<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[graphic omitted]
MFS(R) CORE
GROWTH FUND
SEMIANNUAL REPORT o FEBRUARY 29, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 24
Trustees and Officers ..................................................... 29
MFS(R) ORIGINAL RESEARCH(SM)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
- --------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
One could easily argue that the Internet represents the greatest technological
development most of us may see in our lifetimes. There is no disputing that this
new communication medium is changing forever the way we work, play, and shop.
One might also argue that investing in this new technology represents the
investment opportunity of a lifetime. The question for any investor is whether
and how to take advantage of it.
The popular press, it seems, would have us believe that by surfing the Web, we
can learn everything we need to know about investing. Indeed, there is no doubt
that Internet-delivered information and brokerage services enable individual
investors to be well informed and to trade at bargain prices. But we believe the
numbers and facts argue that, for most of us, mutual funds purchased through an
investment professional will continue to be one of the best products for
long-term investing in this new millennium.
According to a survey by the Investment Company Institute, the national
association of American investment companies, 44% of American households own
stock or bond mutual funds, while only 25.5% own individual stocks.(1) Of course
that doesn't tell us how well they did owning those funds or stocks, but another
statistic gives us a clue. In the third quarter of 1999, during a period of
volatility in the greatest bull market in history, a quarter of the 7,500 stocks
tracked by Morningstar, a popular rating service, lost more than 20% of their
value. But during the same period, fewer than 1% of the mutual funds tracked by
Morningstar -- 6 out of 10,000 funds -- were down by a similar amount.(2) So an
investor's chance of picking one of those losing stocks was about 25 times
greater than his or her chance of picking an equally losing fund.
The numbers also show that a majority of Americans seek professional advice when
buying mutual funds. Outside of employer-sponsored retirement plans,
approximately 68% of fund shareholders state that their primary method of
purchasing shares is through an investment professional.(1)
Why do we at MFS(R) believe that mutual funds plus professional advice will
continue to define the best course of action for many investors? Let's look at
some of the characteristics of a successful long-term investment approach:
o HAVING A PLAN AND STICKING TO IT: Our experience is that successful
investors -- those whose lives are enriched by the fruits of their
investing -- share two characteristics. They have a plan for reaching their
monetary goals, and they stick with that plan through up as well as down
markets. And for many investors, working with an investment professional
may be the best way to develop a plan. Although the Internet abounds with
calculators for developing all sorts of investment plans, none has your
investment professional's high level of experience and an understanding of
your unique situation. And no calculator can counsel you during a down
market, when you may be tempted to abandon your goals and your plan.
o DIVERSIFICATION: Few investors can afford to own a large number of
holdings, so poor performance of one company can potentially drag down
their entire portfolio. This is especially true when investing in volatile
new areas such as the Internet. On the other hand, a diversified mutual
fund that owns dozens or even hundreds of holdings is better positioned to
survive a disappointment in one or several investments.
o GOOD IN A DOWN MARKET: As we enter the tenth year of the greatest bull
market in history, it's easy to forget that market downturns are an almost
inevitable part of investing. Few mutual funds, of course, are going to be
up when the overall market is down. But as the numbers above from the third
quarter of 1999 demonstrate, mutual funds may be less likely to suffer the
extreme downturns experienced by a large number of individual holdings when
the market heads south.
o MFS ORIGINAL RESEARCH(R): The Internet is one of the greatest research
tools ever invented, but it's still not the same as being eyeball to
eyeball with the management of a company and discussing their plans for
their firm's future.
o GOOD PERFORMANCE AT AN ACCEPTABLE LEVEL OF RISK: Investing in individual
stocks or bonds does indeed offer the potential of exhilarating performance
that few mutual funds even attempt. The downside is that the most exciting
investments are also likely to be the ones that give you sleepless nights.
The diversification and professional management of mutual funds help make
them inherently less risky than individual stock picking, and funds are
available in a wide range of risk profiles.
We believe that now, more than ever, mutual funds sold by an investment
professional may offer many investors the best way to participate in whatever
investment opportunities the new millennium may bring. The combination of
professional portfolio management and professional advice recognizes the key
reason that investors give us their money: because they don't want to make a
hobby or a second profession out of investing; they simply want their money to
work for them so they have a better likelihood of realizing their dreams.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
[Graphic Omitted]
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
March 15, 2000
- --------------
(1)Source: Investment Company Institute.
(2)Source: Morningstar CEO Don Phillips' keynote address at The Baltimore
Sun's Dollars and Sense Conference, 10/99. In the period 7/1/99 through 9/
30/99, of the 7,500 stocks tracked by Morningstar, 1,865 lost 20% or more;
of the 10,000 mutual funds tracked by Morningstar, six lost 20% or more.
Mutual fund results are at net asset value; if sales charges had been
reflected, results would have been lower.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Graphic Omitted]
Stephen Pesek
For the six months ended February 29, 2000, Class A shares of the Fund provided
a total return of 38.89%, Class B shares 38.83%, Class C shares 38.83%, and
Class I shares 38.97%. These returns, which assume the reinvestment of any
distributions but exclude the effects of any sales charges, compare to a 4.11%
return for the Fund's benchmark, the Standard & Poor's 500 Composite Index (the
S&P 500) for the same period. The S&P 500 is a popular, unmanaged index of
common stock total return performance.
Q. WHAT ARE SOME OF THE FACTORS THAT DROVE THE PORTFOLIO'S STRONG PERFORMANCE
OVER THE PAST SIX MONTHS?
A. Performance over the recent period, as always, was driven by individual,
bottom-up stock selection. More specifically, our research analysts have
found attractive opportunities in the technology and telecommunications
sectors. In the technology sector, our areas of concentration have included
companies providing infrastructure for the growth of the Internet, such as
Cisco Systems, and firms that have benefited from exponential growth in the
need for bandwidth, such as Corning and other fiber-optic network vendors.
In the telecommunications area, the portfolio has profited from investing
in what we see as a major global trend toward increased wireless
communication of both voice and data. Holdings in this area include device
manufacturers Nokia, Ericsson, and Motorola, as well as cellular carriers
in Europe, Japan, and the United States.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. Simply put, we look for well-run businesses poised for growth. We try to
discover, ahead of the general market, the positive changes that will make
good companies into great stocks. And we feel that the quality of our
Original Research(SM) process gives us a unique advantage in attempting to
do this.
In researching potential investments, we look for several qualities,
perhaps the most important being a sustainable competitive advantage. We
like companies that dominate their market space; reasons for that can range
from a patented process or product to a very large market share. We look
for situations in which prospective competitors face large barriers to
entering the business.
Another quality we look for is superior management. We spend a great deal
of time meeting with senior managers of companies we're thinking of
investing in, as well as with companies in which we currently hold
positions. One of the things we assess is whether management has
demonstrated a consistent desire to act in the shareholders' interest.
A goal of our research is to try to identify companies gaining market share
in above-average growth industries. We see this as particularly important
in technology, currently one of the highest growth sectors of the market.
Our experience is that if we can find a technology company whose product is
becoming an established standard, its stock may have great potential. For
example, looking at Internet service providers today, it appears to us that
nearly every company is using Sun Microsystems servers, Oracle databases,
and VERITAS storage management software -- and all of these firms have
performed very well over the period for the portfolio.
Q. CAN YOU GIVE US AN EXAMPLE OF HOW MFS ORIGINAL RESEARCH(R) UNCOVERED A NEW
OPPORTUNITY FOR THE PORTFOLIO?
A. An example in the telecommunications area would be American Tower Corp.,
which builds antenna towers and rents space on them to wireless and
broadcast companies. What our research uncovered is that wireless voice and
data carriers appear to be moving toward offering nationwide service, and
there are only two tower operators that can rent them the necessary
antennas on a national basis. American Tower is one of them. In addition,
we think highly of American Tower's business model. Its operating expenses
on a tower are fixed. As soon as it has two or more tenants on a tower, the
company is making a healthy profit -- and each tower is designed to handle
multiple tenants. Nationwide, various operators have about 65,000 towers in
operation, and we believe that number will more than double within four
years. So this appears to us to be a high-growth industry in which American
Tower may be positioned to gain a dominant market share.
Q. COULD YOU DISCUSS YOUR CURRENT OUTLOOK FOR THE FUND?
A. Going forward, we expect that the technology and telecommunications themes
related above will continue to be important in the portfolio. At the same
time, we believe the market may broaden, as the valuation disparity between
these sectors and the rest of the market has widened significantly.
Emerging opportunities may include some pharmaceutical, financial, and
retail companies that have underperformed the indexes in the recent past.
In the current environment, our perception is that some of the largest-
capitalization stocks, which have been strong performers over the past few
years, may be running out of room for growth. We believe the low- to
mid-range of large-cap stocks has lately become a better arena in which to
find investment ideas, and that is reflected in our holdings. In addition,
many small- and mid-cap stocks have been strong performers since about late
last summer. Since the Fund's prospectus allows us to invest across the full
spectrum of market capitalizations, we will also continue to take advantage
of growth opportunities in those areas.
[Graphic Omitted]
Stephen Pesek
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
Prior to January 1, 2000, the Fund was available to MFS employees only and had
limited assets.
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PORTFOLIO MANAGER'S PROFILE
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STEPHEN PESEK IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND PORTFOLIO MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND,
MFS(R) CORE GROWTH FUND, AND THE MASSACHUSETTS INVESTORS GROWTH STOCK
SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS. HE IS ALSO A
PORTFOLIO MANAGER OF MFS(R) INSTITUTIONAL LARGE CAP GROWTH FUND AND
MFS(R) GROWTH SERIES (PART OF MFS(R) VARIABLE INSURANCE TRUST(SM)).
MR. PESEK JOINED MFS IN 1994 AS A RESEARCH ANALYST FOLLOWING THE
PHARMACEUTICAL, BIOTECHNOLOGY, AND ELECTRONICS INDUSTRIES. HE BECAME A
PORTFOLIO MANAGER IN 1996 AND SENIOR VICE PRESIDENT IN 1999. PRIOR TO
JOINING MFS, HE WORKED FOR SEVEN YEARS AT A MAJOR INVESTMENT MANAGEMENT
FIRM AS AN EQUITY ANALYST. HE IS A GRADUATE OF THE UNIVERSITY OF
PENNSYLVANIA AND HAS AN M.B.A. DEGREE FROM COLUMBIA UNIVERSITY. HE IS A
CHARTERED FINANCIAL ANALYST.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED
BY AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A GLOBAL, COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
- --------------------------------------------------------------------------------
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. A prospectus containing more
information, including the exchange privilege and all charges and expenses,
for any other MFS product is available from your investment professional, or
by calling MFS at 1-800-225-2606. Please read it carefully before investing or
sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS CAPITAL APPRECIATION.
COMMENCEMENT OF
INVESTMENT OPERATIONS: JANUARY 2, 1996
CLASS INCEPTION: CLASS A JANUARY 2, 1996
CLASS B DECEMBER 31, 1999
CLASS C DECEMBER 31, 1999
CLASS I JANUARY 2, 1997
SIZE: $20.3 MILLION NET ASSETS AS OF FEBRUARY 29, 2000
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes to
Performance Summary.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH FEBRUARY 29, 2000
CLASS A
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +38.89% +55.17% +172.73% +317.37%
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Average Annual Total Return Excluding
Sales Charge -- +55.17% + 39.71% + 41.03%
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Average Annual Total Return Including
Sales Charge -- +46.25% + 36.98% + 39.03%
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CLASS B
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +38.83% +55.11% +172.62% +317.21%
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Average Annual Total Return Excluding
Sales Charge -- +55.11% + 39.70% + 41.01%
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Average Annual Total Return Including
Sales Charge -- +51.11% + 39.18% + 40.85%
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CLASS C
6 Months 1 Year 3 Years Life*
- --------------------------------------------------------------------------------
Cumulative Total Return Excluding Sales
Charge +38.83% +55.11% +172.62% +317.21%
- --------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +55.11% + 39.70% + 41.01%
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Average Annual Total Return Including
Sales Charge -- +55.11% + 39.70% + 41.01%
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*For the period from the commencement of the Fund's investment operations,
January 2, 1996, through February 29, 2000.
CLASS I
6 Months 1 Year 3 Years Life*
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Cumulative Total Return Excluding Sales
Charge +38.97% +55.31% +172.95% +318.33%
- --------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +55.31% + 39.75% + 41.10%
- --------------------------------------------------------------------------------
*For the period from the commencement of the Fund's investment operations,
January 2, 1996, through February 29, 2000.
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months. Class I shares have no sales charge and are only available to certain
institutional investors.
Class B, C, and I share performance includes the performance of the Fund's
Class A shares for periods prior to their inception (blended performance).
Class B and C blended performance has been adjusted to take into account the
CDSC applicable to Class B and C shares rather than the initial sales charge
(load) applicable to Class A shares. Class I share blended performance has
been adjusted to account for the fact that Class I shares have no sales
charge. These blended performance figures have not been adjusted to take into
account differences in class-specific operating expenses. Because operating
expenses for Class B and C shares are higher than those of Class A, the
blended Class B and C share performance is higher than it would have been had
Class B and C shares been offered for the entire period. Conversely, because
operating expenses of Class I shares are lower than those of Class A, the
blended Class I share performance is lower than it would have been had Class I
shares been offered for the entire period.
All performance results reflect any applicable expense 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 assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF FEBRUARY 29, 2000
FIVE LARGEST STOCK SECTORS
[Graphic Omitted]
TECHNOLOGY 44.4%
UTILITIES &
COMMUNICATIONS 16.9%
HEALTH CARE 7.5%
LEISURE 6.0%
RETAILING 5.6%
<TABLE>
<CAPTION>
TOP 10 STOCK HOLDINGS
<S> <C>
CISCO SYSTEMS, INC. 3.7% MOTOROLA, INC. 1.9%
Computer network developer Manufacturer of communications and
electronics products
MICROSOFT CORP. 2.5%
Computer software and systems company LSI LOGIC CORP. 1.7%
Manufacturer of chips for communications
GENERAL ELECTRIC CO. 2.3% products
Diversified manufacturing and financial services
conglomerate KPN N.V. 1.6%
Dutch telecommunications company
ORACLE CORP. 2.2%
Database software developer and manufacturer SAFEWAY, INC. 1.5%
Grocery store chain
CORNING, INC. 2.1%
Materials and equipment supplier to AES CORP. 1.5%
communications industries Electric power plant operator
The portfolio is actively managed, and current holdings may be different.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 29, 2000
Stocks - 93.6%
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ISSUER SHARES VALUE
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U.S. Stocks - 83.1%
Banks and Credit Companies
<S> <C> <C>
Providian Financial Corp. 120 $ 7,778
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Biotechnology - 1.2%
Guidant Corp.* 960 $ 64,680
Waters Corp.* 1,910 187,299
---------------
$ 251,979
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Business Machines - 2.4%
Affiliated Computer Services, Inc., "A"* 1,700 $ 53,550
Seagate Technology, Inc.* 1,000 49,875
Sun Microsystems, Inc.* 2,600 247,650
Texas Instruments, Inc. 770 128,205
---------------
$ 479,280
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Business Services - 2.3%
BEA Systems, Inc.* 850 $ 107,578
BISYS Group, Inc.* 1,000 51,563
Computer Sciences Corp.* 1,800 141,862
First Data Corp. 2,930 131,850
Fiserv, Inc.* 1,000 27,250
Nextel Partners, Inc.* 70 2,240
---------------
$ 462,343
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Cellular Telephones - 0.5%
VoiceStream Wireless Corp.* 700 $ 93,144
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Computer Hardware - Systems - 0.1%
Dell Computer Corp.* 700 $ 28,569
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Computer Services
Inforte Corp.* 10 $ 804
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Computer Software - Personal Computers - 2.4%
Microsoft Corp.* 5,340 $ 477,262
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Computer Software - Services - 0.7%
EMC Corp.* 930 $ 110,670
Portal Software, Inc.* 300 22,538
---------------
$ 133,208
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Computer Software - Systems - 7.2%
BMC Software, Inc.* 1,000 $ 46,000
Citrix Systems, Inc.* 1,480 156,047
Computer Associates International, Inc. 2,500 160,781
Compuware Corp.* 2,420 53,542
Comverse Technology, Inc.* 360 70,875
Exodus Communications, Inc.* 100 14,238
Liberate Technologies* 100 10,188
New Era of Networks, Inc.* 100 9,163
Oracle Corp.* 5,680 421,740
Rational Software Corp.* 1,400 99,575
Siebel Systems, Inc.* 1,040 144,235
SunGard Data Systems, Inc.* 2,410 72,300
VERITAS Software Corp.* 1,000 197,875
---------------
$ 1,456,559
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Conglomerates - 1.3%
Tyco International Ltd. 7,050 $ 267,459
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Consumer Goods and Services - 1.0%
Monsanto Co. 3,500 $ 135,844
Procter & Gamble Co. 700 61,600
---------------
$ 197,444
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Electrical Equipment - 2.3%
General Electric Co. 3,290 $ 434,897
QLogic Corp.* 180 28,080
---------------
$ 462,977
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Electronics - 13.1%
Altera Corp.* 2,140 $ 170,665
Analog Devices, Inc.* 1,530 240,210
Applied Materials, Inc.* 690 126,227
Atmel Corp.* 3,300 163,350
Credence Systems Corp. 800 106,600
DII Group, Inc.* 480 46,410
DuPont Photomasks, Inc.* 3,200 187,200
Fairchild Semiconductor International Co.* 2,100 79,275
Flextronics International Ltd.* 570 34,699
Intel Corp. 1,900 214,700
Lam Research Corp.* 830 129,584
LSI Logic Corp.* 5,140 329,281
Micron Technology, Inc.* 700 68,644
National Semiconductor Corp.* * 2,300 172,787
Novellus Systems, Inc.* 3,180 188,614
Photronics, Inc.* 2,500 106,406
Teradyne, Inc.* 1,700 147,900
Veeco Instruments, Inc.* 1,200 98,550
Vitesse Semiconductor Corp. 500 51,906
---------------
$ 2,663,008
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Entertainment - 3.9%
AMFM, Inc.* 690 $ 42,349
CBS Corp.* 2,530 150,693
Comcast Corp., "A" 3,430 145,775
Infinity Broadcasting Corp. "A"* 5,600 178,850
Macromedia, Inc.* 750 64,828
Spanish Broadcasting Systems, Inc.* 430 8,224
Time Warner, Inc. 1,220 104,310
Univision Communications, Inc., "A"* 1,020 103,912
---------------
$ 798,941
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Financial Institutions - 2.9%
American Express Co. 650 $ 87,222
Citigroup, Inc. 2,860 147,826
Merrill Lynch & Co., Inc. 600 61,500
Morgan Stanley Dean Witter & Co. 1,900 133,831
State Street Corp. 2,060 150,123
---------------
$ 580,502
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Food and Beverage Products - 0.7%
Anheuser-Busch Cos., Inc. 1,600 $ 102,600
Hershey Foods Corp. 1,000 43,938
---------------
$ 146,538
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Insurance - 1.1%
American International Group, Inc. 1,610 $ 142,385
Aon Corp. 90 1,884
CIGNA Corp. 500 36,906
Lincoln National Corp. 1,270 35,322
---------------
$ 216,497
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Internet - 0.5%
DigitalThink, Inc.* 20 $ 815
Niku Corp. 30 2,070
VeriSign, Inc.* 400 101,200
webMethods, Inc.* 10 3,081
---------------
$ 107,166
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Machinery - 0.4%
Deere & Co., Inc. 2,000 $ 71,500
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Medical and Health Products - 3.3%
American Home Products Corp. 4,050 $ 176,175
Bausch & Lomb, Inc. 2,320 122,380
Bristol-Myers Squibb Co. 1,400 79,538
Pharmacia & Upjohn, Inc. 3,300 157,162
Warner-Lambert Co. 1,670 142,889
---------------
$ 678,144
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Medical and Health Technology and Services - 1.9%
Alkermes, Inc.* 100 $ 19,187
Health Management Associates, Inc., "A"* 2,680 28,810
Medtronic, Inc. 4,630 224,266
PE Corp. (Biosystems Group) 400 42,200
PE Corp. (Genomics Group) 100 24,400
United Healthcare Corp. 970 49,591
---------------
$ 388,454
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Oil Services - 1.9%
Cooper Cameron Corp.* 1,790 $ 98,898
Halliburton Co. 2,010 76,757
Noble Drilling Corp.* 2,740 98,640
Schlumberger Ltd. 1,500 110,812
---------------
$ 385,107
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Oils - 2.6%
Apache Corp. 4,100 $ 149,650
Coastal Corp. 1,600 67,300
Conoco, Inc. 2,300 45,281
Exxon Mobil Corp. 1,900 143,094
Transocean Sedco Forex, Inc.* 3,000 118,312
---------------
$ 523,637
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Stores - 3.6%
BJ's Wholesale Club, Inc.* 2,240 $ 69,440
Costco Wholesale Corp.* 4,820 239,192
CVS Corp. 5,090 178,150
Home Depot, Inc. 1,800 104,063
Office Depot, Inc.* 5,600 68,250
Tandy Corp. 1,680 63,945
---------------
$ 723,040
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Supermarkets - 1.4%
Kroger Co.* 20 $ 298
Safeway, Inc.* 7,460 287,676
---------------
$ 287,974
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Telecommunications - 22.1%
3Com Corp. 500 $ 49,000
Allegiance Telecom, Inc.* 600 59,325
Amdocs Ltd.* 860 63,801
American Tower Corp., "A"* 5,600 275,800
ANTEC Corp.* 1,070 56,643
AT&T Corp.* 3,330 173,993
Cabletron Systems, Inc.* 5,000 245,000
Cablevision Systems Corp. "A"* 400 25,675
CIENA Corp.* 400 63,925
Cisco Systems, Inc.* 5,360 708,525
Corning, Inc. 2,100 394,800
Intermedia Communications, Inc.* 1,600 101,300
JDS Uniphase Corp.* 350 92,269
Level 3 Communications, Inc.* 800 91,100
MCI WorldCom, Inc.* 2,165 96,613
Metromedia Fiber Network, Inc., "A"* 1,660 119,338
MGC Communications, Inc.* 1,700 117,300
Motorola, Inc. 2,163 368,791
Network Appliance, Inc.* 380 71,725
Network Solutions, Inc.* 510 164,443
NEXTEL Communications, Inc.* 1,450 198,288
Nortel Networks Corp. 1,700 189,550
NTL, Inc.* 1,700 155,550
Pinnacle Holdings, Inc.* 2,000 117,000
QUALCOMM, Inc.* 400 56,975
Sprint Corp. (PCS Group)* 3,960 204,930
UnitedGlobalCom, Inc.* 1,300 135,850
Vignette Corp.* 200 46,100
Williams Communications Group, Inc.* 700 31,150
---------------
$ 4,474,759
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Utilities - Electric - 1.8%
AES Corp.* 3,350 $ 280,772
Calpine Corp.* 880 80,520
---------------
$ 361,292
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Utilities - Gas - 0.5%
Enron Corp. 100 $ 6,900
Williams Cos., Inc. 2,500 104,531
---------------
$ 111,431
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Total U.S. Stocks $16,836,796
- --------------------------------------------------------------------------------------------------------
Foreign Stocks - 10.5%
Bermuda - 0.9%
FLAG Telecom Holdings Ltd. (Telecommunications)* 1,410 $ 40,361
Global Crossing Ltd. (Telecommunications)* 2,830 131,949
---------------
$ 172,310
- --------------------------------------------------------------------------------------------------------
Canada - 0.2%
BCE, Inc. (Telecommunications) 300 $ 32,981
- --------------------------------------------------------------------------------------------------------
China - 0.7%
China Telecom Hong Kong Ltd. (Telecommunications)* 750 $ 139,406
- --------------------------------------------------------------------------------------------------------
Finland - 0.9%
Nokia Corp., ADR (Telecommunications) 880 $ 174,515
- --------------------------------------------------------------------------------------------------------
France - 0.8%
Vivendi (Business Services) 1,400 $ 164,668
- --------------------------------------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications) 6,000 $ 55,317
- --------------------------------------------------------------------------------------------------------
Japan - 0.3%
Fast Retailing Co. (Retail) 200 $ 56,891
- --------------------------------------------------------------------------------------------------------
Netherlands - 3.1%
Akzo Nobel N.V. (Chemicals) 2,605 $ 100,484
KPN N.V. (Telecommunications)* 2,400 305,543
Versatel Telecommunications Co. (Telecommunications)* 3,800 230,439
---------------
$ 636,466
- --------------------------------------------------------------------------------------------------------
Norway - 0.3%
Schibsted ASA (Printing and Publishing) 2,400 $ 70,209
- --------------------------------------------------------------------------------------------------------
Sweden - 0.9%
Ericsson LM, "B" (Telecommunications) 1,940 $ 186,082
- --------------------------------------------------------------------------------------------------------
United Kingdom - 2.1%
BP Amoco PLC, ADR (Oils) 1,100 $ 51,700
Cable & Wireless Public Ltd. Co., ADR
(Telecommunications) 1,400 90,475
Shire Pharmaceuticals Group PLC (Medical and Health
Technology and Services)* 1,800 86,400
Vodafone Group PLC (Telecommunications)* 36,485 204,124
---------------
$ 432,699
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 2,121,544
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $14,543,275) $ 18,958,340
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 8.5%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $16,258,275) $20,673,340
Other Assets, Less Liabilities - (2.1)% (418,980)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $20,254,360
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------------------
FEBRUARY 29, 2000
- -------------------------------------------------------------------------------------------
Assets:
<S> <C>
Investments, at value (identified cost, $16,258,275) $ 20,673,340
Cash 1,885
Foreign currency, at value (identified cost, $550) 514
Receivable for Fund shares sold 251,467
Receivable for investments sold 482,537
Interest and dividends receivable 4,674
Receivable from investment adviser 11,796
Deferred organization expenses 366
Other assets 2,849
-------------
Total assets $ 21,429,428
-------------
Liabilities:
Payable for Fund shares reacquired $ 1,219
Payable for investments purchased 1,150,570
Payable to affiliates -
Management fee 20,313
Distribution and service fee 115
Accrued expenses and other liabilities 2,851
-------------
Total liabilities $ 1,175,068
-------------
Net assets $ 20,254,360
=============
Net assets consist of:
Paid-in capital $ 14,548,835
Unrealized appreciation on investments and translation of assets and
liabilities in foreign currencies 4,414,911
Accumulated undistributed net realized gain on investments and foreign
currency transactions 1,307,820
Accumulated net investment loss (17,206)
-------------
Total $ 20,254,360
=============
Shares of beneficial interest outstanding 800,609
=======
Class A shares:
Net asset value per share
(net assets of $4,027,315 / 159,468 shares of beneficial interest
outstanding) $25.25
======
Offering price per share (100 / 94.25) $26.79
======
Class B shares:
Net asset value and offering price per share
(net assets of $2,010,189 / 79,642 shares of beneficial interest
outstanding) $25.24
======
Class C shares:
Net asset value and offering price per share
(net assets of $1,102,128 / 43,665 shares of beneficial interest
outstanding) $25.24
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $13,114,728 / 517,834 shares of beneficial interest
outstanding) $25.33
======
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A,
Class B, and Class C shares.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 22,359
Interest 14,067
Foreign taxes withheld (176)
----------
Total investment income $ 36,250
----------
Expenses -
Management fee $ 52,941
Shareholder servicing agent fee 7,007
Distribution and service fee (Class A) 5,002
Distribution and service fee (Class B) 1,367
Distribution and service fee (Class C) 393
Administrative fee 750
Custodian fee 7,523
Printing 17,932
Postage 133
Auditing fees 15,093
Legal fees 1,182
Amortization of organization expenses 216
Registration fees 42,338
Miscellaneous 2,032
----------
Total expenses $ 153,909
Fees paid indirectly (1,672)
Reduction of expenses by investment adviser and distributor (98,781)
----------
Net expenses $ 53,456
----------
Net investment loss $ (17,206)
----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $1,658,337
Foreign currency transactions (4,875)
----------
Net realized gain on investments and foreign
currency transactions $1,653,462
----------
Change in unrealized appreciation (depreciation) -
Investments $3,265,133
Translation of assets and liabilities in foreign currencies (220)
----------
Net unrealized gain on investments and foreign
currency translation $3,264,913
----------
Net realized and unrealized gain on investments
and foreign currency $4,918,375
----------
Increase in net assets from operations $4,901,169
==========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment loss $ (17,206) $ (1,087)
Net realized gain on investments and foreign currency
transactions 1,653,462 654,009
Net unrealized gain on investments and foreign currency
translation 3,264,913 1,128,341
------------ ------------
Increase in net assets from operations $ 4,901,169 $ 1,781,263
------------ ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign currency
transactions (Class A) $ (145,521) $ (223,653)
From net realized gain on investments and foreign currency
transactions (Class I) (817,825) (204,409)
------------ ------------
Total distributions declared to shareholders $ (963,346) $ (428,062)
------------ ------------
Net increase in net assets from Fund share transactions $ 4,194,044 $ 7,860,192
------------ ------------
Total increase in net assets $ 8,131,867 $ 9,213,393
Net assets:
At beginning of period 12,122,493 2,909,100
------------ ------------
At end of period (including accumulated net investment
loss of $17,206 and $0, respectively) $ 20,254,360 $ 12,122,493
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED
SIX MONTHS ENDED ----------------------------------------- AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996*
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $19.46 $14.44 $15.82 $12.33 $10.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.04) -- $(0.01) $ 1.24 $(0.01)
Net realized and unrealized gain on
investments and foreign currency 7.37 7.34 1.26 3.93 2.34
------ ------ ------ ------ ------
Total from investment operations $ 7.33 $ 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 (1.54) (2.32) (1.43) (1.68) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.54) $(2.32) $(2.63) $(1.68) $ --
------ ------ ------ ------ ------
Net asset value - end of period $25.25 $19.46 $14.44 $15.82 $12.33
====== ====== ====== ====== ======
Total return(+) 38.89%++ 54.33% 8.75% 45.22% 23.30%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.91%+ 0.88% 0.89% 1.45% 1.50%+
Net investment income (loss) (0.37)%+ (0.01)% (0.03)% 9.12% (0.11)%+
Portfolio turnover 299% 240% 261% 1043% 204%
Net assets at end of period (000 omitted) $4,027 $1,837 $1,495 $1,061 $686
(S)Effective January 1, 2000, subject to reimbursement by the Fund, the investment adviser has voluntarily agreed to pay all of
the Fund's operating expenses, exclusive of management and distribution and service fees. In consideration, the Fund pays the
investment adviser a fee not greater than 0.40% of average daily net assets. From January 2, 1996, through December 31, 1999,
the investment adviser and the distributor voluntarily waived their fees and from January 2, 1996, through August 31, 1997,
the shareholder servicing agent waived its fee. In addition, for the period ended August 31, 1996, subject to reimbursement
by the Fund, the investment adviser voluntarily agreed to pay all of the Fund's operating expenses. In consideration, the
Fund paid the investment adviser a fee not greater than 1.50% of average daily net assets. To the extent actual expenses were
over these limitations, and the waivers had not been in place, the net investment income (loss) would have been:
Net investment income (loss) $(0.22) $(0.22) $(0.17) $ 1.06 $(0.18)
Ratios (to average net assets):
Expenses## 2.56%+ 2.13% 2.15% 2.82% 4.28%+
Net investment income (loss) (2.02)%+ (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 is based on average shares outstanding.
##Ratios do not reflect reductions from certain expense offset arrangements.
(+)Total returns for Class A shares do not include the applicable sales charge. If the charge
had been included, the results would have been lower.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED
FEBRUARY 29, 2000*
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
<S> <C>
Net asset value - beginning of period $23.88
------
Income from investment operations# -
Net investment loss(S) $(0.06)
Net realized and unrealized gain on investments and foreign currency 1.42
------
Total from investment operations $ 1.36
------
Net asset value - end of period $25.24
======
Total return 5.61%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.17%+
Net investment loss (1.60)%+
Portfolio turnover 299%
Net assets at end of period (000 omitted) $2,010
(S) Subject to reimbursement by the Fund, the investment adviser has
voluntarily agreed to pay all of the Fund's operating expenses, exclusive
of management and distribution and service fees. In consideration, the Fund
pays the investment adviser a fee not greater than 0.40% of average daily
net assets. To the extent actual expenses were over this limitation, the
net investment loss per share and the ratios would have been:
Net investment loss $(0.14)
Ratios (to average net assets):
Expenses## 3.05%+
Net investment loss (2.48)%+
*For the period from the inception of Class B, December 31, 1999, through February 29, 2000.
+Annualized.
++Not annualized.
#Per share data is based on average shares outstanding.
##Ratios do not reflect reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERIOD ENDED
FEBRUARY 29, 2000*
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
<S> <C>
Net asset value - beginning of period $23.88
------
Income from investment operations# -
Net investment loss(S) $(0.04)
Net realized and unrealized gain on investments and foreign currency 1.40
------
Total from investment operations $ 1.36
------
Net asset value - end of period $25.24
======
Total return 5.61%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 2.17%+
Net investment loss (1.60)%+
Portfolio turnover 299%
Net assets at end of period (000 omitted) $1,102
(S)Subject to reimbursement by the Fund, the investment adviser has voluntarily agreed to pay all
of the Fund's operating expenses, exclusive of management and distribution and service fees. In
consideration, the Fund pays the investment adviser a fee not greater than 0.40% of average daily
net assets. To the extent actual expenses were over this limitation, the net investment loss per
share and the ratios would have been:
Net investment loss $(0.10)
Ratios (to average net assets):
Expenses## 3.05%+
Net investment loss (2.48)%+
*For the period from the inception of Class C, December 31, 1999, through February 29, 2000.
+Annualized.
++Not annualized.
#Per share data is based on average shares outstanding.
##Ratios do not reflect reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights -- continued
- -----------------------------------------------------------------------------------------------------------
PERIOD
YEAR ENDED AUGUST 31, ENDED
SIX MONTHS ENDED ---------------------- AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997*
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
CLASS I
- -----------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $19.47 $14.46 $15.84 $12.99
Income from investment operations# -
Net investment income (loss)(S) $(0.02) -- $(0.01) $ 1.50
Net realized and unrealized gain on
investments and foreign currency 7.42 7.33 1.26 1.35
------ ------ ------ ------
Total from investment operations $ 7.40 $ 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 (1.54) (2.32) (1.43) --
------ ------ ------ ------
Total distributions declared
to shareholders $(1.54) $(2.32) $(2.63) --
------ ------ ------ ------
Net asset value - end of period $25.33 $19.47 $14.46 $15.84
====== ====== ====== ======
Total return 38.97%++ 54.40% 8.82% 21.94%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.70%+ 0.71% 0.89% 1.48%+
Net investment income (loss) (0.17)%+ (0.02)% (0.06)% 14.08%+
Portfolio turnover 299% 240% 261% 1043%
Net assets at end of period (000 omitted) $13,115 $10,285 $1,415 $1,695
(S)Effective January 1, 2000, subject to reimbursement by the Fund, the investment adviser has
voluntarily agreed to pay all of the Fund's operating expenses, exclusive of management fee. In
consideration, the Fund pays the investment adviser a fee not greater than 0.40% of average daily
net assets. Prior to January 1, 2000, the investment adviser voluntarily waived its fee. In
addition, for the period ended August 31, 1997, the shareholder servicing agent waived its fee. To
the extent actual expenses were over this limitation and the waivers had not been in place, the net
investment income (loss) would have been:
Net investment income (loss) $(0.16) $(0.14) $(0.13) $ 1.40
Ratios (to average net assets):
Expenses## 2.06%+ 1.46% 1.65% 2.35%+
Net investment income (loss) (1.53)%+ (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 is based on average shares outstanding.
##Ratios do not reflect reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Core Growth Fund is a diversified series of MFS Series Trust I (the Trust).
The Trust is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open- end management
investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Fund can
invest in foreign securities. 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. 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 in good faith, at fair value, 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 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.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the Fund to certain qualified
institutions (the "Borrowers") approved by the Fund. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an amount
at least equal to the market value of the securities loaned. State Street
provides the Fund with indemnification against Borrower default. The Fund bears
the risk of loss with respect to the investment of cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the Fund and the lending agent. On loans
collateralized by U.S. Treasury securities, a fee is received from the Borrower,
and is allocated between the Fund and the lending agent. The dividend and
interest income earned on the securities loaned is accounted for in the same
manner as other dividend and interest income.
At February 29, 2000, there were no securities on loan.
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 - The 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 Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be 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
overdistributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The 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. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.75% of
average daily net assets. Prior to January 1, 2000, the investment adviser
voluntarily agreed to waive its fee, which is shown as a reduction of total
expenses in the Statement of Operations.
Effective January 1, 2000, the Fund has a temporary expense reimbursement
agreement whereby MFS has voluntarily agreed to pay all of the Fund's operating
expenses, exclusive of management, distribution, and service fees. The Fund in
turn will pay MFS an expense reimbursement fee not greater than 0.40% of average
daily net assets. To the extent that the expense reimbursement fee exceeds the
Fund's actual expenses, the excess will be applied to amounts paid by MFS in
prior years. At February 29, 2000, aggregate unreimbursed expenses amounted to
$50,700.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The trustees are currently not receiving any
payments for their services to the Fund.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$2,572 for the six months ended February 29, 2000, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer and a distribution fee to MFD
of up to 0.10% per annum of the Fund's average daily net assets attributable to
Class A shares. MFD retains the service fee for accounts not attributable to a
securities dealer. Prior to January 1, 2000, the Class A distribution and
service fees were waived on a voluntary basis at the discretion of MFD.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer. Fees
incurred under the distribution plan during the period ended February 29, 2000,
were 1.00% of average daily net assets attributable to Class B and Class C
shares, on an annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges. Durng
the six months ended February 29, 2000, there were no contingent deferred sales
charges for Class A, Class B, and Class C shares.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$24,803,386 and $22,684,932, respectively.
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are as
follows:
Aggregate cost $16,258,275
-----------
Gross unrealized appreciation $ 4,744,877
Gross unrealized depreciation (329,812)
-----------
Net unrealized appreciation $ 4,415,065
-----------
(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
SIX MONTHS ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
Shares sold 59,479 $ 1,425,590 19,182 $ 341,831
Shares issued to shareholders in
reinvestment of distributions 6,644 145,514 14,057 223,642
Shares reacquired (1,054) (25,126) (42,341) (734,909)
------ ------------ ------- -----------
Net increase (decrease) 65,069 $ 1,545,978 (9,102) $ (169,436)
====== ============ ====== ===========
<CAPTION>
Class B Shares
PERIOD ENDED FEBRUARY 29, 2000*
-------------------------------
SHARES AMOUNT
- -----------------------------------------------------------------------
<S> <C> <C>
Shares sold 81,443 $ 1,945,650
Shares reacquired (1,801) (44,254)
------ ------------
Net increase 79,642 $ 1,901,396
====== ============
<CAPTION>
Class C Shares
PERIOD ENDED FEBRUARY 29, 2000*
-------------------------------
SHARES AMOUNT
- -----------------------------------------------------------------------
<S> <C> <C>
Shares sold 43,665 $ 1,067,230
------ ------------
Net increase 43,665 $ 1,067,230
====== ============
<CAPTION>
Class I Shares
SIX MONTHS ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
---------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 21,544 $ 496,263 454,319 $ 8,444,369
Shares issued to shareholders in
reinvestment of distributions 37,275 817,819 12,823 204,400
Shares reacquired (69,289) (1,634,642) (36,634) (619,141)
------ ------------ ------- -----------
Net increase (decrease) (10,470) $ (320,560) 430,508 $ 8,029,628
======= ============ ======= ===========
*For the period from the inception of Class B and Class C shares, December 31, 1999, through
February 29, 2000.
</TABLE>
(6) Line of Credit
The 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
the Fund for the six months ended February 29, 2000, was $55. The Fund had no
significant borrowings during the period.
<PAGE>
<TABLE>
MFS(R) CORE GROWTH FUND
<S> <C>
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey - Private Investor; Mark E. Bradley*
Former Chairman and Director (until 1991), Ellen Moynihan*
MFS Investment Management(R) James O. Yost*
Marshall N. Cohan - Private Investor SECRETARY
Stephen E. Cavan*
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; ASSISTANT SECRETARY
Professor of Surgery, Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE - Chief CUSTODIAN
Executive Officer, Edmund Gibbons Ltd.; State Street Bank and Trust Company
Chairman, Colonial Insurance Company, Ltd.
INVESTOR INFORMATION
Abby M. O'Neill - Private Investor For information on MFS mutual funds, call your
investment professional or, for an information
Walter E. Robb, III - President and Treasurer, kit, call toll free: 1-800-637-2929 any
Benchmark Advisors, Inc. (corporate financial business day from 9 a.m. to 5 p.m. Eastern time
consultants); President, Benchmark Consulting (or leave a message anytime).
Group, Inc. (office services)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive MFS Service Center, Inc.
Vice President, Director, and Secretary, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman and Chief For general information, call toll free:
Executive Officer, MFS Investment Management 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
J. Dale Sherratt - President, Insight
Resources, Inc. (acquisition planning For service to speech- or hearing-impaired,
specialists) Ward Smith - Former Chairman call toll free: 1-800-637-6576 any business day
(until 1994), NACCO Industries (holding from 9 a.m. to 5 p.m. Eastern time. (To use
company) 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, exchanges,
500 Boylston Street or stock and bond outlooks, call toll free:
Boston, MA 02116-3741 1-800-MFS-TALK (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 MANAGER
Stephen Pesek*
TREASURER
W. Thomas London*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) CORE ------------
GROWTH FUND BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MCG-3 4/00 59M 92/292/392/892
