telesystems Group, Inc., 5.75s, 2010 $ 5 $ 6,669
Jacor Communications, Inc., 0s, 2011 12 12,615
-----------
$ 19,284
- --------------------------------------------------------------------------------
Total U.S. Bonds $ 330,070
- --------------------------------------------------------------------------------
Foreign Bonds - 1.4%
Switzerland - 1.4%
Swiss Life Finance Ltd., 1.5s, 2003 (Finance) $ 8 $ 11,740
- --------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $311,250) $ 341,810
- --------------------------------------------------------------------------------
Rights - 1.8%
- --------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------
CVS Corp.* (Identified Cost, $15,222) 210 $ 16,013
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $780,507) $ 832,503
Other Assets, Less Liabilities - 4.3% 37,460
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 869,963
- --------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS -- August 31, 1999
MFS CORE GROWTH FUND
Stocks - 98.3%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 94.1%
Advertising - 0.7%
Young & Rubicam, Inc. 1,900 $ 84,788
- --------------------------------------------------------------------------------
Aerospace - 0.6%
Raytheon Co., "A" 1,000 $ 67,125
- --------------------------------------------------------------------------------
Automotive - 0.4%
Harley-Davidson, Inc. 1,000 $ 54,500
- --------------------------------------------------------------------------------
Banks and Credit Companies - 1.3%
Bank of New York Co., Inc. 1,000 $ 35,750
Chase Manhattan Corp. 700 58,581
Providian Financial Corp. 800 62,100
-----------
$ 156,431
- --------------------------------------------------------------------------------
Biotechnology - 1.8%
Guidant Corp. 2,640 $ 154,935
Waters Corp.* 1,000 65,937
-----------
$ 220,872
- --------------------------------------------------------------------------------
Broadcasting
Westwood One, Inc.* 100 $ 3,838
- --------------------------------------------------------------------------------
Business Machines - 5.4%
Affiliated Computer Services, Inc., "A"* 2,200 $ 94,050
Motorola, Inc. 1,550 142,987
Seagate Technology, Inc.* 2,400 79,650
Sun Microsystems, Inc.* 2,200 174,900
Texas Instruments, Inc. 2,000 164,125
-----------
$ 655,712
- --------------------------------------------------------------------------------
Business Services - 2.5%
Ceridian Corp.* 1,100 $ 30,800
Computer Sciences Corp.* 1,200 83,025
Concord EFS, Inc.* 900 33,412
DST Systems, Inc.* 400 26,600
First Data Corp. 3,000 132,000
-----------
$ 305,837
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 4.4%
Microsoft Corp.* 5,700 $ 527,606
- --------------------------------------------------------------------------------
Computer Software - Services - 1.1%
EMC Corp.* 1,700 $ 102,000
Yahoo, Inc.* 200 29,500
-----------
$ 131,500
- --------------------------------------------------------------------------------
Computer Software - Systems - 7.2%
BMC Software, Inc.* 3,100 $ 166,819
Citrix Systems, Inc.* 500 28,500
Computer Associates International, Inc. 1,800 101,700
Compuware Corp.* 5,200 156,975
Gadzoox Networks, Inc.* 50 4,519
Oracle Corp.* 3,800 138,700
Rational Software Corp.* 2,200 59,537
SunGard Data Systems, Inc.* 1,500 37,500
Synopsys, Inc.* 2,000 $ 111,875
VERITAS Software Corp.* 1,200 71,100
-----------
$ 877,225
- --------------------------------------------------------------------------------
Conglomerates - 6.0%
AlliedSignal, Inc. 1,450 $ 88,812
Tyco International Ltd. 6,300 638,269
-----------
$ 727,081
- --------------------------------------------------------------------------------
Consumer Goods and Services - 1.7%
Clorox Co. 1,200 $ 54,300
Gillette Co. 1,600 74,600
Newell Rubbermaid, Inc. 1,900 77,900
-----------
$ 206,800
- --------------------------------------------------------------------------------
Containers - 0.5%
Sealed Air Corp.* 1,001 $ 58,809
- --------------------------------------------------------------------------------
Electrical Equipment - 1.8%
General Electric Co. 1,300 $ 146,006
Honeywell, Inc. 600 68,100
-----------
$ 214,106
- --------------------------------------------------------------------------------
Electronics - 11.3%
Altera Corp.* 2,300 $ 96,887
Analog Devices, Inc.* 3,200 164,800
Atmel Corp.* 2,300 90,419
Burr-Brown Corp.* 2,100 80,062
Cypress Semiconductor Corp.* 1,300 30,063
Flextronics International Ltd.* 600 35,213
Integrated Device Technology, Inc.* 5,000 97,500
Intel Corp. 4,200 345,187
LSI Logic Corp.* 3,000 170,250
Microchip Technology, Inc.* 1,600 87,600
Micron Technology, Inc.* 500 37,281
Novellus Systems, Inc.* 500 26,969
Teradyne, Inc.* 500 34,031
Xilinx, Inc.* 1,000 69,938
-----------
$ 1,366,200
- --------------------------------------------------------------------------------
Energy - 0.1%
BJ Services Co.* 400 $ 13,700
- --------------------------------------------------------------------------------
Entertainment - 7.2%
CBS Corp.* 3,300 $ 155,100
Comcast Corp., "A" 1,800 58,725
Gemstar International Group Ltd.* 1,200 82,800
Harrah's Entertainment, Inc.* 2,300 51,750
Infinity Broadcasting Corp.* 6,700 181,319
Time Warner, Inc. 4,100 243,181
Univision Communications, Inc., "A"* 1,300 95,875
-----------
$ 868,750
- --------------------------------------------------------------------------------
Financial Institutions - 3.0%
American Express Co. 700 $ 96,250
Associates First Capital Corp., "A" 1,000 34,313
Citigroup, Inc. 2,300 102,206
Morgan Stanley Dean Witter & Co. 1,000 85,812
State Street Corp. 800 47,900
-----------
$ 366,481
- --------------------------------------------------------------------------------
Food and Beverage Products - 0.3%
Anheuser-Busch Cos., Inc. 500 $ 38,500
- --------------------------------------------------------------------------------
Forest and Paper Products - 0.9%
Bowater, Inc. 2,000 $ 107,250
- --------------------------------------------------------------------------------
Insurance - 3.1%
Allmerica Financial Corp. 400 $ 22,600
American International Group, Inc. 1,200 111,225
CIGNA Corp. 1,500 134,719
Equitable Cos., Inc. 750 46,312
Lincoln National Corp. 1,400 65,625
-----------
$ 380,481
- --------------------------------------------------------------------------------
Internet - 0.4%
Amazon.com, Inc.* 300 $ 37,313
Drugstore.com, Inc.* 25 1,497
VeriSign, Inc.* 100 10,831
-----------
$ 49,641
- --------------------------------------------------------------------------------
Machinery - 0.9%
Danaher Corp. 1,510 $ 88,713
Deere & Co., Inc. 600 23,325
-----------
$ 112,038
- --------------------------------------------------------------------------------
Medical and Health Products - 4.4%
American Home Products Corp. 3,200 $ 132,800
Bausch & Lomb, Inc. 1,300 85,881
Baxter International, Inc. 900 60,356
Boston Scientific Corp.* 1,200 40,725
Bristol-Myers Squibb Co. 2,500 175,938
Pharmacia & Upjohn, Inc. 800 41,800
-----------
$ 537,500
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.7%
Cardinal Health, Inc. 1,600 $ 102,000
Medtronic, Inc. 1,100 86,075
United Healthcare Corp. 2,300 139,869
-----------
$ 327,944
- --------------------------------------------------------------------------------
Oil Services - 0.7%
Halliburton Co. 800 $ 37,100
Schlumberger Ltd. 800 53,400
-----------
$ 90,500
- --------------------------------------------------------------------------------
Oils - 1.4%
Apache Corp. 1,600 $ 72,800
Conoco, Inc. 3,600 96,750
-----------
$ 169,550
- --------------------------------------------------------------------------------
Photographic Products - 0.3%
Polaroid Corp. 1,200 $ 32,550
- --------------------------------------------------------------------------------
Printing and Publishing - 0.2%
Tribune Co. 300 $ 27,994
- --------------------------------------------------------------------------------
Restaurants and Lodging - 1.3%
McDonald's Corp. 2,500 $ 103,438
Wendy's International, Inc. 1,800 50,400
-----------
$ 153,838
- --------------------------------------------------------------------------------
Special Products and Services - 0.8%
Royal Caribbean Cruises Ltd. 2,000 $ 93,625
- --------------------------------------------------------------------------------
Stores - 4.2%
BJ's Wholesale Club, Inc.* 2,500 $ 70,625
Circuit City Stores, Inc. 1,300 55,900
CVS Corp. 3,800 158,412
Lowe's Cos., Inc. 1,700 76,925
Rite Aid Corp. 2,000 37,000
TJX Cos., Inc. 3,800 109,725
-----------
$ 508,587
- --------------------------------------------------------------------------------
Supermarkets - 1.4%
Kroger Co.* 5,300 $ 122,563
Safeway, Inc.* 900 41,906
-----------
$ 164,469
- --------------------------------------------------------------------------------
Technology - 0.6%
National Semiconductor Corp.* 2,600 $ 73,288
- --------------------------------------------------------------------------------
Telecommunications - 12.5%
AT&T Corp.* 2,300 $ 73,600
Cisco Systems, Inc.* 4,000 271,250
Corning, Inc. 2,100 139,650
General Instrument Corp.* 1,000 49,187
Global TeleSystems Group, Inc.* 2,100 67,856
JDS Uniphase Corp. 300 31,819
MCI WorldCom, Inc.* 3,800 287,850
Net2Phone, Inc.* 25 2,125
Network Solutions, Inc.* 300 17,288
NEXTEL Communications, Inc.* 2,700 156,094
Nortel Networks Corp. 800 32,850
QUALCOMM, Inc.* 325 62,461
Scientific-Atlanta, Inc. 1,700 87,125
Sprint Corp. (PCS Group)* 1,900 113,525
Tellabs, Inc.* 1,500 89,344
Winstar Communications, Inc.* 600 30,487
-----------
$ 1,512,511
- --------------------------------------------------------------------------------
Utilities - Electric - 1.0%
AES Corp.* 2,000 $ 121,375
- --------------------------------------------------------------------------------
Total U.S. Stocks $11,409,002
- --------------------------------------------------------------------------------
Foreign Stocks - 4.2%
Finland - 1.3%
Nokia Corp., ADR (Telecommunications) 1,800 $ 150,075
- --------------------------------------------------------------------------------
Germany - 0.8%
Mannesmann AG (Conglomerate) 625 $ 96,000
- --------------------------------------------------------------------------------
Ireland - 0.4%
Elan Corp. PLC, ADR (Health Products)* 1,540 $ 49,376
- --------------------------------------------------------------------------------
Japan - 0.3%
Hitachi (Electronics) 4,000 $ 40,646
- --------------------------------------------------------------------------------
Netherlands - 0.5%
Akzo Nobel N.V. (Chemicals) 1,300 $ 60,578
- --------------------------------------------------------------------------------
Sweden - 0.1%
Ericsson LM, ADR (Telecommunications) 400 $ 13,025
- --------------------------------------------------------------------------------
United Kingdom - 0.8%
BP Amoco PLC, ADR (Oils) 398 $ 44,625
Freeserve Ordinary PLC (Computer Software -
Systems)* 225 659
Shire Pharmaceuticals Group PLC, ADR (Medical and
Health Technology and Services) 2,100 52,500
-----------
$ 97,784
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 507,484
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $10,766,554) $11,916,486
- --------------------------------------------------------------------------------
Short-Term Obligations - 2.4%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
Student Loan Marketing Assn., due 9/01/99, at
Amortized Cost $ 290 $ 290,000
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $11,056,554) $12,206,486
Other Assets, Less Liabilities - (0.7)% (83,993)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $12,122,493
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS -- August 31, 1999
MFS SCIENCE AND TECHNOLOGY FUND
Stocks - 100.0%
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
U.S. Stocks - 96.6%
Advertising - 2.1%
Omnicom Group, Inc. 350 $ 26,381
Outdoor Systems, Inc.* 850 27,466
Young & Rubicam, Inc. 725 32,353
-----------
$ 86,200
- --------------------------------------------------------------------------------
Biotechnology - 1.1%
Guidant Corp. 750 $ 44,016
- --------------------------------------------------------------------------------
Business Machines - 7.4%
Affiliated Computer Services, Inc., "A"* 1,230 $ 52,583
Motorola, Inc. 750 69,187
Seagate Technology, Inc.* 2,000 66,375
Sun Microsystems, Inc.* 830 65,985
Texas Instruments, Inc. 700 57,444
-----------
$ 311,574
- --------------------------------------------------------------------------------
Business Services - 3.9%
At Home Corp.* 200 $ 8,025
C.H. Robinson Worldwide, Inc. 100 3,150
Ceridian Corp.* 200 5,600
Computer Sciences Corp.* 450 31,134
DST Systems, Inc.* 450 29,925
First Data Corp. 1,900 83,600
-----------
$ 161,434
- --------------------------------------------------------------------------------
Computer Hardware - Systems
PC Connection, Inc.* 100 $ 1,269
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 10.3%
America Online, Inc.* 400 $ 36,525
Autodesk, Inc. 50 1,150
Intuit, Inc.* 200 17,912
Microsoft Corp.* 4,060 375,804
-----------
$ 431,391
- --------------------------------------------------------------------------------
Computer Software - Services - 1.6%
EMC Corp.* 800 $ 48,000
International Integration, Inc.* 100 2,300
Yahoo, Inc.* 120 17,700
-----------
$ 68,000
- --------------------------------------------------------------------------------
Computer Software - Systems - 21.1%
Aspen Technology, Inc.* 1,300 $ 11,131
BMC Software, Inc.* 3,360 180,810
Cadence Design Systems, Inc.* 5,662 77,145
Computer Associates International, Inc. 2,430 137,295
Compuware Corp.* 3,640 109,882
Etec Systems, Inc.* 100 4,400
Oracle Corp.* 4,445 162,242
Range Resources Corp. 120 660
Rational Software Corp.* 2,760 74,693
Siebel Systems, Inc.* 1,025 70,405
SunGard Data Systems, Inc.* 2,220 55,500
-----------
$ 884,163
- --------------------------------------------------------------------------------
Consumer Goods and Services - 1.4%
Galileo International, Inc. 1,200 $ 58,200
- --------------------------------------------------------------------------------
Electronics - 14.6%
Altera Corp.* 1,350 $ 56,869
Analog Devices, Inc.* 1,950 100,425
Atmel Corp.* 2,500 98,281
Helix Technology Corp. 1,200 33,900
Intel Corp. 980 80,544
LSI Logic Corp.* 1,600 90,800
Novellus Systems, Inc.* 200 10,788
Photronics, Inc.* 1,500 35,812
Teradyne, Inc.* 1,230 83,717
Xilinx, Inc.* 300 20,981
-----------
$ 612,117
- --------------------------------------------------------------------------------
Entertainment - 5.9%
CBS Corp.* 500 $ 23,500
Comcast Corp., "A" 1,100 35,888
Hearst-Argyle Television, Inc.* 1,300 32,906
Infinity Broadcasting Corp.* 2,650 71,716
Time Warner, Inc. 1,400 83,037
-----------
$ 247,047
- --------------------------------------------------------------------------------
Financial Institutions - 0.1%
CIT Group, Inc., "A" 100 $ 2,381
Federated Investors, Inc., "A" 100 1,838
-----------
$ 4,219
- --------------------------------------------------------------------------------
Internet - 0.9%
Amazon.com, Inc.* 100 $ 12,438
eBAY, Inc.* 200 25,112
-----------
$ 37,550
- --------------------------------------------------------------------------------
Medical and Health Products - 4.9%
American Home Products Corp. 1,050 $ 43,575
Bausch & Lomb, Inc. 900 59,456
Bristol-Myers Squibb Co. 600 42,225
Pharmacia & Upjohn, Inc. 1,160 60,610
-----------
$ 205,866
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.7%
American Dental Partners, Inc.* 100 $ 1,050
Cardinal Health, Inc. 700 44,625
HEALTHSOUTH Corp.* 1,900 15,556
United Healthcare Corp. 840 51,083
-----------
$ 112,314
- --------------------------------------------------------------------------------
Printing and Publishing - 2.5%
Gannett Co., Inc. 800 $ 54,350
Tribune Co. 545 50,855
-----------
$ 105,205
- --------------------------------------------------------------------------------
Special Products and Services
Caliber Learning Network, Inc.* 100 $ 312
- --------------------------------------------------------------------------------
Stores - 1.4%
CVS Corp. 1,050 $ 43,772
Rite Aid Corp. 800 14,800
-----------
$ 58,572
- --------------------------------------------------------------------------------
Technology - 0.6%
National Semiconductor Corp.* 900 $ 25,369
- --------------------------------------------------------------------------------
Telecommunications - 13.4%
AT&T Corp.* 850 $ 27,200
CIENA Corp.* 400 14,050
Cisco Systems, Inc.* 1,546 104,838
Corning, Inc. 200 13,300
General Instrument Corp.* 150 7,378
Global TeleSystems Group, Inc.* 580 18,741
Hyperion Telecommunications, Inc., "A"* 100 1,881
MCI WorldCom, Inc.* 1,331 100,823
NEXTEL Communications, Inc.* 1,250 72,266
Qwest Communications International, Inc.* 1,000 28,750
Scientific-Atlanta, Inc. 430 22,038
Sprint Corp. (PCS Group)* 1,400 83,650
Tellabs, Inc.* 300 17,869
Winstar Communications, Inc.* 950 48,272
-----------
$ 561,056
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.7%
Frontier Corp. 700 $ 29,356
- --------------------------------------------------------------------------------
Total U.S. Stocks $ 4,045,230
- --------------------------------------------------------------------------------
Foreign Stocks - 3.4%
Germany - 1.1%
Mannesmann AG (Conglomerate) 300 $ 46,080
- --------------------------------------------------------------------------------
Hong Kong
Asia Electronics Holding Co. (Electronics)* 1,000 $ 125
- --------------------------------------------------------------------------------
Ireland - 0.3%
Elan Corp. PLC, ADR (Health Products)* 400 $ 12,825
- --------------------------------------------------------------------------------
Netherlands - 0.4%
STMicroelectronics N.V. (Electronics) 275 $ 18,356
- --------------------------------------------------------------------------------
Switzerland - 0.4%
Nestle S.A. (Food and Beverage Products) 8 $ 15,813
- --------------------------------------------------------------------------------
United Kingdom - 1.2%
Colt Telecom Group PLC (Telecommunications)* 350 $ 30,668
Orange PLC (Telecommunications) 1,125 18,995
-----------
$ 49,663
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 142,862
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $3,174,011) $ 4,188,092
Other Assets, Less Liabilities - 0.0% 302
- --------------------------------------------------------------------------------
Net Assets - 100.0% $ 4,188,394
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- -------------------------------------------------------------------------------------------------------------
CONVERTIBLE
BLUE CHIP SECURITIES
AUGUST 31, 1999 FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $961,148 and
$780,507, respectively) $ 1,118,537 $ 832,503
Cash 200 32,203
Foreign currency, at value (identified cost, $0 and $53,
respectively) -- 50
Receivable for investments sold -- 2,628
Interest and dividends receivable 1,419 2,680
Other assets 5 4
----------- -----------
Total assets $ 1,120,161 $ 870,068
----------- -----------
Liabilities:
Payable for Fund shares reacquired
$ 14,003 $ --
Accrued expenses and other liabilities 139 105
----------- -----------
Total liabilities $ 14,142 $ 105
----------- -----------
Net assets $ 1,106,019 $ 869,963
=========== ===========
Net assets consist of:
Paid-in capital $ 782,417 $ 616,988
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 157,389 51,993
Accumulated undistributed net realized gain on investments
and
foreign currency transactions 166,213 180,877
Accumulated undistributed net investment income -- 20,105
----------- -----------
Total $ 1,106,019 $ 869,963
=========== ===========
Shares of beneficial interest outstanding:
Class A 46,663 57,292
Class I 26,349 3,288
----------- -----------
Total shares of beneficial interest outstanding 73,012 60,580
=========== ===========
Net assets:
Class A $ 706,823 $ 822,813
Class I 399,196 47,150
----------- -----------
Total net assets $ 1,106,019 $ 869,963
=========== ===========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $ 15.15 $ 14.36
======= =======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $ 15.15 $ 14.34
======= =======
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Assets and Liabilities - continued
- -------------------------------------------------------------------------------------------------------------
SCIENCE AND
CORE GROWTH TECHNOLOGY
AUGUST 31, 1999 FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (identified cost, $11,056,554 and
$3,174,011, respectively) $12,206,486 $ 4,188,092
Cash 682 200
Foreign currency, at value (identified cost, $53 and $0,
respectively) 51 --
Receivable for Fund shares sold -- 2,211
Receivable for investments sold 135,259 40,168
Interest and dividends receivable 4,402 776
Deferred organization expenses
582 --
Other assets 413 927
----------- -----------
Total assets $12,347,875 $ 4,232,374
----------- -----------
Liabilities:
Payable for investments purchased $ 219,329 $ 28,822
Payable to affiliates -
Shareholder servicing agent fee 100 34
Administrative fee 15 5
Accrued expenses and other liabilities 5,938 15,119
----------- -----------
Total liabilities $ 225,382 $ 43,980
----------- -----------
Net assets $12,122,493 $ 4,188,394
=========== ===========
Net assets consist of:
Paid-in capital $10,354,791 $ 2,293,043
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 1,149,998 1,014,080
Accumulated undistributed net realized gain on investments
and
foreign currency transactions 617,704 881,271
----------- -----------
Total $12,122,493 $ 4,188,394
=========== ===========
Shares of beneficial interest outstanding:
Class A 94,399 90,424
Class I 528,304 137,983
----------- -----------
Total shares of beneficial interest outstanding 622,703 228,407
=========== ===========
Net assets:
Class A $ 1,837,182 $ 1,657,958
Class I 10,285,311 2,530,436
----------- -----------
Total net assets $12,122,493 $ 4,188,394
=========== ===========
Class A shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $ 19.46 $ 18.34
======= =======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $ 19.47 $ 18.34
======= =======
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Operations
- -------------------------------------------------------------------------------------------------------------
CONVERTIBLE
BLUE CHIP SECURITIES
YEAR ENDED AUGUST 31, 1999 FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income (loss):
Income -
Dividends $ 10,997 $ 19,567
Interest 1,217 12,492
Foreign taxes withheld (27) --
----------- -----------
Total investment income $ 12,187 $ 32,059
----------- -----------
Expenses -
Management fee $ 5,435 $ 4,813
Shareholder servicing agent fee 893 783
Distribution and service fee (Class A) 3,226 3,630
Administrative fee 108 94
Custodian fees 4,565 4,565
Printing 2,621 2,832
Postage 169 86
Auditing fees 19,106 21,589
Legal fees 2,288 1,909
Miscellaneous 5,660 2,065
----------- -----------
Total expenses $ 44,071 $ 42,366
Fees paid indirectly (280) (232)
Reduction of expenses by investment adviser and distributor (31,197) (31,098)
----------- -----------
Net expenses $ 12,594 $ 11,036
----------- -----------
Net investment income (loss) $ (407) $ 21,023
----------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 170,658 $ 181,072
Foreign currency transactions -- (75)
----------- -----------
Net realized gain on investments and foreign currency
transactions $ 170,658 $ 180,997
----------- -----------
Change in unrealized appreciation (depreciation) -
Investments $ 75,247 $ 58,346
Translation of assets and liabilities in foreign currencies -- (3)
----------- -----------
Net unrealized gain on investments and foreign currency
translation $ 75,247 $ 58,343
----------- -----------
Net realized and unrealized gain on investments and foreign
currency $ 245,905 $ 239,340
----------- -----------
Increase in net assets from operations $ 245,498 $ 260,363
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Operations - continued
- -------------------------------------------------------------------------------------------------------------
SCIENCE AND
CORE GROWTH TECHNOLOGY
YEAR ENDED AUGUST 31, 1999 FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss:
Income -
Dividends $ 25,457 $ 5,030
Interest 19,608 6,949
Foreign taxes withheld (132) (89)
----------- -----------
Total investment income $ 44,933 $ 11,890
----------- -----------
Expenses -
Management fee $ 47,077 $ 27,743
Shareholder servicing agent fee 6,611 3,963
Distribution and service fee (Class A) 8,626 7,048
Administrative fee 847 462
Custodian fee 6,191 5,680
Printing 2,589 5,145
Postage 317 520
Auditing fees 25,445 18,899
Legal fees 2,751 2,703
Amortization of organization expenses 434 --
Miscellaneous 2,529 6,064
----------- -----------
Total expenses $ 103,417 $ 78,227
Fees paid indirectly (1,694) (524)
Reduction of expenses by investment adviser and distributor (55,703) (34,791)
----------- -----------
Net expenses $ 46,020 $ 42,912
----------- -----------
Net investment loss $ (1,087) $ (31,022)
----------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 654,494 $ 932,086
Foreign currency transactions (485)
----------- -----------
Net realized gain on investments and foreign currency
transactions $ 654,009 $ 932,149
----------- -----------
Change in unrealized appreciation (depreciation) -
Investments $ 1,128,327 $ 925,297
Translation of assets and liabilities in foreign currencies 14 (4)
----------- -----------
Net unrealized gain on investments and foreign currency
translation $ 1,128,341 $ 925,293
----------- -----------
Net realized and unrealized gain on investments and
foreign currency $ 1,782,350 $ 1,857,442
----------- -----------
Increase in net assets from operations $ 1,781,263 $ 1,826,420
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
BLUE CHIP FUND AUGUST 31, 1999 AUGUST 31, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (407) $ (771)
Net realized gain on investments and foreign
currency transactions 170,658 109,472
Net unrealized gain (loss) on investments and
foreign currency translation 75,247 (13,799)
----------- -----------
Net increase in net assets from operations $ 245,498 $ 94,902
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (848)
From net investment income (Class I) -- (392)
From net realized gain on investments and foreign
currency transactions (Class A) (87,280) (13,308)
From net realized gain on investments and foreign
currency transactions (Class I) (18,396) (6,164)
----------- -----------
Total distributions declared to shareholders $ (105,676) $ (20,712)
----------- -----------
Net increase (decrease) in net assets from Fund
share transactions $ 347,753 $ (183,235)
----------- -----------
Total increase (decrease) in net assets $ 487,575 $ (109,045)
Net assets:
At beginning of period 618,444 727,489
----------- -----------
At end of period (including accumulated net
investment loss of
$0 and $0, respectively) $ 1,106,019 $ 618,444
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets - continued
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
CONVERTIBLE SECURITIES FUND AUGUST 31, 1999 AUGUST 31, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 21,023 $ 15,994
Net realized gain on investments and foreign
currency transactions 180,997 55,770
Net unrealized gain (loss) on investments and
foreign currency translation 58,343 (77,977)
----------- -----------
Increase (decrease) in net assets from
operations $ 260,363 $ (6,213)
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ (11,631) $ (15,475)
From net investment income (Class I) (59) (1,099)
From net realized gain on investments and
foreign currency transactions (Class A) (41,310) (12,390)
From net realized gain on investments and
foreign currency transactions (Class I) (210) (880)
----------- -----------
Total distributions declared to shareholders $ (53,210) $ (29,844)
----------- -----------
Net increase (decrease) in net assets from Fund
share transactions $ 95,644 $ (37,304)
----------- -----------
Total increase (decrease) in net assets $ 302,797 $ (73,361)
Net assets:
At beginning of period 567,166 640,527
----------- -----------
At end of period (including accumulated
undistributed net investment income of $20,105
and $11,471, respectively) $ 869,963 $ 567,166
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets - continued
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
CORE GROWTH FUND AUGUST 31, 1999 AUGUST 31, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,087) $ (1,475)
Net realized gain on investments and foreign
currency transactions 654,009 536,135
Net unrealized gain (loss) on investments and
foreign currency translation 1,128,341 (261,111)
----------- -----------
Increase in net assets from operations $ 1,781,263 $ 273,549
----------- -----------
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) (223,653) (97,297)
From net realized gain on investments and
foreign currency
transactions (Class I) (204,409) (147,949)
----------- -----------
Total distributions declared to
shareholders $ (428,062) $ (450,246)
----------- -----------
Net increase in net assets from Fund share
transactions $ 7,860,192 $ 329,677
----------- -----------
Total increase in net assets $ 9,213,393 $ 152,980
Net assets:
At beginning of period 2,909,100 2,756,120
----------- -----------
At end of period (including accumulated net
investment loss of
$0 and $0, respectively) $12,122,493 $ 2,909,100
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statements of Changes in Net Assets - continued
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SCIENCE AND TECHNOLOGY FUND AUGUST 31, 1999 AUGUST 31, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (31,022) $ (5,383)
Net realized gain on investments and foreign
currency transactions 932,149 188,255
Net unrealized gain (loss) on investments and
foreign currency translation 925,293 (287,231)
----------- -----------
Increase (decrease) in net assets from
operations $ 1,826,420 $ (104,359)
----------- -----------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (64,127)
From net investment income (Class I) -- (115,896)
From net realized gain on investments and
foreign currency transactions (Class A) (42,102) --
From net realized gain on investments and
foreign currency transactions (Class I) (87,226) --
----------- -----------
Total distributions declared to shareholders $ (129,328) $ (180,023)
----------- -----------
Net increase (decrease) in net assets from Fund
share transactions $ (349,889) $ 606,823
----------- -----------
Total increase in net assets $ 1,347,203 $ 322,441
Net assets:
At beginning of period 2,841,191 2,518,750
----------- -----------
At end of period (including accumulated net
investment loss of $0 and $0, respectively) $ 4,188,394 $ 2,841,191
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED YEAR ENDED AUGUST 31, PERIOD ENDED
------------------------- AUGUST 31, ----------------------- AUGUST 31,
BLUE CHIP FUND 1999 1998 1997* 1999 1998 1997*
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $12.61 $11.77 $10.00 $12.62 $11.77 $10.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.01) $(0.01) $ 0.02 $(0.00)+++ $(0.01) $ 0.02
Net realized and unrealized gain
on investments and foreign
currency 4.72 1.20 1.75 4.70 1.21 1.75
------ ------ ------ ------ ------ ------
Total from investment
operations $ 4.71 $ 1.19 $ 1.77 $ 4.70 $ 1.20 $ 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 (2.17) (0.33) -- (2.17) (0.33) --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(2.17) $(0.35) $ -- $(2.17) $(0.35) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $15.15 $12.61 $11.77 $15.15 $12.62 $11.77
====== ====== ====== ====== ====== ======
Total return 40.38% 10.19% 17.70%++ 40.27% 10.28% 17.70%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.53% 1.54% 1.54%+ 1.53% 1.54% 1.54%+
Net investment income (loss) (0.06)% (0.11)% 0.24%+ 0.00% (0.08)% 0.24%+
Portfolio turnover 68% 39% 32% 68% 39% 32%
Net assets at end of period (000
omitted) $ 707 $ 507 $ 486 $ 399 $ 111 $ 241
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the Fund, exclusive of
management and distribution and service fees, at not more than 1.50% of average daily net assets. The investment adviser
and the distributor voluntarily waived their fees for the periods indicated. To the extent actual expenses were over this
limitation and the waivers had not been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.56) $(0.34) $(0.26) $(0.48) $(0.27) $(0.23)
Ratios (to average net assets):
Expenses## 5.36% 3.93% 5.04%+ 4.86% 3.43% 4.54%+
Net investment loss (3.89)% (2.50)% (3.25)%+ (3.47)% (1.97)% (2.80)%+
* For the period from the commencement of the Fund's investment operations, January 2, 1997, through August 31, 1997.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED YEAR ENDED AUGUST 31, PERIOD ENDED
------------------------- AUGUST 31, ----------------------- AUGUST 31,
CONVERTIBLE SECURITIES FUND 1999 1998 1997* 1999 1998 1997*
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $10.70 $11.48 $10.00 $10.69 $11.47 $10.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.37 $ 0.29 $ 0.25 $ 0.37 $ 0.30 $ 0.26
Net realized and unrealized gain
(loss) on investments and
foreign currency 4.29 (0.51) 1.23 4.28 (0.52) 1.21
------ ------ ------ ------ ------ ------
Total from investment
operations $ 4.66 $(0.22) $ 1.48 $ 4.65 $(0.22) $ 1.47
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $(0.22) $(0.31) $ -- $(0.22) $(0.31) $ --
From net realized gain on
investments and foreign currency
transactions (0.78) (0.25) -- (0.78) (0.25) --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(1.00) $(0.56) $ -- $(1.00) $(0.56) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $14.36 $10.70 $11.48 $14.34 $10.69 $11.47
====== ====== ====== ====== ====== ======
Total return 45.85% (1.90)% 14.70%++ 45.94% (2.00)% 14.60%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.53% 1.50% 1.50%+ 1.53% 1.50% 1.50%+
Net investment income 2.86% 2.38% 3.16%+ 2.86% 2.38% 3.19%+
Portfolio turnover 142% 89% 76% 142% 89% 76%
Net assets at end of period (000
omitted) $ 823 $ 565 $ 577 $ 47 $ 2 $ 64
(S) Subject to reimbursement by the Fund, the investment adviser agreed to maintain the expenses of the Fund, exclusive of
management and distribution and service fees, at not more than 1.50% of average daily net assets. The investment adviser
and the distributor voluntarily waived their fees for the periods indicated. To the extent actual expenses were over this
limitation and the waivers had not been in place, the net investment loss per share and the ratios would have been:
Net investment loss $(0.18) $(0.10) $(0.04) $(0.11) $(0.05) $ --
Ratios (to average net assets):
Expenses## 5.76% 4.81% 5.19%+ 5.26% 4.31% 4.69%+
Net investment loss (1.37)% (0.93)% (0.53)%+ (0.87)% (0.43)% --
* 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 has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED
------------------------------------------------- AUGUST 31,
CORE GROWTH FUND 1999 1998 1997 1996*
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.44 $15.82 $12.33 $10.00
----- ----- ----- -----
Income from investment operations# -
Net investment income (loss)(S) $ -- $(0.01) $ 1.24 $(0.01)
Net realized and unrealized gain on
investments and foreign currency 7.34 1.26 3.93 2.34
----- ----- ----- -----
Total from investment operations $ 7.34 $ 1.25 $ 5.17 $ 2.33
----- ----- ----- -----
Less distributions declared to shareholders -
From net investment income $ -- $(1.20) $ -- $ --
From net realized gain on investments and
foreign currency transactions (2.32) (1.43) (1.68) --
----- ----- ----- -----
Total distributions declared to
shareholders $(2.32) $(2.63) $(1.68) $ --
----- ----- ----- -----
Net asset value - end of period $19.46 $14.44 $15.82 $12.33
====== ====== ====== ======
Total return 54.33% 8.75% 45.22% 23.30%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.88% 0.89% 1.45% 1.50%+
Net investment income (loss) (0.01)% (0.03)% 9.12% (0.11)%+
Portfolio turnover 240% 261% 1,043% 204%
Net assets at end of period (000 omitted) $1,837 $1,495 $1,061 $686
(S) For the period ended August 31, 1996, subject to reimbursement by the Fund, the investment adviser agreed to maintain the
expenses of the Fund, exclusive of management and distribution and service fees, at not more than 1.50% of average daily
net assets. The investment adviser and the distributor voluntarily waived their fees for the periods indicated. To the
extent actual expenses were over this limitation and the waivers had not been in place, the net investment income (loss)
per share and the ratios would have been:
Net investment income (loss) $(0.22) $(0.17) $ 1.06 $(0.18)
Ratios (to average net assets):
Expenses## 2.13% 2.15% 2.82% 4.28%+
Net investment income (loss) (1.26)% (1.29)% 7.75% (2.34)%+
* 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 has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED
--------------------------------- AUGUST 31,
CORE GROWTH FUND 1999 1998 1997*
- -----------------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.46 $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 7.33 1.26 1.35
------ ------ ------
Total from investment operations $ 7.33 $ 1.25 $ 2.85
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(1.20) $ --
From net realized gain on investments and foreign
currency transactions (2.32) (1.43) --
------ ------ ------
Total distributions declared to shareholders $(2.32) $(2.63) $ --
------ ------ ------
Net asset value - end of period $19.47 $14.46 $15.84
====== ====== ======
Total return 54.40% 8.82% 21.94%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.71% 0.89% 1.48%+
Net investment income (loss) (0.02)% (0.06)% 14.08%+
Portfolio turnover 240% 261% 1,043%
Net assets at end of period (000 omitted) $10,285 $1,415 $1,695
(S) The investment adviser voluntarily waived its fee for the periods indicated. If this fee had been incurred by
the Fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.14) $(0.13) $ 1.40
Ratios (to average net assets):
Expenses## 1.46% 1.65% 2.35%+
Net investment income (loss) (0.77)% (0.81)% 13.20%+
* For the period from the inception of Class I, January 2, 1997, through August 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated
without reduction for this expense offset arrangement.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED YEAR ENDED AUGUST 31, PERIOD ENDED
------------------------- AUGUST 31, ----------------------- AUGUST 31,
SCIENCE AND TECHNOLOGY FUND 1999 1998 1997* 1999 1998 1997*
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS I
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $11.49 $12.53 $10.00 $11.50 $12.53 $10.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.08) $(0.03) $ 0.84 $(0.22) $(0.02) $ 1.05
Net realized and unrealized gain
(loss) on investments and foreign
currency 7.44 (0.10) 1.69 7.57 (0.10) 1.48
------ ------ ------ ------ ------ ------
Total from investment
operations $ 7.36 $(0.13) $ 2.53 $ 7.35 $(0.12) $ 2.53
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $ -- $(0.91) $ -- $ -- $(0.91) $ --
From net realized gain on
investments and foreign currency
transactions (0.51) -- -- (0.51) -- --
------ ------ ------ ------ ------ ------
Total distributions declared
to shareholders $(0.51) $(0.91) $ -- $(0.51) $(0.91) $ --
------ ------ ------ ------ ------ ------
Net asset value - end of period $18.34 $11.49 $12.53 $18.34 $11.50 $12.53
====== ====== ====== ====== ====== ======
Total return 65.25% (0.61)% 14.70%++ 65.25% (0.61)% 25.30%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.17% 0.88% 1.40%+ 1.17% 0.88% 1.41%+
Net investment income (loss) (0.83)% (0.19)% 10.73%+ (0.84)% (0.18)% 13.11%+
Portfolio turnover 104% 29% 792% 104% 29% 792%
Net assets at end of period (000
omitted) $1,658 $1,045 $ 882 $2,530 $1,796 $1,637
(S) The investment adviser and the distributor voluntarily waived their fees for the periods indicated. If these fees had
been incurred by the Fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.20) $(0.21) $ 0.73 $(0.41) $(0.20) $ 0.98
Ratios (to average net assets):
Expenses## 2.42% 2.18% 2.77%+ 1.92% 1.68% 2.28%+
Net investment income (loss) (2.08)% (1.49)% 9.36%+ (1.59)% (0.98)% 12.24%+
* 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 has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Blue Chip Fund, MFS Convertible Securities Fund, MFS Core Growth Fund, and
MFS Science and Technology 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. 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.
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, 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
the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Deferred Organization Expenses - Costs incurred by the Core Growth 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 Fund operations.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date.
Fees Paid Indirectly - Each Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by the Fund. This
amount is shown as a reduction of expenses on the Statements 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.
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 distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains. During
the year ended August 31, 1999, the following amounts were reclassified among
accumulated undistributed net investment income, accumulated undistributed net
realized gain on investments and foreign currency transactions, and paid-in
capital due to differences between book and tax accounting for currency
transactions and net investment losses. These changes had no effect on the net
assets or net asset values per share.
<TABLE>
<CAPTION>
BLUE CHIP CONVERTIBLE CORE GROWTH SCIENCE AND
INCREASE (DECREASE) FUND SECURITIES FUND FUND TECHNOLOGY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paid-in capital $(76) $ 624 $ -- $ --
Accumulated undistributed net realized gain on investments
and foreign currency transactions (331) 75 (1,087) (31,022)
Accumulated undistributed net investment income (loss) 407 (699) 1,087 31,022
</TABLE>
Multiple Classes of Shares of Beneficial Interest - Each Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. 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 annual rate of 0.65% of
average daily net assets for the Blue Chip and Convertible Securities Funds, and
at an annual rate of 0.75% of average daily net assets for the Core Growth and
Science and Technology Funds. The investment adviser has voluntarily agreed to
waive its fee, which is reflected as a reduction of expenses in the Statements
of Operations.
The Blue Chip and Convertible Securities Funds have a temporary expense
reimbursement agreement whereby MFS has voluntarily agreed to pay all of each
Fund's operating expenses, exclusive of management, distribution, and service
fees. The Funds 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. At August 31, 1999, the aggregate
unreimbursed expenses paid by MFS amounted to $41,929 and $45,981, respectively,
for the Blue Chip and Convertible Securities Funds.
Each Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Funds, all of whom receive
remuneration for their services to the Funds from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The trustees are currently not
receiving any payments for their services to each Fund.
Administrator - Each Fund has an administrative services agreement with MFS to
provide each Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, each Fund pays MFS an administrative fee
at the following annual percentages of each Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, did not
receive any sales charges on sales of Class A shares of each Fund for the year
ended August 31, 1999.
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
paid 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 and 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. Distribution and service fees under the Class A
distribution plan are currently being waived.
Certain Class A shares are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following purchase. There
were no contingent deferred sales charges imposed on Class A shares of each Fund
during the year ended August 31, 1999.
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 each Fund's average daily net assets at an annual rate of 0.10%.
Prior to April 1, 1999, the fee was calculated as a percentage of each Fund's
average daily net assets at an annual rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
CONVERTIBLE
BLUE CHIP FUND SECURITIES FUND
- --------------------------------------------------------------------------------
Purchases
- ---------
Investments (non-U.S. government securities) $ 636,281 $1,055,714
---------- ----------
Sales
- -----
Investments (non-U.S. government securities) $ 538,637 $1,015,594
---------- ----------
SCIENCE AND
CORE GROWTH FUND TECHNOLOGY FUND
- --------------------------------------------------------------------------------
Purchases
- ---------
Investments (non-U.S. government securities) $21,771,756 $3,764,123
----------- ----------
Sales
- -----
Investments (non-U.S. government securities) $14,321,735 $3,984,103
----------- ----------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by each Fund, as computed on a federal income tax basis, are
as follows:
CONVERTIBLE
BLUE CHIP FUND SECURITIES FUND
- --------------------------------------------------------------------------------
Aggregate cost $961,148 $780,796
-------- --------
Gross unrealized appreciation $187,990 $ 91,923
Gross unrealized depreciation (30,601) (40,216)
-------- --------
Net unrealized appreciation $157,389 $ 51,707
======== ========
CORE GROWTH SCIENCE AND
FUND TECHNOLOGY FUND
- --------------------------------------------------------------------------------
Aggregate cost $11,227,424 $3,163,467
---------- ---------
Gross unrealized appreciation 1,300,792 $1,243,966
Gross unrealized depreciation (321,730) (219,341)
----------- ----------
Net unrealized appreciation $ 979,062 $1,024,625
=========== ==========
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
BLUE CHIP FUND
---------------------------------------------------------
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 833 $ 12,203 274 $ 3,617
Shares issued to shareholders in
reinvestment of distributions 6,781 87,269 1,150 14,153
Shares reacquired (1,157) (16,259) (2,534) (33,517)
------- ---------- ------ ----------
Net increase (decrease) 6,457 $ 83,213 (1,110) $ (15,747)
======= ========== ====== ==========
<CAPTION>
Class I Shares
BLUE CHIP FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 19,210 $ 292,259 4,857 $ 63,740
Shares issued to shareholders in
reinvestment of distributions 1,429 18,386 532 6,555
Shares reacquired (3,112) (46,105) (17,081) (237,783)
------- ---------- ------ ----------
Net increase (decrease) 17,527 $ 264,540 (11,692) $ (167,488)
======= ========== ====== ==========
<CAPTION>
Class A Shares
CONVERTIBLE SECURITIES FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 61 $ 867 49 $ 600
Shares issued to shareholders in
reinvestment of distributions 4,619 52,936 2,542 27,862
Shares reacquired (205) (2,217) (40) (506)
------- ---------- ------ ----------
Net increase 4,475 $ 51,586 2,551 $ 27,956
======= ========== ====== ==========
<CAPTION>
Class I Shares
CONVERTIBLE SECURITIES FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,079 $ 44,114 370 $ 4,496
Shares issued to shareholders in
reinvestment of distributions 23 264 180 1,976
Shares reacquired (24) (320) (5,895) (71,732)
------- ---------- ------ ----------
Net increase (decrease) 3,078 $ 44,058 (5,345) $ (65,260)
======= ========== ====== ==========
<CAPTION>
Class A Shares
CORE GROWTH FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 19,182 $ 341,831 26,139 $ 410,338
Shares issued to shareholders in
reinvestment of distributions 14,057 223,642 13,095 178,614
Shares reacquired (42,341) (734,909) (2,765) (46,240)
------- ---------- ------ ----------
Net increase (decrease) (9,102) $ (169,436) 36,469 $ 542,712
======= ========== ====== ==========
<CAPTION>
Class I Shares
CORE GROWTH FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 454,319 $8,444,369 9,354 $ 153,982
Shares issued to shareholders in
reinvestment of distributions 12,823 204,400 19,898 271,610
Shares reacquired (36,634) (619,141) (38,513) (638,627)
------- ---------- ------ ----------
Net increase (decrease) 430,508 $8,029,628 (9,261) $ (213,035)
======= ========== ====== ==========
<CAPTION>
Class A Shares
SCIENCE AND TECHNOLOGY FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 25,561 $ 413,378 16,241 $ 224,443
Shares issued to shareholders in
reinvestment of distributions 2,820 42,099 5,932 64,123
Shares reacquired (28,878) (449,538) (1,612) (21,835)
------- ---------- ------ ----------
Net increase (decrease) (497) $ 5,939 20,561 $ 266,731
======= ========== ====== ==========
<CAPTION>
Class I Shares
SCIENCE AND TECHNOLOGY FUND
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 60,749 $ 953,785 47,806 $ 668,497
Shares issued to shareholders in
reinvestment of distributions 5,842 87,223 10,721 115,891
Shares reacquired (84,872) (1,396,836) (32,870) (444,296)
------- ---------- ------ ----------
Net increase (decrease) (18,281) $ (355,828) 25,657 $ 340,092
======= ========== ====== ==========
</TABLE>
(6) Line of Credit
Each Fund and other affiliated funds participate in an $820 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
each Fund for the year ended August 31, 1999, was as follows:
BLUE CONVERTIBLE CORE SCIENCE AND
CHIP SECURITIES GROWTH TECHNOLOGY
FUND FUND FUND FUND
- --------------------------------------------------------------------------------
$7 $5 $48 $28
--------------------------------------------
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>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of MFS Series Trust I and Shareholders of MFS Blue Chip Fund,
MFS Convertible Securities Fund, MFS Core Growth Fund, and MFS Science and
Technology Fund
We have audited the accompanying statements of assets and liabilities of MFS
Blue Chip Fund, MFS Convertible Securities Fund, MFS Core Growth Fund and MFS
Science and Technology Fund (the Funds) (four of the portfolios constituting MFS
Series Trust I) including the schedules of portfolio investments, as of August
31, 1999, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned at August 31, 1999, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Blue Chip Fund, MFS Convertible Securities Fund, MFS Core Growth Fund and MFS
Science and Technology Fund at August 31, 1999, and the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for the
periods indicated herein, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
October 9, 1999
<PAGE>
FEDERAL TAX INFORMATION
In January 2000, shareholders will be mailed a Form 1099-DIV reporting the
federal tax status of all distributions paid during the calendar year 1999.
The following Funds have designated capital gain dividends for the year ended
August 31, 1999:
PORTFOLIO CAPITAL GAIN
----------------------------------------------
Blue Chip Fund $91,494
Convertible Securities Fund 26,555
Core Growth Fund 76,034
Science and Technology Fund 93,183
For the year ended August 31, 1999, the amount of distributions from income
eligible for the 70% dividends received deduction for the Convertible Securities
Fund was 37.29%.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and on behalf of the MFS
funds, is committed to the effective use of technology in managing our portfolio
investments, delivering high-quality service to MFS fund shareholders,
retirement plan participants, and MFS' institutional clients, and supporting the
financial consultants who sell our products. With that in mind, we created a
separately funded Year 2000 Program Management Office in 1996 comprised of a
specialized staff reporting directly to MFS senior management.
The Year 2000 (Y2K) problem arises because calendar-year fields in computers and
software applications traditionally have used two-digit codes so that, for
example, the year 1998 is coded as "98," with the "19" being implied. In the
year 2000, unless necessary corrections have been made, computer applications
may assume "00" refers to 1900 rather than 2000, thus resulting in systems
failures or miscalculations. To address this issue, our team of dedicated
business and technology managers, working with outside experts, is taking steps
to ascertain the Y2K readiness of MFS' internal systems and is working with our
external systems vendors to determine whether they expect their systems to be
ready.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness. Each year, MFS' research analysts and portfolio managers conduct
more than 1,000 on-site meetings with companies whose securities are, or may be,
held in fund and client portfolios, and host an additional 1,500 meetings at
MFS' headquarters. When assessing the Y2K readiness of these companies, MFS'
research analysts and portfolio managers may rely upon discussions at these
meetings as well as SEC disclosure documents and third-party reports.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS, shareholders of MFS funds, participants in retirement
plans administered by MFS, or MFS' institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com or contact the MFS Year 2000 Program
Management Office by e-mail at [email protected] or by letter at 500 Boylston Street,
Boston, MA 02116-3741.
<PAGE>
MFS(R) BLUE CHIP FUND
MFS(R) CONVERTIBLE SECURITIES FUND
MFS(R) CORE GROWTH FUND
MFS(R) SCIENCE AND TECHNOLOGY FUND
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116
INC-2 10/99 1M
