<PAGE>
MFS -REGISTERED TRADEMARK-/ SUN LIFE SERIES TRUST
SEMIANNUAL REPORT - JUNE 30, 1999
CAPITAL OPPORTUNITIES SERIES
(FORMERLY VALUE SERIES)
EQUITY INCOME SERIES
INTERNATIONAL GROWTH SERIES
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES
NEW DISCOVERY SERIES
RESEARCH GROWTH AND INCOME SERIES
RESEARCH INTERNATIONAL SERIES
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MFS -Registered Original Research-SM-
Trademark-
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 industry. Original Research-SM- at [LOGO]
MFS is more than just crunching
numbers and creating economic
models: it's getting to know each
security and each company personally.
- -----------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- -----------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
DEAR CONTRACT OWNERS,
It has been almost two years since financial turmoil began to rock markets in
Asia, Russia, and Latin America. Even developed markets such as Europe and the
United States were not immune. In the U.S. equity market, for example, investors
focused on a narrow group of 50 of the largest-company growth stocks because
they seemed to offer less volatility in uncertain times. Fixed-income investors
also became more concerned about risk, moving money into U.S. Treasury
securities and out of corporate and municipal bonds and mortgage-backed
securities.
The narrowness of the market was just one of three broad issues that dominated
the U.S. equity market until recently. The other two were a slowdown in
corporate earnings growth and high valuations, with stocks of many companies
selling at extremely high prices relative to their earnings.
Although these have been challenging issues, we now see signs that we feel
demonstrate each one is changing for the better. Today, we believe the markets
are presenting more opportunities for investors to diversify, for our portfolio
managers to find good values, and for us to show the benefits of staying with
our long-term objectives and strategies. Investors seem to be regaining
confidence in a wider range of companies. Stocks of some small and mid-sized
companies, as well as some large industrial companies, have begun to perform
better in the past few months than they had for the previous year or so. These
companies appear to have benefited from early signs of stability in emerging
markets and a continuation of economic growth in the United States.
U.S. companies also have produced better earnings. Corporate earnings were, on
average, relatively flat in 1998. However, we expect earnings to grow 12% to 14%
this year because more companies have benefited from the strong economy and from
aggressive consolidation and cost-cutting measures they have taken over the past
several years.
Based on their earnings projections, our analysts estimate that the U.S. stock
market is still about 30% overvalued. While there has been some shift to a wider
group of stocks, many investors are still focusing on the large-company stocks.
As a result, most of the overvaluation is in the 50 largest stocks in the
Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index
of common stock total return performance. That means about 450 stocks are
selling at more attractive prices, particularly given what we see as the
improved earnings outlooks for these and many small and mid-sized companies not
in the S&P 500. These companies also benefit from consolidation, cost cutting,
and global growth. Because they are smaller, they may be able to respond to
these changes more quickly, and thus they have the potential to grow faster than
the big companies.
The fixed-income markets, meanwhile, seem to be approaching the level of
relative stability they enjoyed before the Asian turmoil. Some credit for this
stability goes to the Federal Reserve Board (the Fed), which has reassured
investors that it will act to prevent rapid economic growth from causing higher
inflation and reduced purchasing power. Also, once investors saw that the
overseas turmoil had little, if any, effect on the financial strength of most
domestic bond issuers, the major non-Treasury markets -- corporate, municipal,
and mortgage -- began to rebound. Our portfolio managers are now finding more
opportunities to buy bonds with relatively stable prices and attractive yields.
The past two years have challenged investors. However, we believe we are well
positioned for the current environment because our analysts and portfolio
managers continue to rely on MFS-Registered Trademark- Original Research-SM- to
help evaluate the long-term investment potential of each holding being
considered for our portfolios. Also, we believe our discipline of staying with
our clearly defined investment strategies can help us offer investment products
with the potential to sustain returns over a variety of market cycles.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/S/ JOHN D. McNEIL
John D. McNeil
Chairman
Board of Trustees
July 15, 1999
MANAGEMENT REVIEW AND OUTLOOK
CAPITAL OPPORTUNITIES SERIES
For the six months ended June 30, 1999, the Series provided a total return of
18.26%, which compares to a total return of 13.68% for the average capital
appreciation fund tracked by Lipper Analytical Services, Inc., an independent
firm that reports mutual fund performance. The Series' return also compares to a
12.23% return for the Standard & Poor's 500 Composite Index (the S&P 500), a
popular, unmanaged index of common stock total return performance.
We have been trying to increase the portfolio's diversification by adding some
stocks and selling or reducing positions in others we already owned. New
holdings include paper companies such as Asia Pulp & Paper Ltd. Previously,
oversupply had made paper companies unattractive, but we believe an upturn in
Asia's economy will boost demand. The Series' position in industrial
conglomerate Tyco International was reduced to increase diversification among
our largest holdings. When Tyco recently acquired AMP, we felt that our already
significant position in the resulting company was too large for this portfolio.
The Series' holding in Freddie Mac, the
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MANAGEMENT REVIEW AND OUTLOOK -- continued
Federal Home Loan Mortgage Corp., also was reduced, again to increase
diversification.
The utilities and communications sector, led by telecommunications companies, is
currently the Series' largest sector. Holdings included AirTouch Communications,
which was acquired by Vodafone early this year. We believe the stock should
benefit from planned cost cutting and consolidation in the United States and
abroad. Also, AirTouch is successfully penetrating the global wireless market, a
strategy that has helped performance. MCI WorldCom also has done well. We
believe the company is well run and has a strong position in the expanding
telecommunications market.
The Series also owns Mannesmann, a German telecommunications company that not
only competes strongly in Germany but also throughout Europe, with an increasing
presence in Italy and France.
In technology, the Series' second-largest sector, we have avoided pure Internet
stocks when we felt they were speculative and overvalued. Instead, the Series
has gained exposure to the sector through companies that provide infrastructure
to the Internet. For example, Cisco Systems, which manufactures networking
hardware, is an expensive stock, but we believe it is a well-positioned company.
Other technology holdings are in the semiconductor area, which finally is seeing
a rebound in sales, due in part to the recovery in Asia. LSI Logic, which
manufactures integrated circuits and storage systems, is attractive to us
because it has consolidated by closing some plants and has increased its sales
of computer chips.
This year's increase in oil prices has created potential opportunities in the
energy sector, including natural gas companies. Enron Oil & Gas, a major natural
gas producer in the United States and Asia, recently was added to the portfolio,
as was Burlington Resources,
one of the largest U.S. oil and gas companies.
The Series' health care weighting has been reduced. We think drug companies are
looking less attractive now, partly due to new government regulations on
coverage and the belief that earnings growth is slowing in the industry. In
addition, cutbacks in Medicare prescription benefits do not favor
pharmaceuticals at this point. In the medical devices area, Becton, Dickinson &
Co. has underperformed in 1999. The company missed its earnings projections
three quarters in a row and is having trouble executing its business plan. Rite
Aid, a drug store holding, declined by 50% due to overexpansion of its retail
chain and difficulty financing the acquisition of PCS, a leading mail-order
prescription service. However, we are maintaining a small position in Rite Aid
because the company has brought in new management that could improve its
outlook.
Our philosophy on managing money is to be flexible and open about the companies
in which we invest. We will consider any company with more than $1 billion in
market capitalization and will look for growth in the mid- and small-cap areas,
in which it may be easier to find reasonable stock prices. Also, we continue to
be flexible globally.
EQUITY INCOME SERIES
For the six months ended June 30, 1999, the Series provided a total return of
9.62%, which compares to an 8.98% return for the average equity income fund
tracked by Lipper Analytical Services, Inc. and 12.23% for the S&P 500.
After more than a year of narrow investor focus on large-cap growth and Internet
stocks, the Series has begun to benefit from what appears to be a friendlier
environment for value stocks, which are the focus of this portfolio. We believe
earnings power for a broader range of companies is increasing because the U.S.
economy continues to be robust while overseas economies are gaining strength.
Also, we believe we have moved from a flat-to-declining interest-rate
environment to a rising interest-rate environment. Large-cap growth stocks have
been selling at very high prices relative to their earnings, but a rising
interest-rate environment is bad for these stocks. Because interest rates help
set the value for future earnings, any increase in interest rates today lowers
the value of future earnings. Therefore, the stocks trading at high prices
relative to future earnings become less attractive.
Early in the year, we began to increase the Series' exposure to companies in
cyclical industries that we believe stand to benefit from a strong economy, such
as paper and chemical companies. That move helped the portfolio when these
stocks began to rebound in April. In addition, we have increased our exposure to
utilities, in particular gas utilities. Although utilities tend to underperform
when interest rates rise because higher rates compete with utilities' high
yields, a few things happened this year that were different. First, because
utility stocks performed poorly during the past few quarters due to the focus on
large-cap growth stocks, they became inexpensive and, as their prices rebounded,
they made up some lost ground. Second, the defensive nature of utility stocks,
which comes from their steady income streams, prevailed over their perceived
interest-rate sensitivity. Finally, there was a lot of consolidation activity in
the sector. For example, Connecticut Energy, a gas utility, was bought out by
Energy East at a premium, and Aquarion, a water utility, was acquired by
Yorkshire Water of the United Kingdom at a premium.
Holdings that have performed particularly well for the Series include Rohm &
Haas, a chemical company, Dow Chemical, International Paper, and Canadian
National Railway. We believe each of these companies benefits from a stronger
economy because its customers order more chemicals, buy more boxes, and ship
more products. Also, Raytheon was a good performer in the defense sector.
Defense companies may benefit from an
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MANAGEMENT REVIEW AND OUTLOOK -- continued
expected increase in U.S. Department of Defense spending.
We have increased the Series' exposure to globally oriented consumer staples
companies such as Nestle in Switzerland and Bestfoods in the United States. We
believe that global economies are growing and that some of the most troubled
markets, Asia in particular, are coming back. So we think these companies may be
able to increase their sales in previously difficult markets.
Looking ahead, with the apparent bottoming out of emerging markets and the
ongoing strength of the U.S. economy, we are less worried about a slowdown than
we were last year. Therefore, in addition to adding cyclical stocks, we have
moved back into regional banks such as Bank America and Wells Fargo that have
merged with other banks and have benefited from the resulting cost savings. We
also have added banks that receive a larger portion of their income from
potentially more stable
fee-based services such as money management and securities processing, rather
than from lending. These include Bank of New York, Mellon, and PNC.
INTERNATIONAL GROWTH SERIES
For the six months ended June 30, 1999, the Series provided a total return of
3.75%, which compares to a 4.11% return for the Morgan Stanley Capital
International (MSCI) Europe, Australia, Far East (EAFE) Index, an unmanaged,
market-capitalization-weighted total return index of developed-country global
stock markets, excluding the United States, Canada, and the South African mining
component. The Series' return also compares to a total return of 6.90% for the
Lipper International Funds Index. The Lipper mutual fund indices are unmanaged,
net-asset-value-weighted indices of the largest qualifying mutual funds within
their respective investment objectives adjusted for the reinvestment of capital
gains distributions and income dividends.
The first half of 1999 saw a continued recovery of global equity markets from
the lows in October. In local currency terms, the MSCI EAFE Index had a total
return of 13.60%, with the MSCI Pacific Index (an unmanaged index of stock
markets in Australia, Hong Kong, Japan, Malaysia, New Zealand, and Singapore) up
21.95% and the MSCI Europe Index (an unmanaged index of stock markets in
Australia, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands,
Norway, Spain, Sweden, Switzerland, Ireland, Portugal, and the United Kingdom)
up 8.20%. Among individual markets, Singapore and Hong Kong led the way. The
Japanese market continued its dramatic recovery, gaining 30%. The emerging
markets were also strong, as evidenced by the 36% increase (in U.S. dollars) of
the International Financial Corporate Emerging Markets Composite Index (an
unmanaged index of market-capitalization-weighted stocks from developing
countries). The strong equity market returns were somewhat offset by a strong
dollar, which gained nearly 7% versus the Japanese yen and more than 13% against
the euro.
One reason the Series slightly underperformed the MSCI EAFE Index was the
narrowness of the markets. In most markets the largest-capitalization stocks
showed the strongest performance. For example, the largest 50 stocks in the MSCI
EAFE Index averaged return about 2.5% greater than the remaining 957 stocks.
While the Series may invest in these larger-capitalization stocks, in general,
it is diversified among a range of capitalizations.
The Series also was negatively affected by limited exposure to cyclical
industries, such as paper, chemicals, and metals. These basic materials
industries were among the best-performing sectors in the first half as markets
reacted to stronger-than-expected growth in the United States and an apparent
recovery in Asia. The portfolio remains underweighted in these industries
because we believe there are better opportunities for long-term growth at
reasonable valuations in other areas.
Contributing positively to first half performance were holdings in the utilities
and communications area, representing our second largest sector at 15.90%. This
included strong performance in the telecommunications arena from Mannesmann (a
31% price increase in U.S. dollars) and NTT Mobile Communications (64%). In the
telecommunications equipment area, Ericsson (36%) was a strong contributor.
The financial services sector, which represents 20.00% of equities, remains the
largest, but is underweighted relative to the MSCI EAFE Index weighting of
23.6%. This sector in general lagged the equity markets, and several of the
Series' larger holdings were no exception. UBS' stock price was down 2.50%,
Anglo Irish Bank's was down 13%, and QBE Insurance's was down 9%. One stock that
helped performance was a smaller position in the Development Bank of Singapore,
whose price increased 64%.
In general, the Series continues to be overweighted relative to the MSCI EAFE
Index in steady, growth-type industries. In addition to telecommunications, this
includes consumer staples, which represents 12.20% of equities, and technology
at 11.5%. Other holdings in these sectors include Benckiser, the
Netherlands-based producer of dish washing detergent and other consumer
products, and Hitachi and Fujitsu, Japanese technology companies from which we
expect to see higher growth as a result of restructuring.
Our bottom-up approach to stock selection and portfolio construction continues
to result in the Series maintaining its largest position in continental Europe,
43.7% of holdings, compared to 47.1% in the MSCI EAFE Index. While our weighting
in Japan has increased to 14.00%, this still is less than the 24.10% in the MSCI
EAFE Index. The second-largest country is the United Kingdom at 16.50% of the
Series, vs. 22.20% in the MSCI EAFE Index.
3
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MANAGEMENT REVIEW AND OUTLOOK -- continued
Our exposure to emerging markets remains low at 4.80% and includes holdings in
Greece and Argentina.
While the rally in global equity markets has pushed valuations to higher levels,
we continue to see very few signs of inflation, with companies finding it
difficult to raise prices. This, combined with an improving corporate earnings
outlook in many markets, gives us reason to feel optimistic about the remainder
of 1999. Regardless of economic tremors, which may develop in select spots
around the world, we believe there will be no lack of opportunistic and
established companies in which to invest. Our mission is to use
MFS-Registered Trademark- Original Research-SM- to try to uncover these
investment opportunities.
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES
For the six months ended June 30, 1999, the Series provided a total return of
10.96%, which compares to returns of 11.65% for the average growth fund tracked
by Lipper Analytical Services, Inc. and 12.23% for the S&P 500.
The Series' technology positions have contributed to performance. Companies such
as Cisco Systems and Microsoft have benefited from the global drive to increase
productivity and from the expansion of the Internet. This sector also includes
semiconductor manufacturing, a cyclical industry that typically performs well
when global economies are strong. For the past couple of years, the
semiconductor industry had too many manufacturing plants due to the slowdown in
Asia and emerging markets, where many products that use semiconductors are
manufactured. Now, with those markets showing signs of recovery, demand has
increased. Because of their strong product lines, semiconductor companies in the
portfolio such as Motorola, Texas Instruments, and Analog Devices appear to be
well positioned to benefit.
Meanwhile, some software companies have been impacted by concerns about the Year
2000 (Y2K) computer issue. Earlier this year, it looked like many businesses
would reduce their spending on computer software and systems to give themselves
time to ensure their existing systems were Y2K ready. Although it now looks like
spending won't be cut as much as people feared, the stocks have been hurt. We
think the Y2K issue will be behind us by next spring. At that time, holdings
that were caught in the general downturn of software stocks, such as BMC
Software and Computer Associates, may be among the best positioned in what we
expect to be a very rapidly growing industry.
Although technology is the Series' largest sector, our biggest increase has been
in telecommunications. We think global telecommunications fundamentals are very
powerful. In 1998, for example, over 230 million cellular handsets were
manufactured. We estimate that number will increase 60% this year, to around 370
million. Going forward, we think the next revolution will be a wave of new
wireless communications devices that will enable more people to use their
cellular phones to communicate and even to invest over the Internet. These
trends should lead to greater market penetration for cellular phone companies.
Among our holdings, we have increased our position in MCI WorldCom, a preeminent
supplier to and the backbone of cellular traffic worldwide. We also increased
our position in Global TeleSystems, a U.S.-based telecommunications services
company that does all its business in Europe, and added telecommunications
equipment suppliers, including Lucent Technologies and Nortel. Because of the
growth of the Internet and the increase in data transmission, the world's
telecommunications capacity is essentially full. These companies are helping to
increase capacity for the Internet and for data traffic.
Another important sector is leisure. We have increased the Series' position in
Time Warner, a large cable content programmer. We believe the company's
management has improved and is using its capital more prudently and cutting
costs. We also added Univision, a cable company that has a 90% share of the
Hispanic market, which is the fastest-growing segment of the population and has
very attractive demographics for advertisers.
In health care, we have reduced the Series' positions in stocks whose prices
fully reflect the earnings outlooks we had for them. Instead, we have focused on
stocks that appear to offer better values and earnings outlooks, such as
American Home Products and Bristol-Myers Squibb. These companies have strong
management teams, several new drugs coming to the market in the next few years,
and accelerating earnings growth rates. Although we are a little cautious on
pharmaceutical companies because of Medicare reimbursement cuts, we think the
ones in the portfolio should do well over the long term thanks to their strong
product lines. We did increase the portfolio's weighting in health maintenance
organizations (HMOs) by adding United HealthCare. We think HMOs are in the midst
of a positive pricing cycle. After several years of price constraints, these
companies are starting to raise prices, which we believe should make them more
profitable.
NEW DISCOVERY SERIES
For the six months ended June 30, 1999, the Series provided a total return of
10.38%, which compares to returns of 8.56% return for the average small-cap fund
tracked by Lipper Analytical Services, Inc. and 9.28% for the Russell 2000 Total
Return Index (the Russell 2000). The Russell 2000 is an unmanaged index
comprised of 2,000 of the smallest U.S.-domiciled company common stocks that are
traded on the New York Stock Exchange, the American Stock Exchange, and NASDAQ.
The Series has benefited from the strong performance
of companies in rapidly growing industries such as technology, health care, and
business services. In technology, the Series' software holdings include Security
Dynamics Technologies and Gemstar International. Security Dynamics provides
software that ensures secure
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MANAGEMENT REVIEW AND OUTLOOK -- continued
transactions over corporate networks and the Internet. Gemstar provides
electronic program guides for television and cable set top boxes. We think it
has a dominant, patent-protected market position, and its technology could
establish it as an Internet portal as TVs become Internet-access appliances. The
Series also has significant holdings among companies that make integrated
circuits used in networking and the Internet, such as PMC-Sierra and Applied
Micro Circuits.
Other than these companies, the Series has not invested heavily in Internet
stocks. Although we believe the Internet is a transforming force for both
corporate America and
the individual consumer, we don't think the valuations of many Internet stocks
reflect their business and investment risks, which include growing competition,
low entry barriers, and unstable business models. Therefore, while our
underweighting of Internet stocks relative to the Russell 2000 probably has
detracted from performance in the short term, we believe this weighting is
correct in the long run.
In health care, the Series owns MedPartners, which has exited some businesses
that were underperforming to focus on its pharmacy benefit-management business.
We feel their new business should grow annual earnings 25% while generating
strong cash flow and paying off debt. Finally, our business services holdings,
such as BISYS, DST, and NOVA Corp., provide a range of computer-processing
services and enjoy growing revenues, improving margins, and strong cash flow.
The Series looks for emerging companies with solid business models we believe
can sustain unit, revenue, and growth rates that substantially exceed the growth
rates of global economies. We search for companies with large market
opportunities, proprietary products or services, visionary managements that can
anticipate and adapt to changing business risks, and financial characteristics
that are the hallmarks of good businesses, such as high profit margins, the
ability to generate strong cash flow, and strong balance sheets. Because the
small-capitalization marketplace is volatile and inefficient, this
is a very research-intensive process. Ultimately, we are trying to identify
companies we believe may post long-term growth rates that are both high and
sustainable.
We expect to see a continuation of the recovery in small-company stocks that
began this spring. Although large-cap growth stocks have led the way for more
than a year, superior earnings growth historically has been rewarded with
superior valuations. However, past performance is no guarantee of future
results. Currently, many small companies are growing at rates well above that of
the average company in the S&P 500. We believe these growth rates may eventually
be recognized by the market.
RESEARCH GROWTH AND INCOME SERIES
For the six months ended June 30, 1999, the Series provided a total return of
8.59%, which compares to returns of 10.93% for the average growth and income
fund tracked by Lipper Analytical Services, Inc. and 12.23% for the S&P 500.
The Series is managed by a committee of more than 30 equity research analysts
who survey a universe of about 1,300 stocks using a bottom-up approach. They
look for companies that demonstrate strong predicted earnings growth, good
current and potential market position, management strength, and product
potential. The portfolio has the ability to diversify across all industry
sectors and investment styles.
Stocks that have performed particularly well recently include United
Technologies. Last year its price fell due to an unexpected loss of earnings in
the second quarter, but we held onto the stock, and its prospects have improved
in our view. Tyco International, a diversified manufacturing and service
conglomerate, also has done well by internally developing a wide range of
products and by acquiring companies with complementary products.
Meanwhile, MCI WorldCom is a recent addition to the Series. The company has
experienced strong growth as a result of the increase in global data traffic,
and we expect this trend to continue.
Although oil prices have been rising, our research indicates that most oil
companies are fairly valued. The Series does hold a select few, including BP
Amoco, Exxon, and Mobil, all of which enjoy a powerful presence in the market
thanks to strategic mergers and acquisitions.
We recently reduced the Series' health care weighting by selling Pfizer, a
premier pharmaceutical company. We sold the stock for two reasons. First, we
believe that the company's product cycle is maturing. The pipeline for new
products is not as strong as it once was, and some of its existing products,
such as Celebrex, are facing increased competition. Second, Pfizer's valuation
appeared high relative to its competitors, and we believed we could find better
opportunities elsewhere.
We believe the recent broadening of the equity market beyond the largest-company
growth stocks may benefit performance. The Series does have select positions in
$50 billion-and-larger companies such as Bristol-Myers Squibb, which we think
may perform well due to continued drug prescription growth. However, the Series
as a whole is underweighted in these mega-cap stocks relative to the S&P 500. As
a result, we have benefited as the market has broadened to include companies
with market capitalizations below $50 billion.
RESEARCH INTERNATIONAL SERIES
For the six months ended June 30, 1999, the Series provided a total return of
12.14%, which compares to returns of 7.38% for the average international fund
tracked by Lipper Analytical Services, Inc. and 4.11% for the MSCI EAFE Index.
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MANAGEMENT REVIEW AND OUTLOOK -- continued
Over the period, the global analysts who manage the Series scoured the market
seeking undervalued or growth investment opportunities. The goal of our Original
Research-SM- process is to find companies with attractive valuations relative to
their growth prospects. This portfolio comprises only the "best ideas" of the
analysts. What makes a "best idea" can vary; therefore the portfolio is
comprised of a mixture of growth and value ideas. These ideas are all derived
from an in-depth study of our portfolio companies' products and services, their
growth outlook, and the stocks' relative valuations. It is not global economic
and political analysis which drives our stock selection, but in-depth
company-by-company research. As fundamental information on international
companies is less timely and the markets are less efficient, our analysts do
their own research rather than relying on sell-side research, which we believe
greatly enhances our investment performance.
Although we rely on bottom-up company research, recently we have strongly
favored stocks within five sectors: utilities and communications (especially
telecommunications), financial services, consumer staples, health care, and
industrial goods and services. We believe companies in these sectors look
promising in both the established and emerging markets. Some of these companies
appeal to us because they are clearly responding to macro-level changes, for
example, deregulation in the wake of European monetary union. The
telecommunications sector has been deregulated in many countries, creating
opportunities for new service providers to challenge the monopoly phone
companies.
One telecommunications company we like is Mannesmann in Germany, which has
transformed itself from an engineering firm involved with a range of
metal-bending businesses to a telecommunications company with a substantial
share of the German wireless market.
In financial services, UBS is one of our top holdings. This company merged with
Swiss Bank Corp. to create a dominant global bank. Management has refocused the
lending business toward more profitable segments of the market and has taken
advantage of cost-cutting opportunities created by the merger. Finally, we
believe UBS is well positioned in global asset management, and may see
significant growth in the next few years.
Retail also is interesting. The French company Castorama-Dubois recently teamed
up with the English company Kingfisher, a leading retailer in the do-it-yourself
market. These companies resemble Home Depot in the United States. We feel that
Castorama may benefit from organic growth in this market and could play a role
in consolidating the market across Europe.
Our research analysts have continued to find new ideas in the developed markets
of Europe and Asia. In Japan, companies are starting to restructure their
businesses to offset a relatively weak market. We believe this may result in
better earnings outlooks, especially if the economy improves. With some support
from the government, a few Japanese banks are finally dealing with their
nonperforming loans. We think there are signs that they can repair their balance
sheets and return to a growth trajectory. Emerging market countries, on the
other hand, have played a modest role in the portfolio. We have holdings in
Argentina, Brazil, South Korea, and the Philippines. All have shown signs of
recovery from the difficult economic environment of the past 12 to 18 months.
We will continue to research undervalued stocks, focusing on what we believe are
growth sectors. This is an all-capitalization portfolio, and for most of 1998
and early 1999, performance was concentrated in the largest growth stocks in the
S&P 500. Recently, stock prices for some small- and mid-cap stocks have gone up
more than large-cap stock prices. This may benefit the portfolio, which over
time has had more than half of its assets in these markets.
------------------------
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.
It is not possible to invest directly in an index.
The portfolios are actively managed, and current holdings may be different.
6
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PERFORMANCE SUMMARY
Because MFS-Registered Trademark-/Sun Life Series Trust is 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. (See Notes to
Performance Summary for more information.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH JUNE 30, 1999
CAPITAL OPPORTUNITIES SERIES(1)
<TABLE>
<CAPTION>
6 Months 1 Year 3 Years Life*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
Cumulative Total Return +18.26% +26.29% +110.27% +110.90%
- ---------------------------------------------------------------------
Average Annual Total Return -- +26.29% +28.11% +27.48%
- ---------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, June
3, 1996, through June 30, 1999.
EQUITY INCOME SERIES(1)
<TABLE>
<CAPTION>
6
Months 1 Year Life*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
Cumulative Total Return +9.62% +15.45% +15.11%
- ---------------------------------------------------------------------
Average Annual Total Return -- +15.45% +13.00%
- ---------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, May
6, 1998, through June 30, 1999.
INTERNATIONAL GROWTH SERIES(1)
<TABLE>
<CAPTION>
6 Months 1 Year 3 Years Life*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
Cumulative Total Return +3.75% -2.45% +1.95% +2.26%
- ---------------------------------------------------------------------
Average Annual Total Return -- -2.45% +0.65% +0.73%
- ---------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, June
3, 1996, through June 30, 1999.
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES
<TABLE>
<CAPTION>
6
Months 1 Year Life*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
Cumulative Total Return +10.96% +26.11% +33.93%
- ---------------------------------------------------------------------
Average Annual Total Return -- +26.11% +28.90%
- ---------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, May
6, 1998, through June 30, 1999.
NEW DISCOVERY SERIES(2)
<TABLE>
<CAPTION>
6 Months 1 Year Life*
<S> <C> <C> <C>
- ---------------------------------------------------------------
Cumulative Total Return +10.38% +11.42% +17.22%
- ---------------------------------------------------------------
Average Annual Total Return -- +11.42% +14.80%
- ---------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, May
6, 1998, through June 30, 1999.
RESEARCH GROWTH AND INCOME SERIES
<TABLE>
<CAPTION>
6 Months 1 Year Life*
<S> <C> <C> <C>
- ---------------------------------------------------------------
Cumulative Total Return +8.59% +13.33% +46.15%
- ---------------------------------------------------------------
Average Annual Total Return -- +13.33% +19.48%
- ---------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, May
13, 1997, through June 30, 1999.
RESEARCH INTERNATIONAL SERIES(1)
<TABLE>
<CAPTION>
6 Months 1 Year Life*
<S> <C> <C> <C>
- -------------------------------------------------------------
Cumulative Total Return +12.14% +6.49% +5.64%
- -------------------------------------------------------------
Average Annual Total Return -- +6.49% +4.88%
- -------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations, May
6, 1998, through June 30, 1999.
NOTES TO PERFORMANCE SUMMARY
All results are historical and assume the reinvestment of dividends and capital
gains. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS. 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.
RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF THE MORTALITY AND EXPENSE RISK
CHARGES AND ADMINISTRATION FEES. PLEASE REFER TO THE ANNUITY PRODUCT'S ANNUAL
REPORT FOR PERFORMANCE THAT REFLECTS THE DEDUCTION OF THE FEES AND CHARGES
IMPOSED BY INSURANCE COMPANY SEPARATE ACCOUNTS.
(1) Investments in foreign and emerging market securities may provide superior
returns but also involve greater risk than U.S. investments. Investments in
foreign and emerging market securities may be favorably or unfavorably
affected by changes in interest rates and currency exchange rates, market
conditions, and the economic and political conditions of the countries where
investments are made. These risks may increase unit price volatility. See
the prospectus for details.
(2) Investing in small or emerging growth companies involves greater risk than
is customarily associated with more-established companies. These risks may
increase unit price volatility. See the prospectus for details.
7
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) -- June 30, 1999
CAPITAL OPPORTUNITIES SERIES
STOCKS -- 94.4%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 81.5%
ADVERTISING -- 0.9%
Outdoor Systems, Inc.* ................. 25,100 $ 916,150
Young & Rubicam, Inc. .................. 32,500 1,476,719
---------------
$ 2,392,869
---------------
AEROSPACE -- 0.8%
Allied Signal, Inc. .................... 31,800 $ 2,003,400
---------------
BANKS AND CREDIT COMPANIES -- 2.2%
Bank of New York Co., Inc. ............. 45,700 $ 1,676,619
Chase Manhattan Corp. .................. 9,400 814,275
Mellon Bank Corp. ...................... 47,800 1,738,725
Wells Fargo Co. ........................ 39,820 1,702,305
---------------
$ 5,931,924
---------------
BROADCASTING -- 0.9%
Infinity Broadcasting Corp.* ........... 84,100 $ 2,501,975
---------------
BUSINESS MACHINES -- 2.5%
Kulicke & Soffa Industries, Inc.* ...... 32,700 $ 876,769
Texas Instruments, Inc. ................ 12,900 1,870,500
Xerox Corp. ............................ 67,700 3,998,531
---------------
$ 6,745,800
---------------
BUSINESS SERVICES -- 0.2%
Computer Sciences Corp.* ............... 9,400 $ 650,362
---------------
COMPUTER HARDWARE -- SYSTEMS -- 0.7%
Hewlett-Packard Co. .................... 19,900 $ 1,999,950
---------------
COMPUTER SOFTWARE -- PERSONAL
COMPUTERS -- 0.8%
America Online, Inc.* .................. 1,400 $ 154,700
Microsoft Corp.* ....................... 23,300 2,101,369
---------------
$ 2,256,069
---------------
COMPUTER SOFTWARE -- SERVICES -- 0.5%
EMC Corp.* ............................. 24,900 $ 1,369,500
---------------
COMPUTER SOFTWARE -- SYSTEMS -- 4.3%
Ariba, Inc.* ........................... 500 $ 48,625
BMC Software, Inc.* .................... 103,400 5,583,600
Oracle Corp.* .......................... 105,800 3,927,825
Unisys Corp.* .......................... 49,100 1,911,831
---------------
$ 11,471,881
---------------
CONSUMER GOODS AND SERVICES -- 6.3%
Galileo International, Inc. ............ 21,300 $ 1,138,219
Newell Rubbermaid, Inc. ................ 34,500 1,604,250
Tyco International Ltd. ................ 147,476 13,973,351
---------------
$ 16,715,820
---------------
CONTAINERS -- 0.2%
Smurfit-Stone Container Corp.* ......... 19,600 $ 403,025
---------------
ELECTRONICS -- 5.2%
Altera Corp.* .......................... 45,900 $ 1,689,694
Analog Devices, Inc.* .................. 65,580 3,291,296
Intel Corp. ............................ 14,300 850,850
Lattice Semiconductor Corp.* ........... 34,700 2,160,075
LSI Logic Corp.* ....................... 88,100 4,063,613
Micron Technology, Inc.* ............... 13,300 536,156
Teradyne, Inc.* ........................ 17,600 1,262,800
---------------
$ 13,854,484
---------------
ENTERTAINMENT -- 9.1%
CBS Corp.* ............................. 65,700 $ 2,853,844
Clear Channel
Communications, Inc.* ................ 32,867 2,265,769
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
ENTERTAINMENT -- continued
Comcast Corp., "A" ..................... 97,800 $ 3,759,188
Disney (Walt) Co. ...................... 84,000 2,588,250
Harrah's Entertainment, Inc.* .......... 140,364 3,088,008
Hearst-Argyle Television, Inc.* ........ 79,200 1,900,800
MediaOne Group, Inc.* .................. 54,700 4,068,312
Time Warner, Inc. ...................... 53,000 3,895,500
---------------
$ 24,419,671
---------------
FINANCIAL INSTITUTIONS -- 5.9%
Associates First Capital Corp., "A" .... 49,400 $ 2,189,038
Citigroup, Inc. ........................ 81,850 3,887,875
Donaldson, Lufkin & Jenrette, Inc. ..... 4,800 289,200
Federal Home Loan Mortgage
Corp. ................................ 48,233 2,797,514
Finova Group, Inc. ..................... 75,600 3,978,450
Merrill Lynch & Co., Inc. .............. 20,300 1,622,731
Paine Webber Group, Inc. ............... 14,100 659,175
Providian Financial Corp. .............. 3,100 289,850
---------------
$ 15,713,833
---------------
FOOD AND BEVERAGE PRODUCTS -- 0.8%
Anheuser-Busch Cos., Inc. .............. 16,450 $ 1,166,922
Suiza Foods Corp.* ..................... 26,000 1,088,750
---------------
$ 2,255,672
---------------
FOREST AND PAPER PRODUCTS -- 1.2%
Bowater, Inc. .......................... 22,500 $ 1,063,125
Champion International Corp. ........... 6,800 325,550
Jefferson Smurfit Corp. ................ 570,600 1,348,898
Westvaco Corp. ......................... 19,200 556,800
---------------
$ 3,294,373
---------------
INSURANCE -- 6.4%
American International Group, Inc. ..... 13,400 $ 1,568,638
Annuity & Life Re Holdings Ltd. ........ 28,900 648,444
CIGNA Corp. ............................ 37,743 3,359,127
Equitable Cos., Inc. ................... 48,700 3,262,900
Hartford Financial Services Group,
Inc. ................................. 62,830 3,663,774
Nationwide Financial Services, Inc.,
"A" .................................. 25,700 1,162,925
ReliaStar Financial Corp. .............. 79,599 3,482,456
---------------
$ 17,148,264
---------------
INTERNET
Ask Jeeves, Inc.* ...................... 200 $ 2,800
Phone.Com, Inc.* ....................... 400 22,400
---------------
$ 25,200
---------------
MEDICAL AND HEALTH PRODUCTS -- 2.6%
American Home Products Corp. ........... 58,700 $ 3,375,250
Becton, Dickinson & Co. ................ 56,700 1,701,000
Pfizer, Inc. ........................... 6,500 713,375
Pharmacia & Upjohn, Inc. ............... 22,000 1,249,875
---------------
$ 7,039,500
---------------
MEDICAL AND HEALTH TECHNOLOGY
AND SERVICES -- 2.0%
Mid Atlantic Medical Services, Inc.* ... 59,400 $ 586,575
United HealthCare Corp. ................ 60,123 3,765,203
Wellpoint Health Networks, Inc.* ....... 10,900 925,137
---------------
$ 5,276,915
---------------
</TABLE>
8-COS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
U.S. STOCKS -- continued
<S> <C> <C>
OIL SERVICES -- 0.8%
Baker Hughes, Inc. ..................... 28,600 $ 958,100
Burlington Resources, Inc. ............. 26,300 1,137,475
---------------
$ 2,095,575
---------------
OILS -- 1.2%
Conoco, Inc., "A" ...................... 60,100 $ 1,675,287
Enron Oil & Gas Co. .................... 75,000 1,518,750
---------------
$ 3,194,037
---------------
PRINTING AND PUBLISHING -- 1.9%
Gannett Co., Inc. ...................... 8,000 $ 571,000
Meredith Corp. ......................... 33,000 1,142,625
Scripps (E.W.) Howard, Inc., "A" ....... 41,300 1,964,331
Tribune Co. ............................ 15,300 1,333,013
---------------
$ 5,010,969
---------------
RESTAURANTS AND LODGING -- 1.2%
Promus Hotel Corp.* .................... 44,800 $ 1,388,800
Wendy's International, Inc. ............ 64,400 1,823,325
---------------
$ 3,212,125
---------------
RETAIL -- 0.9%
Tandy Corp. ............................ 47,200 $ 2,306,900
---------------
STORES -- 2.4%
CVS Corp. .............................. 48,100 $ 2,441,075
Office Depot, Inc.* .................... 12,100 266,956
Rite Aid Corp. ......................... 104,860 2,582,177
TJX Cos., Inc. ......................... 32,300 1,075,994
---------------
$ 6,366,202
---------------
SUPERMARKETS -- 2.3%
Kroger Co.* ............................ 223,300 $ 6,238,444
---------------
TELECOMMUNICATIONS -- 12.4%
CenturyTel, Inc. ....................... 37,025 $ 1,471,744
Cisco Systems, Inc.* ................... 55,600 3,582,725
General Instrument Corp.* .............. 49,900 2,120,750
GTE Corp. .............................. 29,800 2,257,350
MCI WorldCom, Inc.* .................... 67,900 5,843,643
Motorola, Inc. ......................... 32,900 3,117,275
NEXTEL Communications, Inc.* ........... 61,100 3,066,456
Nortel Networks Corp. .................. 8,800 763,950
NTL, Inc.* ............................. 41,600 3,585,400
PSINet, Inc.* .......................... 23,100 1,010,625
Qwest Communications International,
Inc.* ................................ 22,700 750,519
SBC Communications, Inc. ............... 24,700 1,432,600
Scientific-Atlanta, Inc. ............... 28,600 1,029,600
Sprint Corp. (PCS Group) ............... 39,400 2,250,725
Winstar Communications, Inc.* .......... 18,800 916,500
---------------
$ 33,199,862
---------------
UTILITIES -- ELECTRIC -- 0.9%
AES Corp.* ............................. 11,300 $ 656,813
Duke Energy Corp. ...................... 30,100 1,636,687
---------------
$ 2,293,500
---------------
UTILITIES -- GAS -- 2.4%
Coastal Corp. .......................... 59,400 $ 2,376,000
Sonat, Inc. ............................ 35,900 1,189,188
Williams Cos., Inc. .................... 68,200 2,902,762
---------------
$ 6,467,950
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
UTILITIES -- TELEPHONE -- 1.6%
Frontier Corp. ......................... 71,500 $ 4,218,500
---------------
Total U.S. Stocks .................................... $ 218,074,551
---------------
FOREIGN STOCKS -- 12.9%
BERMUDA -- 0.5%
Ace Ltd. (Insurance) ................... 48,400 $ 1,367,300
---------------
CANADA -- 1.1%
Abitibi-Consolidated, Inc. (Forest and
Paper Products) ...................... 104,900 $ 1,193,237
AT & T* Canada, Inc.
(Telecommunications) ................. 7,600 486,875
Canadian National Railway Co.
(Railroads) .......................... 18,300 1,226,100
---------------
$ 2,906,212
---------------
FINLAND -- 1.1%
Nokia Corp., ADR
(Telecommunications) ................. 24,600 $ 2,252,438
Telephone Cooperative HPY
(Telecommunications) ................. 250 645,608
---------------
$ 2,898,046
---------------
FRANCE -- 0.8%
Axa (Insurance) ........................ 3,200 $ 390,106
Bouygues S.A. (Construction)* .......... 6,910 1,825,049
---------------
$ 2,215,155
---------------
GERMANY -- 2.6%
Mannesmann AG (Conglomerate) ........... 47,000 $ 7,022,855
---------------
GREECE -- 0.3%
Hellenic Telecommunication Organization
S.A., GDR (Telecommunications) ....... 40,200 $ 860,800
---------------
IRELAND -- 0.1%
Jefferson Smurfit Group PLC, ADR
(Containers) ......................... 10,100 $ 237,981
---------------
JAPAN -- 1.1%
Nippon Telephone & Telegraph Co.
(Utilities -- Telephone) ............. 120 $ 1,399,272
NTT Mobile Communications Network, Inc.
(Telecommunications) ................. 24 325,504
NTT Mobile Communications Network, Inc.
(Telecommunications)* ................ 96 1,286,140
---------------
$ 3,010,916
---------------
NETHERLANDS -- 0.2%
Benckiser N.V., "B" (Consumer Goods and
Services) ............................ 8,273 $ 441,186
---------------
PORTUGAL -- 0.2%
Telecel -- Comunicacoes Pessoais S.A.
(Telecommunications) ................. 4,700 $ 605,419
---------------
SINGAPORE -- 0.9%
Asia Pulp & Paper Co. Ltd., ADR
(Consumer Goods and Services) ........ 220,300 $ 2,120,388
Development Bank of Singapore Ltd.
(Banks and Credit Cos.) .............. 12,000 146,694
---------------
$ 2,267,082
---------------
</TABLE>
9-COS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares
<S> <C> <C>
FOREIGN STOCKS -- continued
SPAIN -- 0.4%
Acciona S. A. (Construction) ........... 21,100 $ 1,005,204
Telefonica Publicidad e Informacion S.A.
(Telephone) .......................... 2,600 51,844
---------------
$ 1,057,048
---------------
SWEDEN -- 0.2%
Ericsson LM, ADR
(Telecommunications) ................. 18,200 $ 599,463
---------------
UNITED KINGDOM -- 3.4%
Cable & Wireless Communications PLC
(Telecommunications) ................. 23,000 $ 221,113
Capital Radio PLC (Broadcasting) ....... 27,900 369,131
Colt Telecom Group PLC
(Telecommunications)* ................ 15,600 1,347,450
Orange PLC (Telecommunications) ........ 182,400 2,676,274
Vodafone Group PLC
(Telecommunications) ................. 22,100 4,353,700
---------------
$ 8,967,668
---------------
Total Foreign Stocks .................................. $ 34,457,131
---------------
Total Stocks
(Identified Cost, $215,109,259) ..................... $ 252,531,682
---------------
CONVERTIBLE PREFERRED STOCKS -- 0.6%
TELECOMMUNICATIONS -- 0.6%
UnitedGlobalCom, 7.00%## (Identified
Cost, $1,495,000) .................... 29,900 $ 1,506,212
---------------
CONVERTIBLE BOND -- 0.7%
FINANCIAL SERVICES -- 0.7%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Bell Atlantic Financial Services, Inc.,
4.25s, 2005## (Identified Cost,
$2,098,096) .......................... $ 1,850 $ 1,891,625
---------------
<CAPTION>
Shares
<S> <C> <C>
RIGHTS
FRANCE
Bouygues S.A. (Construction) (Identified
Cost, $18,731) ....................... 6,910 $ 18,372
---------------
SHORT-TERM OBLIGATIONS -- 5.5%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Federal Home Loan Bank, due 7/01/99 .... $ 6,700 $ 6,700,000
Federal National Mortgage Corp., due
7/22/99 .............................. 8,000 7,977,273
---------------
Total Short-Term Obligations, at Amortized Cost ....... $ 14,677,273
---------------
OTHER SHORT-TERM
OBLIGATIONS -- 6.6%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$17,613,883) ......................... 17,613,883 $ 17,613,883
---------------
Total Investments
(Identified Cost, $251,012,242) ..................... $ 288,239,047
---------------
OTHER ASSETS,
LESS LIABILITIES -- (7.8)% (20,832,572)
---------------
Net Assets -- 100.0% .................................. $ 267,406,475
---------------
---------------
See portfolio footnotes and notes to financial statements
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
EQUITY INCOME SERIES
STOCKS -- 92.2%
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 83.7%
AEROSPACE -- 2.9%
Allied Signal, Inc. .................... 3,962 $ 249,606
Lockheed-Martin Corp. .................. 2,904 108,174
Raytheon Co., "A" ...................... 4,262 293,545
---------------
$ 651,325
---------------
AUTOMOTIVE -- 1.5%
TRW, Inc. .............................. 6,166 $ 338,359
---------------
BANKS AND CREDIT COMPANIES -- 5.7%
Bank America Corp. ..................... 5,394 $ 395,448
Bank of New York Co., Inc. ............. 5,778 211,980
Mellon Bank Corp. ...................... 6,340 230,617
PNC Bank Corp. ......................... 3,990 229,924
Wells Fargo Co. ........................ 5,348 228,627
---------------
$ 1,296,596
---------------
BEVERAGES -- 0.8%
Coca Cola Bottling Co. ................. 3,050 $ 170,800
---------------
BUILDING -- 0.8%
Sherwin Williams Co. ................... 6,528 $ 181,152
---------------
BUSINESS MACHINES -- 1.5%
Xerox Corp. ............................ 5,701 $ 336,715
---------------
CHEMICALS -- 4.8%
Dow Chemical Co. ....................... 1,773 $ 224,949
Engelhard Corp. ........................ 10,345 234,056
Ferro Corp. ............................ 7,861 216,178
PPG Industries, Inc. ................... 3,606 212,979
Rohm & Haas Co. ........................ 4,937 211,674
---------------
$ 1,099,836
---------------
CONGLOMERATES -- 0.7%
Eastern Enterprises .................... 4,136 $ 164,406
---------------
CONSUMER GOODS AND SERVICES -- 2.1%
Fortune Brands, Inc. ................... 5,477 $ 226,611
International Flavours ................. 5,637 250,142
---------------
$ 476,753
---------------
CONTAINERS -- 0.6%
Owens Illinois, Inc.* .................. 4,367 $ 142,746
---------------
ELECTRICAL EQUIPMENT -- 2.4%
Cooper Industries, Inc. ................ 1,998 $ 103,896
Emerson Electric Co. ................... 3,482 218,931
Honeywell, Inc. ........................ 834 96,640
Thomas & Betts Corp. ................... 2,508 118,503
---------------
$ 537,970
---------------
ENTERTAINMENT -- 0.2%
MediaOne Group, Inc.* .................. 433 $ 32,204
---------------
FINANCIAL INSTITUTIONS -- 0.6%
Edwards (A.G.), Inc. ................... 4,028 $ 129,903
Goldman Sachs Group, Inc. .............. 200 14,450
---------------
$ 144,353
---------------
FOOD AND BEVERAGE PRODUCTS -- 3.4%
Archer-Daniels-Midland Co. ............. 14,940 $ 230,636
Bestfoods Co. .......................... 3,622 179,289
Quaker Oats Co. ........................ 1,012 67,172
Seagram Limited* ....................... 2,200 109,862
Smucker (J. M.) Co. .................... 9,460 179,740
---------------
$ 766,699
---------------
FOREST AND PAPER PRODUCTS -- 1.9%
Bowater, Inc. .......................... 2,350 $ 111,038
International Paper Co. ................ 2,848 143,824
</TABLE>
10-EIS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
U.S. STOCKS -- continued
<S> <C> <C>
FOREST AND PAPER PRODUCTS -- continued
Westvaco Corp. ......................... 3,138 $ 91,002
Weyerhaeuser Co. ....................... 1,327 91,231
---------------
$ 437,095
---------------
INSURANCE -- 9.0%
American International Group, Inc. ..... 1,788 $ 209,308
Chubb Corp. ............................ 1,537 106,821
CIGNA Corp. ............................ 2,210 196,690
Equitable Cos., Inc. ................... 121 8,107
Hartford Financial Services Group,
Inc. ................................. 6,091 355,181
Jefferson Pilot Corp. .................. 3,375 223,383
Lincoln National Corp. ................. 8,142 425,928
ReliaStar Financial Corp. .............. 8,557 374,369
St. Paul Cos., Inc. .................... 4,754 151,237
---------------
$ 2,051,024
---------------
MEDICAL AND HEALTH PRODUCTS -- 2.7%
American Home Products Corp. ........... 3,141 $ 180,607
Becton, Dickinson & Co. ................ 4,438 133,140
Merck & Co., Inc. ...................... 1,570 116,180
Pharmacia & Upjohn, Inc. ............... 3,361 190,947
---------------
$ 620,874
---------------
OILS -- 4.5%
Atlantic Richfield Co. ................. 662 $ 55,318
Chevron Corp. .......................... 1,300 123,744
Conoco, Inc., "A" ...................... 6,679 186,177
Exxon Corp. ............................ 2,313 178,390
Mobil Corp. ............................ 2,241 221,859
Phillips Petroleum Co. ................. 2,200 110,688
Unocal Corp. ........................... 3,881 153,785
---------------
$ 1,029,961
---------------
PRINTING AND PUBLISHING -- 1.3%
Gannett Co., Inc. ...................... 1,616 $ 115,342
Meredith Corp. ......................... 5,477 189,641
---------------
$ 304,983
---------------
RAILROADS -- 0.4%
Burlington Northern Santa Fe Railway
Co. .................................. 2,632 $ 81,592
---------------
REAL ESTATE INVESTMENT TRUSTS -- 2.1%
CarrAmerica Realty Corp. ............... 3,347 $ 83,675
Equity Residential Properties Trust .... 3,289 148,211
First Industrial Realty Trust, Inc. .... 3,080 84,507
Kilroy Realty Corp. .................... 2,669 65,057
TriNet Corporate Realty Trust, Inc. .... 3,191 88,351
---------------
$ 469,801
---------------
RESTAURANTS AND LODGING -- 2.2%
McDonald's Corp. ....................... 6,145 $ 253,865
Wendy's International, Inc. ............ 8,824 249,830
---------------
$ 503,695
---------------
SPECIAL PRODUCTS AND SERVICES -- 1.3%
Aquarion Co. ........................... 3,141 $ 109,150
USEC, Inc. ............................. 12,798 190,370
---------------
$ 299,520
---------------
STORES -- 0.7%
Dayton Hudson Corp. .................... 2,490 $ 161,850
---------------
SUPERMARKETS -- 0.7%
Albertsons, Inc. ....................... 1,319 $ 68,011
Kroger Co.* ............................ 3,596 100,463
---------------
$ 168,474
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
TELECOMMUNICATIONS -- 6.4%
Bell Atlantic Corp. .................... 4,835 $ 316,088
GTE Corp. .............................. 5,573 422,155
Motorola, Inc. ......................... 2,737 259,331
SBC Communications, Inc. ............... 4,072 236,176
Sprint Corp. ........................... 4,385 231,583
---------------
$ 1,465,333
---------------
UTILITIES -- ELECTRIC -- 10.1%
BEC Energy ............................. 4,730 $ 195,112
Carolina Power & Light Co. ............. 3,270 139,997
Ctg Resources, Inc. .................... 4,854 176,564
DQE, Inc. .............................. 3,496 140,277
Duke Energy Corp. ...................... 3,789 206,027
FirstEnergy Corp. ...................... 7,160 221,960
Florida Progress Corp. ................. 5,666 234,077
GPU, Inc. .............................. 5,131 216,464
Keyspan Corp. .......................... 6,066 159,991
Niagara Mohawk Holdings, Inc. .......... 8,500 136,531
NiSource, Inc. ......................... 2,076 53,587
Pinnacle West Capital Corp. ............ 5,193 209,018
Public Service Enterprise Group ........ 5,313 217,169
---------------
$ 2,306,774
---------------
UTILITIES -- GAS -- 12.4%
AGL Resources, Inc. .................... 7,604 $ 140,199
Berkshire Energy Resources ............. 5,406 121,635
Coastal Corp. .......................... 10,252 410,080
Colonial Gas Co. ....................... 4,676 173,012
Columbia Energy Group .................. 4,807 301,339
Connecticut Energy Group ............... 2,892 111,523
Consolidated Natural Gas Co. ........... 3,189 193,732
El Paso Energy Corp. ................... 4,509 158,660
Fall River Gas Co. ..................... 4,968 94,392
National Fuel Gas Co. .................. 5,150 249,775
NICOR, Inc. ............................ 6,037 229,783
Providence Energy Corp. ................ 5,479 146,221
Sonat, Inc. ............................ 3,407 112,857
Washington Gas Light Co. ............... 5,239 136,214
Wicor, Inc. ............................ 9,130 255,069
---------------
$ 2,834,491
---------------
Total U.S. Stocks ..................................... $ 19,075,381
---------------
FOREIGN STOCKS -- 8.5%
CANADA -- 1.1%
Canadian National Railway Co.
(Railroads) .......................... 3,587 $ 240,329
---------------
FRANCE -- 1.7%
Axa (Insurance) ........................ 2,006 $ 244,548
Pernod Ricard Co. (Beverages) .......... 2,086 139,725
---------------
$ 384,273
---------------
JAPAN -- 1.0%
Nippon Telephone & Telegraph Co.
(Utilities -- Telephone) ............. 20 $ 233,212
---------------
NETHERLANDS -- 1.8%
Akzo Nobel N.V. (Chemicals) ............ 3,679 $ 154,681
Royal Dutch Petroleum Co., ADR
(Oils) ............................... 4,259 256,605
---------------
$ 411,286
---------------
SWITZERLAND -- 1.0%
Nestle S.A. (Food and Beverage
Products) ............................ 130 $ 234,227
---------------
</TABLE>
11-EIS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
FOREIGN STOCKS -- continued
<S> <C> <C>
UNITED KINGDOM -- 1.9%
BP Amoco PLC, ADR (Oils) ............... 4,004 $ 434,434
--------------
Total Foreign Stocks ................................. $ 1,937,761
--------------
Total Stocks
(Identified Cost, $19,694,488) ..................... $ 21,013,142
--------------
CONVERTIBLE PREFERRED STOCKS -- 3.1%
CONSUMER GOODS AND SERVICES -- 0.5%
Newell Financial Trust I, 5.25% ........ 1,928 $ 108,088
Newell Financial Trust I, 5.25%## ...... 10 561
--------------
$ 108,649
--------------
CONTAINERS -- 0.2%
Owens Illinois, Inc., 4.75% ............ 980 $ 42,875
--------------
INSURANCE -- 0.4%
Lincoln National Corp., 7.75% .......... 3,606 $ 98,038
--------------
OILS -- 0.1%
Apache Corp., 6.5% ..................... 400 $ 14,616
--------------
TELECOMMUNICATIONS -- 0.6%
Qwest Trends Trust, 5.75%## ............ 716 $ 40,454
Winstar Communications, Inc. 7.25%## ... 100 98,125
--------------
$ 138,579
--------------
UTILITIES -- ELECTRIC -- 1.0%
Houston Industries, Inc., 7.00% ........ 854 $ 101,840
Texas Utilities Co., 9.25% ............. 2,418 132,990
--------------
$ 234,830
--------------
UTILITIES -- GAS -- 0.3%
El Paso Energy Capital Trust I,
4.75% ................................ 1,300 $ 64,350
--------------
Total Convertible Preferred Stocks
(Identified Cost, $688,634) ........................ $ 701,937
--------------
PREFERRED STOCKS -- 1.2%
U.S. STOCKS -- 0.7%
UTILITIES -- ELECTRIC -- 0.7%
Nisource, Inc., 7.75% .................. 3,159 $ 155,976
--------------
FOREIGN STOCKS -- 0.5%
CANADA -- 0.5%
Canadian National Railway Co.
(Railroads), 5.25% ................... 2,200 $ 117,700
--------------
Total Preferred Stocks
(Identified Cost, $269,161) ........................ $ 273,676
--------------
CONVERTIBLE BONDS -- 1.9%
<CAPTION>
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
Issuer (000 Omitted) Value
<S> <C> <C>
U.S. BONDS -- 1.2%
BUSINESS MACHINES -- 0.5%
Xerox Corp., 0s, 2018 .................. $ 128 $ 80,960
Xerox Corp., 0s, 2018## ................ 42 26,040
--------------
$ 107,000
--------------
FINANCIAL SERVICES -- 0.7%
Bell Atlantic Financial Services,
Inc., 4.25s, 2005## .................. $ 162 $ 165,645
--------------
Total U.S. Bonds ..................................... $ 272,645
--------------
FOREIGN BONDS -- 0.7%
SWITZERLAND -- 0.7%
Swiss Life Finance Ltd., 1.5s, 2003
(Finance) ............................ $ 119 $ 173,740
--------------
Total Convertible Bonds
(Identified Cost, $431,239) ........................ $ 446,385
--------------
SHORT-TERM OBLIGATIONS -- 2.2%
Federal Home Loan Bank, due 7/01/99, at
Amortized Cost ....................... $ 510 $ 510,000
--------------
OTHER SHORT-TERM
OBLIGATIONS -- 1.3%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$300,148) ............................ 300,148 $ 300,148
--------------
Total Investments
(Identified Cost, $21,893,670) ..................... $ 23,245,288
--------------
OTHER ASSETS,
LESS LIABILITIES -- (1.9)% (444,068)
--------------
Net Assets -- 100.0% ................................. $ 22,801,220
--------------
--------------
See portfolio footnotes and notes to financial statements
</TABLE>
12-EIS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
INTERNATIONAL GROWTH SERIES
STOCKS -- 96.6%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
FOREIGN STOCKS -- 90.8%
ARGENTINA -- 0.4%
Quilmes Industrial S.A., ADR
(Beverages) .......................... 15,200 $ 188,100
--------------
AUSTRALIA -- 2.1%
QBE Insurance Group Ltd.
(Insurance)* ......................... 233,602 $ 887,594
Seven Network Ltd. (Entertainment) ..... 1,224 3,583
--------------
$ 891,177
--------------
CANADA -- 2.1%
Canadian National Railway Co.
(Railroads) .......................... 13,400 $ 897,800
--------------
FINLAND -- 4.1%
Helsingin Puhelin Oyj
(Telecommunications) ................. 16,300 $ 772,669
Perlos Corp. (Electronics)* ............ 4,000 58,532
Pohjola Group Insurance Corp.
(Insurance) .......................... 8,060 413,215
Telephone Cooperative HPY
(Telecommunications) ................. 72 185,935
Tieto Corp. (Computer
Software -- Systems) ................. 7,600 316,405
--------------
$ 1,746,756
--------------
FRANCE -- 10.0%
Bouygues S.A. (Construction) ........... 800 $ 211,294
Castorama Dubois Investisse (Stores) ... 2,600 616,239
Pernod Ricard Co. (Beverages) .......... 9,300 622,937
Renault Regie Nationale
(Automobiles) ........................ 4,100 178,297
Television Francaise (Entertainment) ... 2,700 628,811
Total S.A., "B" (Oils)* ................ 8,900 1,147,348
Union des Assurances Federales S.A.
(Insurance) .......................... 5,900 699,194
Wavecom S.A. ADR (Electronics) ......... 14,500 190,313
--------------
$ 4,294,433
--------------
GERMANY -- 7.6%
Henkel KGaA, Preferred (Chemicals) ..... 9,700 $ 661,725
HypoVereinsbank (Banks and Credit
Cos.) ................................ 7,200 467,435
Mannesmann AG (Conglomerate) ........... 9,200 1,374,687
VEBA AG (Oil and Gas) .................. 5,900 346,557
Wella AG (Consumer Goods and
Services) ............................ 560 406,841
--------------
$ 3,257,245
--------------
GREECE -- 2.1%
Antenna TV S.A., ADR (Broadcasting)* ... 22,900 $ 314,875
Hellenic Telecommunication Organization
S.A., GDR (Telecommunications) ....... 24,944 534,124
STET Hellas Telecommunications S.A., ADR
(Telecommunications)* ................ 1,700 38,038
--------------
$ 887,037
--------------
IRELAND -- 3.2%
Allied Irish Bank PLC (Banks and Credit
Cos.) ................................ 36,300 $ 480,554
Anglo Irish Bank PLC (Banks and Credit
Cos.)* ............................... 355,262 884,630
--------------
$ 1,365,184
--------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
FOREIGN STOCKS -- continued
ITALY -- 5.0%
Banca Carige S.p.A. (Banks and Credit
Cos.) ................................ 49,000 $ 429,203
ERG S.p.A. (Oils) ...................... 97,000 289,878
Mediaset S.p.A. (Entertainment) ........ 60,000 532,975
Telecom Italia Mobile S.p.A.
(Telecommunications) ................. 88,000 525,060
Telecom Italia Mobile S.p.A., Saving
Shares (Telecommunications)* ......... 106,300 391,065
--------------
$ 2,168,181
--------------
JAPAN -- 16.2%
Canon, Inc. (Special Products and
Services) ............................ 27,000 $ 777,043
Chugai Pharmaceutical Co., Ltd.
(Pharmaceuticals) .................... 86,000 927,423
Chukyo Coca-Cola Bottling Co., Ltd.
(Food and Beverage Products) ......... 17,000 238,720
Fuji Heavy Industries, Ltd.
(Automotive) ......................... 18,000 139,034
Fujitsu Ltd. (Computer
Hardware -- Systems) ................. 24,000 483,295
Hitachi Ltd. (Electronics) ............. 70,000 657,046
Kita Kyushu Coca-Cola Bottling Co., Ltd.
(Food and Beverage Products) ......... 4,000 227,588
Mikuni Coca-Cola Bottling Co., Ltd.
(Food and Beverage Products) ......... 28,000 569,633
Mitsubishi Motor (Automotive) .......... 21,000 108,890
NTT Mobile Communications Network, Inc.
(Telecommunications) ................. 21 284,816
NTT Mobile Communications Network, Inc.
(Telecommunications)* ................ 84 1,125,372
Olympus Optical Co. (Conglomerate) ..... 37,900 560,727
Sanyo Coca-Cola Bottling Co., Ltd. (Food
and Beverage Products) ............... 9,000 278,568
Takeda Chemical Industries Co.
(Pharmaceuticals) .................... 12,000 556,732
--------------
$ 6,934,887
--------------
NETHERLANDS -- 7.8%
Akzo Nobel N.V. (Chemicals) ............ 12,800 $ 538,168
Benckiser N.V., "B" (Consumer Goods and
Services) ............................ 28,369 1,512,872
Equant N.V. (Computer
Software -- Services)* ............... 2,600 244,725
IHC Caland N.V. (Marine Equipment)* .... 4,059 158,947
ING Groep N.V. (Financial Services)* ... 16,786 908,143
--------------
$ 3,362,855
--------------
NORWAY -- 2.3%
Sparebanken NOR (Banks and Credit
Cos.) ................................ 28,300 $ 528,066
Storebrand ASA (Insurance) ............. 66,500 447,385
--------------
$ 975,451
--------------
PORTUGAL -- 2.3%
Banco Pinto & Sotto Mayor S.A. (Banks
and Credit Cos.) ..................... 39,524 $ 701,362
</TABLE>
13-IGS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
FOREIGN STOCKS -- continued
<S> <C> <C>
PORTUGAL -- continued
Telecel -- Comunicacoes Pessoais S.A.
(Telecommunications) ................. 2,100 $ 270,506
--------------
$ 971,868
--------------
SINGAPORE -- 0.5%
Development Bank of Singapore Ltd.
(Banks and Credit Cos.) .............. 18,000 $ 220,041
--------------
SWEDEN -- 5.2%
Ericsson LM, "B"
(Telecommunications) ................. 34,500 $ 1,108,115
Saab AB, "B" (Aerospace) ............... 144,700 1,125,672
--------------
$ 2,233,787
--------------
SWITZERLAND -- 4.4%
Barry Callebaut AG (Food and Beverage
Products) ............................ 2,325 $ 355,944
Novartis AG (Medical and Health
Products) ............................ 200 292,036
UBS AG (Banks and Credit Cos.)* ........ 4,150 1,238,647
--------------
$ 1,886,627
--------------
UNITED KINGDOM -- 15.5%
AstraZeneca Group PLC (Medical and
Health Products) ..................... 22,897 $ 893,318
BP Amoco PLC (Oils)* ................... 46,740 836,803
British Aerospace PLC (Aerospace and
Defense)* ............................ 164,284 1,069,304
Cable & Wireless Communications PLC
(Telecommunications) ................. 159,500 1,533,368
Capital Radio PLC (Broadcasting) ....... 11,200 148,182
Next PLC (Stores) ...................... 76,000 922,275
Orange PLC (Telecommunications) ........ 20,200 296,385
TeleWest Communications PLC
(Entertainment)* ..................... 114,000 510,695
Tomkins PLC (Conglomerate) ............. 97,000 420,398
--------------
$ 6,630,728
--------------
Total Foreign Stocks ................................. $ 38,912,157
--------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 5.8%
CONSUMER GOODS AND SERVICES -- 4.4%
Galileo International, Inc. ............ 35,400 $ 1,891,687
--------------
INTERNET
Ask Jeeves, Inc.* ...................... 50 $ 700
--------------
TELECOMMUNICATIONS -- 0.1%
Global TeleSystems Group, Inc.* ........ 600 $ 48,600
--------------
UTILITIES -- TELEPHONE -- 1.3%
Frontier Corp. ......................... 9,200 $ 542,800
--------------
Total U.S. Stocks .................................... $ 2,483,787
--------------
Total Stocks
(Identified Cost, $38,283,022) ..................... $ 41,395,944
--------------
RIGHTS
FRANCE
Bouygues S.A. (Construction) (Identified
Cost, $2,573) ........................ 800 $ 2,127
--------------
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
SHORT-TERM OBLIGATIONS -- 4.7%
Federal Home Loan Bank, due 7/01/99, at
Amortized Cost ....................... $ 2,000 $ 2,000,000
--------------
Total Investments
(Identified Cost, $40,285,595 ) .................... $ 43,398,071
--------------
OTHER ASSETS,
LESS LIABILITIES -- (1.3)% (541,222)
--------------
Net Assets -- 100.0% ................................. $ 42,856,849
--------------
--------------
See portfolio footnotes and notes to financial statements
</TABLE>
14-IGS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES
STOCKS -- 89.5%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 84.7%
ADVERTISING -- 1.4%
Interpublic Group of Cos, Inc. ......... 18,900 $ 1,637,213
Young & Rubicam, Inc. .................. 44,122 2,004,793
---------------
$ 3,642,006
---------------
AEROSPACE -- 1.9%
Allied Signal, Inc. .................... 34,000 $ 2,142,000
Gulfstream Aerospace Corp.* ............ 18,070 1,220,854
Raytheon Co., "A" ...................... 19,900 1,370,613
---------------
$ 4,733,467
---------------
BANKS AND CREDIT COMPANIES -- 1.0%
Bank of New York Co., Inc. ............. 23,500 $ 862,156
US Bancorp ............................. 27 918
Wells Fargo Co. ........................ 41,871 1,789,985
---------------
$ 2,653,059
---------------
BROADCASTING -- 1.2%
Infinity Broadcasting Corp.* ........... 103,900 $ 3,091,025
---------------
BUSINESS MACHINES -- 3.5%
Affiliated Computer Services, Inc.,
"A"* ................................. 36,835 $ 1,864,772
Texas Instruments, Inc. ................ 28,601 4,147,145
Xerox Corp. ............................ 49,100 2,899,969
---------------
$ 8,911,886
---------------
BUSINESS SERVICES -- 3.1%
Computer Sciences Corp.* ............... 27,538 $ 1,905,285
Concord EFS, Inc.* ..................... 18,000 761,625
DST Systems, Inc.* ..................... 23,612 1,484,605
First Data Corp. ....................... 74,900 3,665,419
---------------
$ 7,816,934
---------------
COMPUTER SOFTWARE -- PERSONAL
COMPUTERS -- 4.3%
Microsoft Corp.* ....................... 121,792 $ 10,984,116
---------------
COMPUTER SOFTWARE -- SERVICES -- 1.6%
EMC Corp.* ............................. 28,278 $ 1,555,290
Sun Microsystems, Inc.* ................ 36,338 2,502,780
---------------
$ 4,058,070
---------------
COMPUTER SOFTWARE -- SYSTEMS -- 4.9%
Ariba, Inc.* ........................... 500 $ 48,625
BMC Software, Inc.* .................... 71,588 3,865,752
Cadence Design Systems, Inc.* .......... 60,434 770,534
Computer Associates
International, Inc. .................. 26,700 1,468,500
Compuware Corp.* ....................... 97,640 3,106,172
Oracle Corp.* .......................... 60,200 2,234,925
SunGard Data Systems, Inc.* ............ 25,567 882,061
---------------
$ 12,376,569
---------------
CONGLOMERATES -- 0.4%
Kansas City Southern Industries,
Inc. ................................. 17,700 $ 1,129,481
---------------
CONSUMER GOODS AND SERVICES -- 6.2%
Clorox Co. ............................. 2,500 $ 267,031
Colgate-Palmolive Co. .................. 5,100 503,625
Dial Corp. ............................. 6,497 241,607
Galileo International, Inc. ............ 43,003 2,297,973
Gillette Co. ........................... 10,100 414,100
Newell Rubbermaid, Inc. ................ 42,100 1,957,650
Tyco International Ltd. ................ 105,954 10,039,142
---------------
$ 15,721,128
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
CONTAINERS -- 0.5%
Sealed Air Corp.* ...................... 20,800 $ 1,349,400
---------------
ELECTRICAL EQUIPMENT -- 1.6%
Emerson Electric Co. ................... 12,900 $ 811,088
General Electric Co. ................... 18,300 2,067,900
Honeywell, Inc. ........................ 9,700 1,123,987
---------------
$ 4,002,975
---------------
ELECTRONICS -- 4.6%
Altera Corp.* .......................... 25,396 $ 934,890
Analog Devices, Inc.* .................. 62,700 3,146,756
Applied Materials, Inc.* ............... 29,100 2,149,763
Atmel Corp.* ........................... 63,400 1,660,288
Globespan Semiconductor, Inc.* ......... 200 7,950
LSI Logic Corp.* ....................... 55,100 2,541,487
Teradyne, Inc.* ........................ 15,900 1,140,825
---------------
$ 11,581,959
---------------
ENTERTAINMENT -- 5.9%
CBS Corp.* ............................. 31,288 $ 1,359,072
Clear Channel
Communications, Inc.* ................ 13,096 902,806
Cox Radio, Inc., "A"* .................. 932 50,561
Fox Entertainment Group, Inc.* ......... 48 1,293
Gemstar International Group Ltd.* ...... 2,770 180,743
Harrah's Entertainment, Inc.* .......... 44,302 974,644
MediaOne Group, Inc.* .................. 30,175 2,244,266
Time Warner, Inc. ...................... 112,007 8,232,514
Univision Communications, Inc., "A"* ... 15,394 1,016,004
---------------
$ 14,961,903
---------------
FINANCIAL INSTITUTIONS -- 4.1%
American Express Co. ................... 16,775 $ 2,182,847
Associates First Capital Corp., "A" .... 52,294 2,317,278
Citigroup, Inc. ........................ 72,000 3,420,000
Morgan Stanley Dean Witter & Co. ....... 16,500 1,691,250
Providian Financial Corp. .............. 9,600 897,600
---------------
$ 10,508,975
---------------
FOOD AND BEVERAGE PRODUCTS -- 1.0%
Anheuser-Busch Cos., Inc. .............. 17,447 $ 1,237,647
Nabisco Holdings Corp., "A" ............ 28,800 1,245,600
---------------
$ 2,483,247
---------------
INSURANCE -- 2.8%
Allstate Corp. ......................... 43 $ 1,543
American International Group, Inc. ..... 28,958 3,389,896
Aon Corp. .............................. 18,700 771,375
CIGNA Corp. ............................ 27,100 2,411,900
Lincoln National Corp. ................. 11,362 594,374
---------------
$ 7,169,088
---------------
INTERNET
Ask Jeeves, Inc.* ...................... 200 $ 2,800
---------------
MANUFACTURING -- 0.9%
Danaher Corp. .......................... 19,000 $ 1,104,375
Illinois Tool Works, Inc. .............. 15,200 1,246,400
---------------
$ 2,350,775
---------------
MEDICAL AND HEALTH PRODUCTS -- 3.9%
American Home Products Corp. ........... 55,607 $ 3,197,402
Bausch & Lomb, Inc. .................... 17,100 1,308,150
Becton, Dickinson & Co. ................ 18,200 546,000
Bristol-Myers Squibb Co. ............... 48,126 3,389,875
</TABLE>
15-MIG
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
U.S. STOCKS -- continued
<S> <C> <C>
MEDICAL AND HEALTH PRODUCTS -- continued
Pharmacia & Upjohn, Inc. ............... 23,900 $ 1,357,819
---------------
$ 9,799,246
---------------
MEDICAL AND HEALTH TECHNOLOGY AND SERVICES -- 3.9%
Cardinal Health, Inc. .................. 32,700 $ 2,096,887
Guidant Corp. .......................... 31,400 1,615,138
HEALTHSOUTH Corp.* ..................... 93,601 1,398,165
Medtronic, Inc. ........................ 25,300 1,970,238
United Healthcare Corp. ................ 46,178 2,891,897
---------------
$ 9,972,325
---------------
OIL SERVICES -- 0.4%
Burlington Resources, Inc. ............. 12,000 $ 519,000
Schlumberger Ltd. ...................... 6,100 388,494
---------------
$ 907,494
---------------
OILS -- 0.8%
Apache Corp. ........................... 30,600 $ 1,193,400
Exxon Corp. ............................ 34 2,622
Mobil Corp. ............................ 7,522 744,678
---------------
$ 1,940,700
---------------
POLLUTION CONTROL -- 0.8%
Republic Services, Inc.* ............... 77,500 $ 1,918,125
---------------
RESTAURANTS AND LODGING -- 1.7%
Cendant Corp.* ......................... 32,499 $ 666,229
McDonald's Corp. ....................... 61,076 2,523,202
Wendy's International, Inc. ............ 38,300 1,084,369
---------------
$ 4,273,800
---------------
SPECIAL PRODUCTS AND SERVICES -- 1.3%
Carnival Corp. ......................... 29,600 $ 1,435,600
Royal Caribbean Cruises Ltd. ........... 39,700 1,736,875
---------------
$ 3,172,475
---------------
STORES -- 6.4%
CVS Corp. .............................. 87,993 $ 4,465,644
Dayton Hudson Corp. .................... 10,900 708,500
Lowe's Cos., Inc. ...................... 41,300 2,341,194
Office Depot, Inc.* .................... 74,628 1,646,480
Rite Aid Corp. ......................... 88,582 2,181,332
TJX Cos., Inc. ......................... 76,259 2,540,378
Wal-Mart Stores, Inc. .................. 50,668 2,444,731
---------------
$ 16,328,259
---------------
SUPERMARKETS -- 1.6%
Kroger Co.* ............................ 104,792 $ 2,927,626
Safeway, Inc.* ......................... 20,600 1,019,700
---------------
$ 3,947,326
---------------
TELECOMMUNICATIONS -- 11.0%
AT&T Corp.* ............................ 60,100 $ 2,208,675
CenturyTel, Inc. ....................... 6,315 251,021
Cisco Systems, Inc.* ................... 70,112 4,517,842
Global TeleSystems Group, Inc.* ........ 12,600 1,020,600
Lucent Technologies, Inc. .............. 26,348 1,776,843
MCI WorldCom, Inc.* .................... 82,234 7,077,264
Motorola, Inc. ......................... 39,101 3,704,820
NEXTEL Communications, Inc.* ........... 16,700 838,131
Nortel Networks Corp. .................. 19,600 1,701,525
NTL, Inc.* ............................. 1,266 109,113
Sprint Corp. (PCS Group) ............... 41,020 2,343,267
Tellabs, Inc.* ......................... 30,904 2,087,952
Viatel, Inc.* .......................... 2,400 134,700
---------------
$ 27,771,753
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
UTILITIES -- ELECTRIC -- 1.0%
AES Corp.* ............................. 43,500 $ 2,528,438
---------------
UTILITIES -- GAS -- 0.2%
Williams Cos., Inc. .................... 9,900 $ 421,369
---------------
UTILITIES -- TELEPHONE -- 0.8%
Frontier Corp. ......................... 36,500 $ 2,153,500
---------------
Total U.S. Stocks .................................... $ 214,663,673
---------------
FOREIGN STOCKS -- 4.8%
FINLAND -- 0.8%
Nokia Corp., ADR
(Telecommunications) ................. 22,200 $ 2,032,687
---------------
GERMANY -- 0.9%
Mannesmann AG (Conglomerate) ........... 15,133 $ 2,261,210
---------------
IRELAND -- 0.3%
Elan Corp. PLC, ADR (Health
Products)* ........................... 23,600 $ 654,900
---------------
NETHERLANDS -- 0.1%
Equant N.V. (Computer
Software -- Services)* ............... 2,900 $ 272,963
---------------
SWEDEN -- 0.7%
Ericsson LM, ADR
(Telecommunications) ................. 56,200 $ 1,851,088
---------------
UNITED KINGDOM -- 2.0%
BP Amoco PLC, ADR (Oils) ............... 24,851 $ 2,696,333
Vodafone Group PLC
(Telecommunications) ................. 12,054 2,374,638
---------------
$ 5,070,971
---------------
Total Foreign Stocks ................................. $ 12,143,819
---------------
Total Stocks
(Identified Cost, $206,631,375) .................... $ 226,807,492
---------------
SHORT-TERM OBLIGATIONS -- 9.2%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Caterpillar Financial Services, due
7/19/99 .............................. $ 5,000 $ 4,988,025
Federal Home Loan Bank, due 7/01/99 .... 3,335 3,335,000
Merrill Lynch & Co., Inc., due
7/22/99 .............................. 8,000 7,977,647
Morgan (J.P.) & Co., Inc., due
8/10/99 .............................. 7,000 6,961,422
---------------
Total Short-Term Obligations, at Amortized Cost ...... $ 23,262,094
---------------
OTHER SHORT-TERM
OBLIGATIONS -- 14.6%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$37,085,678) ......................... 37,085,678 $ 37,085,678
---------------
Total Investments
(Identified Cost, $266,979,147) .................... $ 287,155,264
---------------
OTHER ASSETS,
LESS LIABILITIES -- (13.3)% (33,712,405)
---------------
Net Assets -- 100.0% ................................. $ 253,442,859
---------------
---------------
See portfolio footnotes and notes to financial statements
</TABLE>
16-MIG
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
NEW DISCOVERY SERIES
STOCKS -- 95.5%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 94.2%
ADVERTISING -- 0.6%
TMP Worldwide, Inc.* ................... 2,639 $ 167,577
------------
AIRLINES -- 0.8%
Atlas Air, Inc.* ....................... 5,243 $ 169,087
Skywest, Inc. .......................... 2,044 50,972
------------
$ 220,059
------------
AUTO PARTS -- 0.7%
Brooks Automation, Inc.* ............... 6,559 $ 177,503
------------
BUSINESS MACHINES -- 2.7%
Affiliated Computer Services, Inc.,
"A"* ................................. 8,830 $ 447,019
Kulicke & Soffa Industries, Inc.* ...... 9,481 254,209
------------
$ 701,228
------------
BUSINESS SERVICES -- 16.5%
BISYS Group, Inc.* ..................... 8,222 $ 480,987
Bright Horizons Family Solutions,
Inc.* ................................ 3,097 58,456
Catalina Marketing Corp.* .............. 1,114 102,488
Ceridian Corp.* ........................ 3,765 123,068
Complete Business Solutions, Inc.* ..... 11,659 209,133
Concord EFS, Inc.* ..................... 1,800 76,163
Dendrite International, Inc.* .......... 6,301 227,624
Diamond Technology Partners, Inc.,
"A"* ................................. 4,813 107,691
DST Systems, Inc.* ..................... 7,061 443,960
IMRglobal Corp.* ....................... 11,068 213,059
ITT Educational Services, Inc.* ........ 5,814 151,527
Learning Tree International, Inc.* ..... 13,800 150,937
Memberworks, Inc.* ..................... 1,846 53,534
Meta Group, Inc.* ...................... 7,534 115,835
Modis Professional Services, Inc.* ..... 6,728 92,510
Nextera Enterprises, Inc.* ............. 14,875 95,758
NOVA Corp.* ............................ 16,217 405,425
Paymentech, Inc.* ...................... 11,836 300,338
Professional Detailing, Inc.* .......... 1,785 41,948
Quintiles Transnational Corp.* ......... 10,429 438,018
Renaissance Worldwide, Inc.* ........... 10,158 80,947
Romac International, Inc.* ............. 10,220 90,703
Technology Solutions Co.* .............. 20,434 220,943
Teletech Holdings, Inc.* ............... 4,368 44,226
------------
$ 4,325,278
------------
COMPUTER SOFTWARE -- PERSONAL
COMPUTERS -- 0.7%
Apex PC Solutions, Inc.* ............... 5,091 $ 104,366
Intuit, Inc.* .......................... 945 85,168
------------
$ 189,534
------------
COMPUTER SOFTWARE -- SERVICES -- 1.1%
Hyperion Solutions Corp.* .............. 9,244 $ 164,659
Tier Technologies, Inc.* ............... 16,184 113,288
------------
$ 277,947
------------
COMPUTER SOFTWARE -- SYSTEMS -- 13.2%
Aspen Technology, Inc.* ................ 15,153 $ 178,048
AVT Corp.* ............................. 2,760 104,535
Black Box Corp.* ....................... 2,741 137,393
Cadence Design Systems, Inc.* .......... 4,537 57,847
Checkfree Holdings Corp.* .............. 1,599 44,072
Clarify, Inc.* ......................... 3,326 137,197
Dialogic Corp.* ........................ 1,534 67,304
Eclipsys Corp.* ........................ 5,341 127,850
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
COMPUTER SOFTWARE -- SYSTEMS -- continued
Edify Corp.* ........................... 2,800 $ 37,450
Etec Systems, Inc.* .................... 5,511 183,241
Exchange Applications Software* ........ 5,729 233,457
Fair, Isaac & Co., Inc. ................ 999 35,027
Harbinger Corp.* ....................... 7,167 89,588
JDA Software Group, Inc.* .............. 6,233 58,045
Keane, Inc. ............................ 400 9,050
Peerless Systems Corp.* ................ 5,423 56,942
Redback Networks, Inc.* ................ 50 6,278
Security Dynamics
Technologies, Inc.* .................. 23,250 494,062
Sterling Software, Inc.* ............... 4,423 118,039
Summit Design, Inc.* ................... 11,513 34,539
SunGard Data Systems, Inc.* ............ 7,646 263,787
Synopsys, Inc.* ........................ 5,849 322,792
Transaction System Architects, Inc.,
"A"* ................................. 8,893 346,827
Vantive Corp.* ......................... 16,985 194,266
Wind River Systems, Inc.* .............. 7,271 116,790
------------
$ 3,454,426
------------
CONGLOMERATES -- 0.8%
Sodexho Marriott Services, Inc.* ....... 6,973 $ 133,795
Valley Media, Inc.* .................... 5,480 81,515
------------
$ 215,310
------------
CONSUMER GOODS AND SERVICES -- 3.5%
Blyth Industries, Inc.* ................ 3,808 $ 130,900
Galileo International, Inc. ............ 5,476 292,624
InfoUSA, Inc., "A"* .................... 7,315 64,921
InfoUSA, Inc., "B"* .................... 3,757 31,934
LoJack Corp.* .......................... 9,468 79,294
Sportsline USA, Inc.* .................. 8,713 312,579
------------
$ 912,252
------------
CONTAINERS -- 0.4%
Ivex Packaging Corp.* .................. 4,839 $ 106,458
------------
ELECTRICAL EQUIPMENT -- 0.6%
Barnett, Inc.* ......................... 3,371 $ 25,283
QLogic Corp.* .......................... 1,000 132,000
------------
$ 157,283
------------
ELECTRONICS -- 7.1%
Analog Devices, Inc.* .................. 5,275 $ 264,739
Applied Micro Circuits Corp.* .......... 1,795 147,639
Burr-Brown Corp.* ...................... 8,034 294,245
Cable Design Technologies Corp.* ....... 7,191 111,011
Credence Systems Corp.* ................ 2,844 105,584
DuPont Photomasks, Inc.* ............... 1,436 68,749
GaSonics International Corp.* .......... 8,993 125,902
GlobeSpan, Inc.* ....................... 50 1,988
Lattice Semiconductor Corp.* ........... 3,007 187,186
LTX Corp.* ............................. 900 11,981
MKS Instruments, Inc.* ................. 8,386 156,189
Photronics, Inc.* ...................... 5,245 128,502
PMC-Sierra, Inc.* ...................... 2,303 135,733
SIPEX Corp.* ........................... 6,121 125,480
------------
$ 1,864,928
------------
ENTERTAINMENT -- 4.6%
Emmis Broadcasting Corp., "A"* ......... 700 $ 34,563
Gemstar International Group Ltd.* ...... 15,252 995,193
Young Broadcasting, Inc., "A"* ......... 4,200 178,762
------------
$ 1,208,518
------------
</TABLE>
17-NDS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
U.S. STOCKS -- continued
<S> <C> <C>
FINANCIAL INSTITUTIONS -- 1.5%
Conning Corp. .......................... 1,864 $ 30,290
Federated Investors, Inc., "A" ......... 6,461 115,894
Financial Federal Corp.* ............... 3,911 86,042
Waddell & Reed Financial, Inc., "A" .... 5,885 161,470
------------
$ 393,696
------------
FOOD AND BEVERAGE PRODUCTS -- 0.5%
Del Monte Foods Co.* ................... 7,067 $ 118,372
------------
INSURANCE -- 0.7%
Annuity & Life Re Holdings Ltd. ........ 2,052 $ 46,042
Executive Risk, Inc. ................... 1,114 94,760
Inspire Insurance Solutions, Inc.* ..... 3,500 50,750
------------
$ 191,552
------------
INTERNET -- 0.1%
Ask Jeeves, Inc.* ...................... 50 $ 700
Security First Tech Corp.* ............. 400 18,050
Software.com, Inc.* .................... 50 1,159
------------
$ 19,909
------------
MACHINERY -- 0.7%
Applied Science and Technology,
Inc.* ................................ 3,810 $ 85,725
Asyst Technologies, Inc.* .............. 3,293 98,584
------------
$ 184,309
------------
MEDICAL AND HEALTH PRODUCTS -- 1.2%
Genzyme Corp. .......................... 4,900 $ 21,591
Haemonetics Corp.* ..................... 8,917 178,897
PSS World Medical, Inc.* ............... 9,655 108,015
------------
$ 308,503
------------
MEDICAL AND HEALTH TECHNOLOGY AND SERVICES -- 13.8%
Concentra Managed Care, Inc.* .......... 8,664 $ 128,336
Cytyc Corp.* ........................... 3,328 64,896
Henry Schein, Inc.* .................... 2,084 66,037
Hologic, Inc.* ......................... 5,685 31,978
IDEXX Laboratories, Inc.* .............. 26,586 619,786
IDX Systems Corp.* ..................... 12,036 271,562
Impath, Inc.* .......................... 7,142 192,834
LifePoint Hospitals, Inc.* ............. 14,855 199,614
Martek Biosciences Corp.* .............. 5,538 47,073
MEDE AMERICA Corp.* .................... 1,103 41,638
MedPartners, Inc.* ..................... 63,167 477,700
Mid Atlantic Medical Services, Inc.* ... 12,355 122,006
NCS Healthcare, Inc., "A"* ............. 7,674 41,727
Orthodontic Centers of America,
Inc.* ................................ 6,841 96,629
Osteotech, Inc. ........................ 800 23,000
Parexel International Corp.* ........... 13,807 183,806
Pediatrix Medical Group, Inc.* ......... 3,110 66,088
Quorum Health Group, Inc.* ............. 7,326 92,033
Steris Corp.* .......................... 4,323 83,758
Superior Consultant Holdings Corp.* .... 2,322 57,324
Total Renal Care Holdings, Inc.* ....... 36,405 566,553
Ventana Medical Systems, Inc.* ......... 4,794 91,685
Virgin Islands Technologies, Inc.* ..... 9,957 49,785
------------
$ 3,615,848
------------
OIL SERVICES -- 3.3%
Cooper Cameron Corp.* .................. 4,448 $ 164,854
Dril-Quip, Inc.* ....................... 1,528 35,049
Global Industries, Inc.* ............... 16,868 216,121
Input/Output, Inc. * ................... 17,419 131,731
National Oilwell, Inc.* ................ 5,572 78,008
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
OIL SERVICES -- continued
Noble Drilling Corp.* .................. 8,404 $ 165,454
Weatherford International, Inc.* ....... 1,623 59,442
------------
$ 850,659
------------
OILS -- 0.5%
Newfield Exploration Co.* .............. 5,036 $ 143,211
------------
PHARMACEUTICALS -- 0.2%
Boron, LePore & Associates, Inc.* ...... 7,006 $ 58,675
------------
POLLUTION CONTROL -- 0.3%
Superior Services, Inc.* ............... 3,372 $ 89,990
------------
PRINTING AND PUBLISHING -- 1.9%
Harte-Hanks Communications, Inc. ....... 3,676 $ 99,711
Scholastic Corp.* ...................... 7,870 398,419
------------
$ 498,130
------------
REAL ESTATE INVESTMENT TRUSTS -- 0.5%
Kilroy Realty Corp. .................... 2,297 $ 55,989
MeriStar Hospitality Corp. ............. 2,859 64,149
------------
$ 120,138
------------
RESTAURANTS AND LODGING -- 2.7%
Buffets, Inc.* ......................... 14,905 $ 171,407
Coldwater Creek, Inc.* ................. 8,100 157,950
Four Seasons Hotels, Inc. .............. 2,059 90,725
Landry's Seafood Restaurants, Inc.* .... 6,740 53,920
Mortons Restaurant Group, Inc.* ........ 2,429 46,303
Papa John's International, Inc.* ....... 1,446 64,618
Sonic Corp.* ........................... 3,661 119,440
------------
$ 704,363
------------
SPECIAL PRODUCTS AND SERVICES -- 1.1%
Caliber Learning Network, Inc.* ........ 5,974 $ 28,377
Edutrek International, Inc., "A"* ...... 4,253 20,202
Verisign, Inc.* ........................ 1,314 113,332
Watsco, Inc. ........................... 7,220 118,227
------------
$ 280,138
------------
STORES -- 4.1%
BJ's Wholesale Club, Inc.* ............. 4,393 $ 132,065
Copart, Inc.* .......................... 8,044 170,935
CSK Auto Corp.* ........................ 5,272 142,344
Gymboree Corp.* ........................ 9,753 102,406
Micro Warehouse, Inc.* ................. 6,991 124,964
Petco Animal Supplies, Inc.* ........... 9,896 155,862
Pier 1 Imports, Inc. ................... 6,763 76,084
Regis Corp. ............................ 8,247 158,239
------------
$ 1,062,899
------------
TELECOMMUNICATIONS -- 7.4%
Adelphia Communications Corp. "A"* ..... 1,643 $ 104,536
American Tower Corp., "A"* ............. 3,528 84,672
Aspect Telecommunications Corp.* ....... 9,313 90,802
Copper Mountain Networks, Inc.* ........ 20 1,545
DSP Communications, Inc.* .............. 4,500 129,938
Intermedia Communications, Inc.* ....... 20,273 608,190
International Telecommunication Data
Systems, Inc.* ....................... 8,756 140,096
Lightbridge, Inc.* ..................... 3,696 46,431
Nextlink Communications, Inc., "A"* .... 2,353 175,004
Pinnicle Holdings, Inc.* ............... 7,816 191,492
Proxim, Inc.* .......................... 3,184 184,672
Transaction Network Services, Inc.* .... 6,210 181,642
------------
$ 1,939,020
------------
</TABLE>
18-NDS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
TRANSPORTATION -- 0.4%
Coach USA, Inc.* ....................... 2,655 $ 111,344
---------------
Total U.S. Stocks .................................... $ 24,669,057
---------------
FOREIGN STOCKS -- 1.3%
UNITED KINGDOM -- 1.3%
CBT Group PLC, ADR (Computer Software --
Personal Computers)* ................. 20,464 $ 337,656
---------------
Total Stocks
(Identified Cost, $21,246,326) ..................... $ 25,006,713
---------------
CONVERTIBLE PREFERRED STOCKS -- 0.1%
MEDICAL AND HEALTH TECHNOLOGY AND SERVICES -- 0.1%
Concentra Managed Care, Inc., 4.50%
(Identified Cost, $15,767) ........... 24,000 $ 22,560
---------------
SHORT-TERM OBLIGATIONS -- 4.6%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Federal Home Loan Bank, due 7/01/99, at
Amortized Cost ....................... $ 1,200 $ 1,200,000
---------------
OTHER SHORT-TERM
OBLIGATIONS -- 14.7%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$3,853,203) .......................... 3,853,203 $ 3,853,203
---------------
Total Investments
(Identified Cost, $26,315,296) ..................... $ 30,082,476
---------------
OTHER ASSETS,
LESS LIABILITIES -- (14.9)% (3,904,431)
---------------
Net Assets -- 100.0% ................................. $ 26,178,045
---------------
---------------
See portfolio footnotes and notes to financial statements
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
RESEARCH GROWTH AND INCOME SERIES
STOCKS -- 96.5%
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- 91.8%
AEROSPACE -- 2.8%
United Technologies Corp. .............. 25,730 $ 1,844,519
---------------
AUTOMOTIVE -- 0.4%
Delphi Automotive Systems Corp. ........ 16,000 $ 297,000
---------------
BANKS AND CREDIT COMPANIES -- 6.7%
Bank America Corp. ..................... 5,000 $ 366,563
Bank of New York Co., Inc. ............. 16,500 605,344
BankBoston Corp. ....................... 15,500 792,437
Capital One Financial Corp. ............ 8,400 467,775
Chase Manhattan Corp. .................. 4,660 403,673
PNC Bank Corp. ......................... 12,700 731,837
US Bancorp ............................. 7,100 241,400
Wells Fargo Co. ........................ 20,600 880,650
---------------
$ 4,489,679
---------------
BUSINESS MACHINES -- 2.0%
Xerox Corp. ............................ 22,200 $ 1,311,187
---------------
CHEMICALS -- 0.9%
E.I. du Pont de Nemours & Co., Inc. .... 8,800 $ 601,150
---------------
COMPUTER SOFTWARE -- PERSONAL
COMPUTERS -- 5.0%
Microsoft Corp.* ....................... 36,780 $ 3,317,096
---------------
COMPUTER SOFTWARE -- SERVICES -- 1.7%
EMC Corp.* ............................. 8,900 $ 489,500
Sun Microsystems, Inc.* ................ 9,420 648,803
---------------
$ 1,138,303
---------------
COMPUTER SOFTWARE -- SYSTEMS -- 0.8%
Computer Associates International,
Inc. ................................. 3,200 $ 176,000
Oracle Corp.* .......................... 9,260 343,778
---------------
$ 519,778
---------------
CONSUMER GOODS AND SERVICES -- 10.7%
Clorox Co. ............................. 5,725 $ 611,502
Colgate-Palmolive Co. .................. 4,250 419,688
Dial Corp. ............................. 17,500 650,781
Fortune Brands, Inc. ................... 18,500 765,437
Galileo International, Inc. ............ 14,800 790,875
Gillette Co. ........................... 13,300 545,300
Newell Rubbermaid, Inc. ................ 13,800 641,700
Procter & Gamble Co. ................... 9,940 887,145
Tyco International Ltd. ................ 18,900 1,790,775
---------------
$ 7,103,203
---------------
ELECTRICAL EQUIPMENT -- 1.3%
Emerson Electric Co. ................... 13,600 $ 855,100
---------------
ELECTRONICS -- 1.9%
Intel Corp. ............................ 20,900 $ 1,243,550
---------------
ENTERTAINMENT -- 1.3%
Disney (Walt) Co. ...................... 27,600 $ 850,425
---------------
FINANCIAL INSTITUTIONS -- 2.9%
Associates First Capital Corp., "A" .... 21,400 $ 948,287
Citigroup, Inc. ........................ 20,200 959,500
Goldman Sachs Group, Inc.* ............. 700 50,575
---------------
$ 1,958,362
---------------
FOOD AND BEVERAGE PRODUCTS -- 4.0%
Anheuser-Busch Cos., Inc. .............. 12,400 $ 879,625
Coca-Cola Co. .......................... 10,100 631,250
Keebler Foods Co.* ..................... 11,300 343,237
Nabisco Holdings Corp., "A" ............ 7,700 333,025
</TABLE>
19-RGI
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
U.S. STOCKS -- continued
<S> <C> <C>
FOOD AND BEVERAGE PRODUCTS -- continued
Ralston-Ralston Purina Co. ............. 15,200 $ 462,650
---------------
$ 2,649,787
---------------
INSURANCE -- 7.5%
American International Group, Inc. ..... 7,100 $ 831,144
CIGNA Corp. ............................ 8,415 748,935
Equitable Cos., Inc. ................... 9,500 636,500
Hartford Financial Services Group,
Inc. ................................. 11,330 660,681
Hartford Life, Inc., "A" ............... 2,100 110,513
Lincoln National Corp. ................. 16,740 875,711
Nationwide Financial Services, Inc.,
"A" .................................. 8,350 377,837
Progressive Corp. ...................... 1,700 246,500
ReliaStar Financial Corp. .............. 11,240 491,750
---------------
$ 4,979,571
---------------
INTERNET
Software.com, Inc.* .................... 100 $ 2,319
---------------
MANUFACTURING -- 1.8%
Danaher Corp. .......................... 8,900 $ 517,312
Illinois Tool Works, Inc. .............. 8,400 688,800
---------------
$ 1,206,112
---------------
MEDICAL AND HEALTH PRODUCTS -- 5.2%
American Home Products Corp. ........... 20,500 $ 1,178,750
Bristol-Myers Squibb Co. ............... 19,140 1,348,173
Pharmacia & Upjohn, Inc. ............... 17,100 971,494
---------------
$ 3,498,417
---------------
MEDICAL AND HEALTH TECHNOLOGY
AND SERVICES -- 5.2%
Cardinal Health, Inc. .................. 17,140 $ 1,099,102
Guidant Corp. .......................... 19,700 1,013,319
Medtronic, Inc. ........................ 9,600 747,600
United Healthcare Corp. ................ 9,900 619,988
---------------
$ 3,480,009
---------------
METALS AND MINERALS -- 1.0%
Alcoa, Inc. ............................ 10,740 $ 664,538
---------------
OILS -- 3.3%
Exxon Corp. ............................ 8,800 $ 678,700
Mobil Corp. ............................ 15,100 1,494,900
---------------
$ 2,173,600
---------------
POLLUTION CONTROL -- 0.9%
Browning Ferris Industries, Inc. ....... 13,350 $ 574,050
---------------
PRINTING AND PUBLISHING -- 2.0%
Gannett Co., Inc. ...................... 13,400 $ 956,425
Tribune Co. ............................ 4,200 365,925
---------------
$ 1,322,350
---------------
REAL ESTATE INVESTMENT TRUSTS -- 2.0%
Arden Realty, Inc. ..................... 27,300 $ 672,262
Highwoods Properties, Inc. ............. 24,400 669,475
---------------
$ 1,341,737
---------------
RESTAURANTS AND LODGING -- 0.5%
Wendy's International, Inc. ............ 12,200 $ 345,413
---------------
SPECIAL PRODUCTS AND SERVICES
Newport News Shipbuilding, Inc. ........ 100 $ 2,950
---------------
STORES -- 4.0%
CVS Corp. .............................. 19,700 $ 999,775
Dayton Hudson Corp. .................... 12,400 806,000
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
STORES -- continued
Lowe's Cos., Inc. ...................... 5,680 $ 321,985
Rite Aid Corp. ......................... 21,560 530,915
---------------
$ 2,658,675
---------------
SUPERMARKETS -- 1.7%
Albertsons, Inc. ....................... 13,352 $ 688,462
Kroger Co.* ............................ 15,350 428,841
---------------
$ 1,117,303
---------------
TELECOMMUNICATIONS -- 8.1%
Bell Atlantic Corp. .................... 18,100 $ 1,183,288
Cisco Systems, Inc.* ................... 10,900 702,369
MCI WorldCom, Inc.* .................... 15,300 1,316,756
Motorola, Inc. ......................... 10,100 956,975
Sprint Corp. ........................... 23,140 1,222,081
---------------
$ 5,381,469
---------------
UTILITIES -- ELECTRIC -- 3.3%
CMS Energy Corp. ....................... 13,160 $ 551,075
DQE, Inc. .............................. 12,000 481,500
Peco Energy Co. ........................ 13,900 582,063
Sierra Pacific Resources ............... 16,300 592,912
---------------
$ 2,207,550
---------------
UTILITIES -- GAS -- 1.1%
Coastal Corp. .......................... 5,800 $ 232,000
Columbia Energy Group .................. 7,750 485,828
---------------
$ 717,828
---------------
UTILITIES -- TELEPHONE -- 1.8%
Frontier Corp. ......................... 20,300 $ 1,197,700
---------------
Total U.S. Stocks .................................... $ 61,050,730
---------------
FOREIGN STOCKS -- 4.7%
CANADA -- 0.6%
Canadian National Railway Co.
(Railroads) .......................... 5,800 $ 388,600
---------------
GERMANY -- 0.9%
Henkel KGaA (Chemicals) ................ 3,300 $ 225,123
Mannesmann AG (Conglomerate) ........... 2,400 358,614
---------------
$ 583,737
---------------
NETHERLANDS -- 0.5%
ING Groep N.V.
(Financial Services)* ................ 6,012 $ 325,257
---------------
SWITZERLAND -- 0.1%
Nestle S.A. (Food and
Beverage Products) ................... 41 $ 73,872
---------------
UNITED KINGDOM -- 2.6%
BP Amoco PLC, ADR (Oils) ............... 15,949 $ 1,730,467
British Aerospace PLC
(Aerospace and Defense)* ............. 48 312
Lloyds TSB Group PLC
(Banks and Credit Cos.) .............. 42 570
---------------
$ 1,731,349
---------------
Total Foreign Stocks ................................. $ 3,102,815
---------------
Total Stocks
(Identified Cost, $57,471,804) ..................... $ 64,153,545
---------------
CONVERTIBLE PREFERRED STOCKS -- 1.5%
INSURANCE -- 0.1%
Lincoln National Corp., 7.75% .......... 2,800 $ 76,125
---------------
</TABLE>
20-RGI
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
CONVERTIBLE PREFERRED STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares
<S> <C> <C>
UTILITIES -- ELECTRIC -- 1.4%
Houston Industries, Inc., 7.00% ........ 7,700 $ 918,225
---------------
Total Convertible Preferred Stocks
(Identified Cost, $796,215) ........................ $ 994,350
---------------
SHORT-TERM OBLIGATIONS -- 5.3%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Federal Home Loan Bank, due 7/01/99, at
Amortized Cost ....................... $ 3,505 $ 3,505,000
---------------
OTHER SHORT-TERM OBLIGATIONS -- 13.4%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$8,935,778) .......................... 8,935,778 $ 8,935,778
---------------
Total Investments
(Identified Cost, $70,708,797) ..................... $ 77,588,673
---------------
OTHER ASSETS,
LESS LIABILITIES -- (16.7)% (11,089,695)
---------------
Net Assets -- 100.0% ................................. $ 66,498,978
---------------
---------------
See portfolio footnotes and notes to financial statements
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1999
RESEARCH INTERNATIONAL SERIES
STOCKS -- 94.5%
<CAPTION>
Issuer Shares Value
<S> <C> <C>
FOREIGN STOCKS -- 89.0%
ARGENTINA -- 0.5%
Quilmes Industrial S.A., ADR
(Beverages) .......................... 3,336 $ 41,283
---------------
AUSTRALIA -- 2.2%
Australia & New Zealand Banking Group
Ltd. (Banks and Credit Cos.)* ........ 5,745 $ 42,173
Cable & Wireless Optus
(Telecommunications)* ................ 40,831 92,815
QBE Insurance Group Ltd.
(Insurance)* ......................... 8,559 32,521
---------------
$ 167,509
---------------
BERMUDA -- 1.0%
Dairy Farm International Holdings Ltd.
(Supermarkets) ....................... 63,000 $ 75,600
---------------
BRAZIL -- 0.5%
Tele Norte Leste Participacoes S.A.
(Telephone) .......................... 2,073 $ 38,480
---------------
CANADA -- 1.6%
Abitibi-Consolidated, Inc.
(Forest and Paper Products) .......... 1,720 $ 19,565
Canadian National Railway Co.
(Railroads) .......................... 1,092 73,164
The Toronto -- Dominion Bank
(Banks and Credit Cos.) .............. 673 30,621
---------------
$ 123,350
---------------
DENMARK -- 0.1%
H. Lundbeck A/S (Medical) .............. 200 $ 5,382
---------------
FINLAND -- 1.9%
Helsingin Puhelin Oyj
(Telecommunications) ................. 1,519 $ 72,005
Perlos Corp. (Electronics)* ............ 800 11,707
Tieto Corp. (Computer
Software -- Systems) ................. 1,516 63,114
---------------
$ 146,826
---------------
FRANCE -- 6.9%
Axa (Insurance) ........................ 937 $ 114,228
Castorama-Dubois Investisse
(Stores -- Building Products) ........ 454 107,605
SEITA (Tobacco) ........................ 1,599 92,275
Television Francaise (Entertainment) ... 453 105,501
Total Fina S.A., "B" (Oils) ............ 565 72,837
Wavecom S.A. ADR (Electronics)* ........ 2,686 35,254
---------------
$ 527,700
---------------
GERMANY -- 6.4%
Fielmann AG (Retail) ................... 973 $ 35,996
Henkel KGaA, Preferred (Chemicals) ..... 1,657 113,039
HypoVereinsbank (Banks
and Credit Cos.) ..................... 2,189 142,113
Mannesmann AG (Conglomerate) ........... 854 127,607
Porsche AG (Automotive) ................ 16 37,593
VEBA AG (Oil and Gas) .................. 644 37,827
---------------
$ 494,175
---------------
GREECE -- 1.3%
Antenna TV S.A., ADR (Broadcasting)* ... 300 $ 4,125
Hellenic Telecommunication Organization
S.A., GDR (Telecommunications) ....... 2,002 42,869
</TABLE>
21-RSS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
CONVERTIBLE PREFERRED STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
FOREIGN STOCKS -- continued
<S> <C> <C>
GREECE -- continued
STET Hellas Telecommunications S.A., ADR
(Telecommunications)* ................ 2,489 $ 55,691
---------------
$ 102,685
---------------
HONG KONG -- 1.1%
Li & Fung Ltd. (Wholesale) ............. 34,000 $ 81,515
---------------
IRELAND -- 2.7%
Anglo Irish Bank PLC
(Banks and Credit Cos.)* ............. 41,638 $ 103,682
Bank Of Ireland
(Banks and Credit Cos.) .............. 3,874 65,357
Elan Corp. PLC, ADR
(Health Products)* ................... 1,400 38,850
---------------
$ 207,889
---------------
ITALY -- 2.8%
Banca Carige S.p.A.
(Banks and Credit Cos.) .............. 4,432 $ 38,821
Mediaset S.p.A. (Entertainment) ........ 7,338 65,183
San Paolo-Imi S.p.A
(Banks and Credit Cos.)* ............. 5,373 73,087
Telecom Italia Mobile S.p.A.
(Telecommunications) ................. 6,324 37,732
---------------
$ 214,823
---------------
JAPAN -- 20.4%
Aeon Credit Service Co. Ltd. (Financial
Services) ............................ 1,300 $ 123,636
Canon, Inc., ADR
(Special Products and Services) ...... 2,816 82,016
Chugai Pharmaceutical Co., Ltd.
(Pharmaceuticals) .................... 6,000 64,704
Don Quijote Co., Ltd. (Retail) ......... 600 151,092
Hitachi Ltd. (Electronics) ............. 5,000 46,932
Keyence Corp. (Electronics) ............ 500 87,579
Mikuni Coca-Cola Bottling Co., Ltd.
(Food and Beverage Products) ......... 3,000 61,032
Nippon Telephone & Telegraph Co.
(Utilities -- Telephone) ............. 11 128,267
NTT Mobile Communications Network, Inc.
(Telecommunications) ................. 2 27,125
NTT Mobile Communications Network, Inc.
(Telecommunications)* ................ 8 107,178
Olympus Optical Co. (Conglomerate) ..... 3,000 44,385
Rock Field Co., Ltd.
(Food Products) ...................... 2,100 75,893
Rohm Co. (Electronics) ................. 1,000 156,715
Takeda Chemical Industries Co.
(Pharmaceuticals) .................... 4,000 185,577
TDK Corp., ADR (Electronics) ........... 60 5,524
Terumo Corp. (Pharmaceuticals) ......... 4,000 89,150
The Sanwa Bank, Ltd.
(Banks and Credit Cos.) .............. 3,000 29,548
The Sumitomo Bank, Ltd.
(Banks and Credit Cos.) .............. 2,000 24,826
Ushio, Inc. (Electronics) .............. 6,000 76,910
---------------
$ 1,568,089
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
FOREIGN STOCKS -- continued
NETHERLANDS -- 10.0%
Akzo Nobel N.V. (Chemicals) ............ 1,247 $ 52,429
Benckiser N.V., "B"
(Consumer Goods and Services) ........ 2,739 146,067
Equant N.V. (Computer
Software -- Services)* ............... 619 58,263
Fugro N.V. (Engineering)* .............. 2,433 69,199
Hunter Douglas N.V., ADR (Consumer Goods
and Services)* ....................... 2,113 72,509
IHC Caland N.V.
(Marine Equipment)* .................. 1,016 39,786
ING Groep N.V.
(Financial Services)* ................ 2,232 120,754
Koninklijke Ahrend Groep N.V. (Consumer
Goods and Services)* ................. 3,608 62,649
Koninklijke Philips Electronics N.V.
(Electronics) ........................ 711 70,081
Van der Moolen Holding N.V. (Financial
Services)* ........................... 554 35,538
Wolters Kluwer N.V. (Publishing) ....... 900 35,800
---------------
$ 763,075
---------------
PHILIPPINES -- 1.0%
Philippine Long Distance Telephone Co.
(Utilities -- Telephone) ............. 2,417 $ 72,812
---------------
PORTUGAL -- 1.0%
Banco Pinto & Sotto Mayor S.A. (Banks
and Credit Cos.) ..................... 4,233 $ 75,115
---------------
SINGAPORE -- 2.9%
Asia Pulp & Paper Co. Ltd., ADR
(Consumer Goods and Services)* ....... 3,614 $ 34,785
Datacraft Asia Ltd.
(Telecommunications) ................. 10,000 43,600
Development Bank of Singapore Ltd.
(Banks and Credit Cos.) .............. 7,000 85,571
Hong Leong Finance Ltd. (Finance)+ ..... 27,000 61,887
---------------
$ 225,843
---------------
SOUTH KOREA -- 1.1%
Korea Telecom Corp.
(Telecommunications)* ................ 2,083 $ 83,320
---------------
SPAIN -- 2.6%
Cortefiel S.A. (Retail) ................ 2,951 $ 77,546
Repsol S.A. (Oils) ..................... 1,658 33,830
Telefonica de Espana
(Utilities -- Telephone) ............. 1,623 78,122
Telefonica Publicidad e Informacion S.A.
(Telephone)* ......................... 600 11,964
---------------
$ 201,462
---------------
SWEDEN -- 5.7%
Celsius AB (Aerospace) ................. 4,801 $ 60,550
Ericsson LM, "B"
(Telecommunications) ................. 3,638 116,850
Saab AB, "B" (Aerospace) ............... 11,916 92,699
Skandia Forsakrings AB (Insurance) ..... 8,787 164,678
---------------
$ 434,777
---------------
SWITZERLAND -- 4.1%
Barry Callebaut AG
(Food and Beverage Products) ......... 240 $ 36,743
Julius Baer Holdings
(Banks and Credit Cos.) .............. 20 56,992
</TABLE>
22-RSS
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- continued
CONVERTIBLE PREFERRED STOCKS -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
FOREIGN STOCKS -- continued
<S> <C> <C>
SWITZERLAND -- continued
Nestle S.A.
(Food and Beverage Products) ......... 40 $ 72,070
UBS AG (Banks and Credit Cos.)* ........ 493 147,145
---------------
$ 312,950
---------------
UNITED KINGDOM -- 10.7%
BP Amoco PLC (Oils)* ................... 8,244 $ 147,595
British Aerospace PLC
(Aerospace and Defense)* ............. 11,098 72,236
Cable & Wireless Communications PLC
(Telecommunications) ................. 6,108 58,720
Capital Radio PLC (Broadcasting) ....... 2,856 37,786
Computacenter PLC
(Computer -- Services) ............... 7,628 58,606
Next PLC (Stores) ...................... 3,212 38,978
Reuters Group PLC
(Business Services) .................. 5,314 69,888
Sema Group PLC (Computer
Software -- Systems) ................. 7,436 71,545
Vodafone Group PLC
(Telecommunications) ................. 335 65,995
Williams PLC (Conglomerate) ............ 10,577 69,845
Zeneca Group PLC
(Medical and Health Products) ........ 3,378 130,591
---------------
$ 821,785
---------------
VENEZUELA -- 0.5%
Ca la Electricidad de Caracas, ADR
(Utilities -- Electric) .............. 1,946 $ 38,403
---------------
Total Foreign Stocks ................................. $ 6,824,848
---------------
U.S. STOCKS -- 5.5%
ADVERTISING -- 0.6%
Young & Rubicam, Inc. .................. 1,011 $ 45,937
---------------
AUTOMOTIVE -- 1.0%
Federal-Mogul Corp. .................... 1,474 $ 76,648
---------------
FOOD AND BEVERAGE PRODUCTS -- 1.1%
Panamerican Beverage ................... 3,621 $ 86,225
---------------
FOREST AND PAPER PRODUCTS -- 0.5%
Jefferson Smurfit Corp. ................ 15,591 $ 36,857
---------------
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. STOCKS -- continued
INTERNET
Ask Jeeves, Inc.* ...................... 50 $ 700
---------------
MEDICAL AND HEALTH PRODUCTS -- 1.3%
Pharmacia & Upjohn, Inc. ............... 1,715 $ 97,434
---------------
TELECOMMUNICATIONS -- 1.0%
Global TeleSystems Group, Inc.* ........ 979 $ 79,299
---------------
Total U.S. Stocks .................................... $ 423,100
---------------
Total Stocks
(Identified Cost, $6,912,411) ...................... $ 7,247,948
---------------
SHORT-TERM
OBLIGATIONS -- 3.6%
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Federal Home Loan Bank, due 7/01/99, at
Amortized Cost ....................... $ 280 $ 280,000
OTHER SHORT-TERM
OBLIGATIONS -- 8.3%
<CAPTION>
Shares
<S> <C> <C>
Navigator Securities Lending Prime
Portfolio (Identified Cost,
$865,057) ............................ 865,057 $ 865,057
---------------
Total Investments
(Identified Cost, $8,057,468) ...................... $ 8,393,005
---------------
OTHER ASSETS,
LESS LIABILITIES -- (6.4)% (724,592)
---------------
Net Assets -- 100.0% ................................. $ 7,668,413
---------------
---------------
See portfolio footnotes and notes to financial statements
PORTFOLIO FOOTNOTES:
- ----------------------------------------
</TABLE>
* Non-income producing security.
** Non-income producing security -- in default.
## SEC Rule 144A restriction.
+ Restricted security.
23-RSS
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) -- June 30, 1999
<TABLE>
<CAPTION>
Massachusetts
Investors
Capital Equity International Growth
Assets: Opportunities Income Growth Stock
Investments -- Series Series Series Series
-------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Unaffiliated issuers, at
cost.................... $ 251,012,242 $ 21,893,670 $ 40,285,595 $ 266,979,147
Unrealized appreciation... 37,226,805 1,351,618 3,112,476 20,176,117
-------------- ------------ -------------- --------------
Total investments, at
value............... $ 288,239,047 $ 23,245,288 $ 43,398,071 $ 287,155,264
Cash........................ 89,319 7,750 93,240 41,545
Foreign currency, at value
(identified cost, $47,032,
$0, $502,949 and $65,
respectively)............. 49,151 -- 526,880 63
Receivable for investments
sold...................... 6,163,524 338,091 471,145 4,607,869
Receivable for Series shares
sold...................... 248,085 115,817 8,162 710,755
Interest and dividends
receivable................ 223,586 38,603 95,275 59,266
Receivable from investment
adviser................... -- 4,086 -- --
Other assets................ 1,502 25 181 --
-------------- ------------ -------------- --------------
Total assets.......... $ 295,014,214 $ 23,749,660 $ 44,592,954 $ 292,574,762
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
Liabilities:
Payable for investments
purchased................. $ 9,942,503 $ 644,111 $ 1,691,049 $ 2,010,517
Payable for Series shares
reacquired................ 71 265 4,363 27
Collateral for securities
loaned, at value.......... 17,613,883 300,148 -- 37,085,678
Payable to affiliates --
Management fee............ 5,445 460 1,145 5,134
Administrative fee........ 109 -- 18 591
Accrued expenses and other
liabilities............... 45,728 3,456 39,530 29,956
-------------- ------------ -------------- --------------
Total liabilities..... $ 27,607,739 $ 948,440 $ 1,736,105 $ 39,131,903
-------------- ------------ -------------- --------------
Net assets.................... $ 267,406,475 $ 22,801,220 $ 42,856,849 $ 253,442,859
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
Net assets consist of:
Paid-in capital............. $ 196,083,457 $ 20,834,579 $ 42,390,388 $ 226,343,434
Unrealized appreciation on
investments and
translation of assets and
liabilities in foreign
currencies................ 37,221,655 1,352,004 3,135,548 20,176,105
Accumulated undistributed
net realized gain (loss)
on investments and foreign
currency transactions..... 34,071,294 474,871 (2,912,462) 6,648,206
Accumulated undistributed
net investment income..... 30,069 139,766 243,375 275,114
-------------- ------------ -------------- --------------
Total............... $ 267,406,475 $ 22,801,220 $ 42,856,849 $ 253,442,859
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
Shares of beneficial
interest outstanding...... 13,620,283 1,985,442 4,262,706 19,220,814
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
Net asset value, offering
price and redemption price
per share
(net assets DIVIDED BY
shares of beneficial
interest outstanding)..... $19.63 $11.48 $10.05 $13.19
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
</TABLE>
See notes to financial statements
24
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) -- June 30, 1999 -- continued
<TABLE>
<CAPTION>
Research
New Growth and Research
Assets: Discovery Income International
Investments -- Series Series Series
----------- ----------- --------------
<S> <C> <C> <C>
Unaffiliated issuers, at
cost.......................... $26,315,296 $70,708,797 $ 8,057,468
Unrealized appreciation........ 3,767,180 6,879,876 335,537
----------- ----------- --------------
Total investments, at
value...................... $30,082,476 $77,588,673 $ 8,393,005
Cash............................. 4,158 2,659 4,119
Foreign currency, at value
(identified cost, $0, $53 and
$30,494, respectively)......... -- 51 30,114
Receivable for investments
sold........................... 206,393 400,044 168,853
Receivable for Series shares
sold........................... 21,563 285,696 3,434
Interest and dividends
receivable..................... 2,119 51,327 12,191
Receivable from investment
adviser........................ -- -- 10,031
Other assets..................... 48 247 13
----------- ----------- --------------
Total assets............... $30,316,757 $78,328,697 $ 8,621,760
----------- ----------- --------------
----------- ----------- --------------
Liabilities:
Payable for investments
purchased...................... $ 260,077 $ 2,829,224 $ 77,344
Payable for Series shares
reacquired..................... 12,346 39,610 203
Collateral for securities loaned,
at value....................... 3,853,203 8,935,778 865,057
Payable to affiliates --
Management fee................. 623 1,345 209
Administrative fee............. 10 27 3
Accrued expenses and other
liabilities.................... 12,453 23,735 10,531
----------- ----------- --------------
Total liabilities.......... $ 4,138,712 $11,829,719 $ 953,347
----------- ----------- --------------
Net assets......................... $26,178,045 $66,498,978 $ 7,668,413
----------- ----------- --------------
----------- ----------- --------------
Net assets consist of:
Paid-in capital.................. $22,301,337 $58,068,736 $ 6,997,398
Unrealized appreciation on
investments and translation of
assets and liabilities in
foreign currencies............. 3,767,180 6,879,723 334,989
Accumulated undistributed net
realized gain on investments
and foreign currency
transactions................... 163,142 1,365,174 303,344
Accumulated undistributed net
investment income (loss)....... (53,614) 185,345 32,682
----------- ----------- --------------
Total.................. $26,178,045 $66,498,978 $ 7,668,413
----------- ----------- --------------
----------- ----------- --------------
Shares of beneficial interest
outstanding.................... 2,248,488 4,589,444 726,445
----------- ----------- --------------
----------- ----------- --------------
Net asset value, offering price,
and redemption price per share
(net assets DIVIDED BY shares
of beneficial interest
outstanding)................... $11.64 $14.49 $10.56
----------- ----------- --------------
----------- ----------- --------------
</TABLE>
See notes to financial statements
25
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF OPERATIONS (Unaudited) -- Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
Massachusetts
Capital Equity International Investors
Net investment income: Opportunities Income Growth Growth Stock
Income -- Series Series Series Series
-------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Interest.................. $ 237,149 $ 21,294 $ 43,610 $ 605,353
Dividends................. 723,562 190,824 521,107 340,078
Foreign taxes withheld.... (10,115) (2,076) (67,311) (4,210)
-------------- ----------- -------------- --------------
Total investment
income................. $ 950,596 $ 210,042 $ 497,406 $ 941,221
-------------- ----------- -------------- --------------
Expenses --
Management fee............ $ 823,140 $ 53,015 $ 185,462 $ 586,843
Trustees' compensation.... 2,419 106 453 1,016
Administrative fee........ 16,463 1,051 2,854 11,737
Custodian fee............. 52,229 3,635 33,089 27,502
Printing.................. 20,783 3,593 10,159 27,686
Auditing fees............. 14,404 12,779 16,654 10,579
Legal fees................ 1,882 984 1,281 996
Miscellaneous............. 4,743 535 800 1,260
-------------- ----------- -------------- --------------
Total expenses.......... $ 936,063 $ 75,698 $ 250,752 $ 667,619
Fees paid indirectly...... (10,750) (927) (1,355) (1,512)
Reduction of expenses by
investment adviser....... -- (4,086) -- --
-------------- ----------- -------------- --------------
Net expenses............ $ 925,313 $ 70,685 $ 249,397 $ 666,107
-------------- ----------- -------------- --------------
Net investment
income................ $ 25,283 $ 139,357 $ 248,009 $ 275,114
-------------- ----------- -------------- --------------
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions:
Realized gain (loss)
(identified cost basis) --
Investment transactions... $ 33,631,851 $ 553,693 $ 1,722,531 $ 7,419,227
Foreign currency
transactions............. (110,674) (928) (44,528) (1,664)
-------------- ----------- -------------- --------------
Net realized gain on
investments and foreign
currency
transactions........... $ 33,521,177 $ 552,765 $ 1,678,003 $ 7,417,563
-------------- ----------- -------------- --------------
Change in unrealized
appreciation
(depreciation) --
Investments............... $ 4,624,565 $ 843,032 $ (415,772) $ 10,749,563
Translation of assets and
liabilities in foreign
currencies............... 42,043 400 27,625 (15)
-------------- ----------- -------------- --------------
Net unrealized gain
(loss) on investments
and foreign currency
translation............ $ 4,666,608 $ 843,432 $ (388,147) $ 10,749,548
-------------- ----------- -------------- --------------
Net realized and
unrealized gain on
investments and
foreign currency...... $ 38,187,785 $ 1,396,197 $ 1,289,856 $ 18,167,111
-------------- ----------- -------------- --------------
Increase in net
assets from
operations....... $ 38,213,068 $ 1,535,554 $ 1,537,865 $ 18,442,225
-------------- ----------- -------------- --------------
-------------- ----------- -------------- --------------
</TABLE>
See notes to financial statements
26
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF OPERATIONS (Unaudited) -- Six Months Ended June 30,
1999 -- continued
<TABLE>
<CAPTION>
Research
New Growth and Research
Net investment income (loss): Discovery Income International
Income -- Series Series Series
---------- ---------- --------------
<S> <C> <C> <C>
Interest....................... $ 40,288 $ 94,303 $ 7,884
Dividends...................... 7,158 316,762 70,209
Foreign taxes withheld......... (12) (2,326) (7,906)
---------- ---------- -------
Total investment income...... $ 47,434 $ 408,739 $ 70,187
---------- ---------- -------
Expenses --
Management fee................. $ 77,589 $ 190,643 $ 24,802
Trustees' compensation......... 172 495 45
Administrative fee............. 1,293 3,813 372
Custodian fee.................. 4,906 10,475 8,155
Printing....................... 5,322 8,478 1,414
Auditing fees.................. 10,079 14,254 11,704
Legal fees..................... 960 787 904
Miscellaneous.................. 1,126 136 152
---------- ---------- -------
Total expenses............... $ 101,447 $ 229,081 $ 47,548
Fees paid indirectly........... (399) (1,806) (315)
Reduction of expenses by
investment adviser............ -- -- (10,031)
---------- ---------- -------
Net expenses................. $ 101,048 $ 227,275 $ 37,202
---------- ---------- -------
Net investment income
(loss)..................... $ (53,614) $ 181,464 $ 32,985
---------- ---------- -------
Realized and unrealized gain (loss)
on investments and foreign
currency transactions:
Realized gain (loss) (identified
cost basis) --
Investment transactions........ $ 373,818 $2,137,519 $420,162
Foreign currency
transactions.................. 12 (507) (3,345)
---------- ---------- -------
Net realized gain on
investments and foreign
currency transactions....... $ 373,830 $2,137,012 $416,817
---------- ---------- -------
Change in unrealized appreciation
(depreciation) --
Investments.................... $2,265,717 $1,952,472 $191,976
Translation of assets and
liabilities in foreign
currencies.................... -- (206) (564)
---------- ---------- -------
Net unrealized gain on
investments and foreign
currency translation........ $2,265,717 $1,952,266 $191,412
---------- ---------- -------
Net realized and unrealized
gain on investments and
foreign currency........... $2,639,547 $4,089,278 $608,229
---------- ---------- -------
Increase in net assets
from operations........... $2,585,933 $4,270,742 $641,214
---------- ---------- -------
---------- ---------- -------
</TABLE>
See notes to financial statements
27
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) -- Six Months Ended June 30,
1999
<TABLE>
<CAPTION>
Massachusetts
Investors
Increase (decrease) in net Capital Equity International Growth
assets: Opportunities Income Growth Stock
From operations -- Series Series Series Series
-------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Net investment income....... $ 25,283 $ 139,357 $ 248,009 $ 275,114
Net realized gain on
investments and foreign
currency transactions..... 33,521,177 552,765 1,678,003 7,417,563
Net unrealized gain (loss)
on investments and foreign
currency translation...... 4,666,608 843,432 (388,147) 10,749,548
-------------- ------------ -------------- --------------
Increase in net assets
from operations......... $ 38,213,068 $ 1,535,554 $ 1,537,865 $ 18,442,225
-------------- ------------ -------------- --------------
Distributions declared to
shareholders --
From net investment
income.................... $ (438,071) $ (47,860) $ (218,603) $ --
From net realized gain on
investments and foreign
currency transactions..... (4,929,801) -- -- (3,090,851)
-------------- ------------ -------------- --------------
Total distributions
declared to
shareholders............ $ (5,367,872) $ (47,860) $ (218,603) $ (3,090,851)
-------------- ------------ -------------- --------------
Net increase in net assets
from Series share
transactions................ $ 43,848,907 $ 12,820,692 $ 5,856,368 $ 156,854,233
-------------- ------------ -------------- --------------
Total increase in net
assets.............. $ 76,694,103 $ 14,308,386 $ 7,175,630 $ 172,205,607
Net assets --
At beginning of period...... 190,712,372 8,492,834 35,681,219 81,237,252
-------------- ------------ -------------- --------------
At end of period............ $ 267,406,475 $ 22,801,220 $ 42,856,849 $ 253,442,859
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
Accumulated undistributed net
investment income included
in net assets at end of
period...................... $ 30,069 $ 139,766 $ 243,375 $ 275,114
-------------- ------------ -------------- --------------
-------------- ------------ -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Research
New Growth and Research
Increase (decrease) in net assets: Discovery Income International
From operations -- Series Series Series
----------- ----------- --------------
<S> <C> <C> <C>
Net investment income (loss)..... $ (53,614) $ 181,464 $ 32,985
Net realized gain on investments
and foreign currency
transactions................... 373,830 2,137,012 416,817
Net unrealized gain on
investments and foreign
currency translation........... 2,265,717 1,952,266 191,412
----------- ----------- --------------
Increase in net assets from
operations................... $ 2,585,933 $ 4,270,742 $ 641,214
----------- ----------- --------------
Distributions declared to
shareholders --
From net investment income....... $ -- $ (197,936) $ (1,911)
From net realized gain on
investments and foreign
currency transactions.......... (135,763) -- --
----------- ----------- --------------
Total distributions declared to
shareholders................. $ (135,763) $ (197,936) $ (1,911)
----------- ----------- --------------
Net increase in net assets from
Series share transactions........ $10,447,932 $23,274,392 $ 3,509,800
----------- ----------- --------------
Total increase in net
assets................... $12,898,102 $27,347,198 $ 4,149,103
Net assets --
At beginning of period........... 13,279,943 39,151,780 3,519,310
----------- ----------- --------------
At end of period................. $26,178,045 $66,498,978 $ 7,668,413
----------- ----------- --------------
----------- ----------- --------------
Accumulated undistributed net
investment income (loss) included
in net assets at end of period... $ (53,614) $ 185,345 $ 32,682
----------- ----------- --------------
----------- ----------- --------------
</TABLE>
See notes to financial statements
28
<PAGE>
MFS/SUN LIFE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS -- Year Ended December 31, 1998
<TABLE>
<CAPTION>
Massachusetts
Investors
Increase (decrease) in net Capital Equity International Growth
assets: Opportunities Income Growth Stock
From operations -- Series Series* Series Series*
-------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Net investment income
(loss).................... $ 441,896 $ 48,723 $ 262,417 $ (286)
Net realized gain (loss) on
investments and foreign
currency transactions..... 5,949,486 (78,348) (3,919,151) 2,321,780
Net unrealized gain on
investments and foreign
currency translation...... 25,493,108 508,572 3,704,068 9,426,557
-------------- ----------- -------------- --------------
Increase in net assets
from operations......... $ 31,884,490 $ 478,947 $ 47,334 $ 11,748,051
-------------- ----------- -------------- --------------
Distributions declared to
shareholders --
From net investment
income.................... $ (531,468) $ -- $ (320,369) $ --
From net realized gain on
investments and foreign
currency transactions..... (5,113,199) -- -- --
-------------- ----------- -------------- --------------
Total distributions
declared to
shareholders............ $ (5,644,667) $ -- $ (320,369) $ --
-------------- ----------- -------------- --------------
Net increase in net assets
from Series share
transactions................ $ 76,728,956 $ 8,013,887 $ 12,553,148 $ 69,489,201
-------------- ----------- -------------- --------------
Total increase in net
assets.............. $ 102,968,779 $ 8,492,834 $ 12,280,113 $ 81,237,252
Net assets --
At beginning of period...... 87,743,593 -- 23,401,106 --
-------------- ----------- -------------- --------------
At end of period............ $ 190,712,372 $ 8,492,834 $ 35,681,219 $ 81,237,252
-------------- ----------- -------------- --------------
-------------- ----------- -------------- --------------
Accumulated undistributed net
investment income included
in net assets at end of
period...................... $ 442,857 $ 48,269 $ 213,969 $ --
-------------- ----------- -------------- --------------
-------------- ----------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Research
New Growth and Research
Increase (decrease) in net assets: Discovery Income International
From operations -- Series* Series Series*
----------- ----------- --------------
<S> <C> <C> <C>
Net investment income (loss)..... $ (17,741) $ 202,962 $ 810
Net realized loss on investments
and foreign currency
transactions................... (57,184) (772,152) (112,675)
Net unrealized gain on
investments and foreign
currency translation........... 1,501,463 4,710,181 143,577
----------- ----------- --------------
Increase in net assets from
operations................... $ 1,426,538 $ 4,140,991 $ 31,712
----------- ----------- --------------
Distributions declared to
shareholders --
From net investment income....... $ -- $ (19,103) $ --
From net realized gain on
investments and foreign
currency transactions.......... -- (62,914) --
----------- ----------- --------------
Total distributions declared to
shareholders................. $ -- $ (82,017) $ --
----------- ----------- --------------
Net increase in net assets from
Series share transactions........ $11,853,405 $28,552,816 $ 3,487,598
----------- ----------- --------------
Total increase in net
assets................... $13,279,943 $32,611,790 $ 3,519,310
Net assets --
At beginning of period........... -- 6,539,990 --
----------- ----------- --------------
At end of period................. $13,279,943 $39,151,780 $ 3,519,310
----------- ----------- --------------
----------- ----------- --------------
Accumulated undistributed net
investment income included in net
assets at end of period.......... $ -- $ 201,817 $ 1,608
----------- ----------- --------------
----------- ----------- --------------
</TABLE>
* For the period from the commencement of the Series' investment operations,
May 6, 1998, through December 31, 1998.
See notes to financial statements
29
<PAGE>
MFS/SUN LIFE SERIES TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
International
Capital Opportunities Series Equity Income Series Growth Series
----------------------------------------------------------- --------------------------- -----------
Six Months Six Months Six Months
Per share data (for a Ended Year Year Period Ended Period Ended
share June 30, Ended Ended Ended June 30, Ended June 30,
outstanding throughout 1999 December 31, December 31, December 31, 1999 December 31, 1999
each period): (Unaudited) 1998 1997 1996* (Unaudited) 1998** (Unaudited)
----------- ------------- ------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value --
beginning of period.... $16.9825 $13.9339 $11.0055 $10.0000 $10.5038 $10.0000 $ 9.7306
----------- ------------- ------------- ------------- ----------- ------------- -----------
Income (loss) from
investment operations#
--
Net investment
incomeSection........ $ 0.0021 $ 0.0477 $ 0.1466 $ 0.0916 $ 0.1044 $ 0.1379 $ 0.0632
Net realized and
unrealized gain
(loss) on investments
and foreign
currency............. 3.0773 3.6598 2.8785 0.9139 0.9020 0.3659 0.3345
----------- ------------- ------------- ------------- ----------- ------------- -----------
Total from
investment
operations....... $ 3.0794 $ 3.7075 $ 3.0251 $ 1.0055 $ 1.0064 $ 0.5038 $ 0.3977
----------- ------------- ------------- ------------- ----------- ------------- -----------
Less distributions
declared to
shareholders --
From net investment
income............... $(0.0350) $(0.0620) $(0.0221) $-- $(0.0302) $-- $(0.0744)
From net realized gain
on investments and
foreign currency
transactions......... (0.3939) (0.5969) (0.0746) -- -- -- --
----------- ------------- ------------- ------------- ----------- ------------- -----------
Total distributions
declared to
shareholders..... $(0.4289) $(0.6589) $(0.0967) $-- $(0.0302) $-- $(0.0744)
----------- ------------- ------------- ------------- ----------- ------------- -----------
Net asset value -- end of
period................. $19.6330 $16.9825 $13.9339 $11.0055 $11.4800 $10.5038 $10.0539
----------- ------------- ------------- ------------- ----------- ------------- -----------
----------- ------------- ------------- ------------- ----------- ------------- -----------
Total return++........... 18.26%++ 26.97% 27.57% 10.10%++ 9.62%++ 5.00%++ 3.75%++
Ratios (to average net
assets)/Supplemental
dataSection:
Expenses##............. 0.85%+ 0.86% 0.77% 0.63%+ 1.01%+ 1.03%+ 1.32%+
Net investment
income............... 0.02%+ 0.31% 1.15% 1.75%+ 1.97%+ 2.16%+ 1.30%+
Portfolio turnover....... 77% 135% 129% 52% 49% 101% 44%
Net assets, end of period
(000 omitted).......... $267,406 $190,712 $ 87,744 $ 16,700 $ 22,801 $ 8,493 $ 42,857
<CAPTION>
Per share data (for a Year Year Period
share Ended Ended Ended
outstanding throughout December 31, December 31, December 31,
each period): 1998 1997 1996*
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value --
beginning of period.... $ 9.6480 $ 9.8213 $10.0000
------------- ------------- -------------
Income (loss) from
investment operations#
--
Net investment
incomeSection........ $ 0.0843 $ 0.1201 $ 0.0748
Net realized and
unrealized gain
(loss) on investments
and foreign
currency............. 0.1060 (0.2747) (0.2535)
------------- ------------- -------------
Total from
investment
operations....... $ 0.1903 $(0.1546) $(0.1787)
------------- ------------- -------------
Less distributions
declared to
shareholders --
From net investment
income............... $(0.1077) $(0.0187) $--
From net realized gain
on investments and
foreign currency
transactions......... -- -- --
------------- ------------- -------------
Total distributions
declared to
shareholders..... $(0.1077) $(0.0187) $--
------------- ------------- -------------
Net asset value -- end of
period................. $ 9.7306 $ 9.6480 $ 9.8213
------------- ------------- -------------
------------- ------------- -------------
Total return++........... 1.94% (1.64)% (1.70)%++
Ratios (to average net
assets)/Supplemental
dataSection:
Expenses##............. 1.32% 1.11% 1.56%+
Net investment
income............... 0.86% 1.23% 1.47%+
Portfolio turnover....... 77% 261% 3%
Net assets, end of period
(000 omitted).......... $ 35,681 $ 23,401 $ 5,525
</TABLE>
Section The investment adviser voluntarily waived all or a portion of its
advisory fee for the Capital Opportunities Series, Equity Income Series and
International Growth Series for certain of the periods indicated. In
addition, the investment adviser agreed to maintain the expenses of the
Capital Opportunities Series, Equity Income Series and International Growth
Series at not more than 1.00%, 0.25% and 1.50% of average daily net assets,
respectively, for certain of the periods indicated. The investment adviser
agreed to maintain the expenses of the Equity Income Series, exclusive of
management fee, at no more than 0.25% of average daily net assets for the
periods indicated. If these fees had been incurred and/or to the extent
actual expenses were over these limitations, the net investment income per
share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income.... $0.1296 $0.0537 $0.1012 $0.1070 $0.1036 $0.0265
Ratios (to average net
assets):
Expenses##............. 0.90% 1.35% + 1.07% + 1.51% + 1.28% 2.50% +
Net investment
income............... 1.03% 1.02% + 1.91% + 1.68% + 1.06% 0.46% +
</TABLE>
* For the period from the commencement of the Series' investment operations,
June 3, 1996, through December 31, 1996.
** For the period from the commencement of the Series' investment operations,
May 6, 1998, through December 31, 1998.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent. The Series' expenses are
calculated without reduction for this expense offset arrangement.
++ The total return information shown above does not reflect expenses that
apply to the separate accounts established by Sun Life of Canada (U.S.) and
Sun Life (N.Y.). Inclusion of these charges would reduce the total return
figures for all periods shown.
See notes to financial statements
30
<PAGE>
MFS/SUN LIFE SERIES TRUST
FINANCIAL HIGHLIGHTS -- continued
<TABLE>
<CAPTION>
Massachusetts Investors
Growth Stock Series New Discovery Series Research Growth and Income Series
--------------------------- --------------------------- -------------------------------------------
Six Months Six Months Six Months
Ended Period Ended Period Ended Year Period
Per share data (for a June 30, Ended June 30, Ended June 30, Ended Ended
share outstanding 1999 December 31, 1999 December 31, 1999 December 31, December 31,
throughout each period): (Unaudited) 1998* (Unaudited) 1998* (Unaudited) 1998 1997**
----------- ------------- ----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value --
beginning of period.... $12.0804 $10.0000 $10.6232 $10.0000 $13.3898 $11.0208 $10.0000
----------- ------------- ----------- ------------- ----------- ------------- -------------
Income (loss) from
investment operations#
--
Net investment income
(loss)Section........ $ 0.0217 $(0.0001) $(0.0319) $(0.0273) $ 0.0489 $ 0.1170 $ 0.0821
Net realized and
unrealized gain
(loss) on investments
and foreign
currency............. 1.2871 2.0805 1.1252 0.6505 1.1002 2.3163 0.9387
----------- ------------- ----------- ------------- ----------- ------------- -------------
Total from
investment
operations....... $ 1.3088 $ 2.0804 $ 1.0933 $ 0.6232 $ 1.1491 $ 2.4333 $ 1.0208
----------- ------------- ----------- ------------- ----------- ------------- -------------
Less distributions
declared to
shareholders --
From net investment
income............... $ -- $-- $ -- $-- $(0.0494) $(0.0150) $--
From net realized gain
on investments and
foreign currency
transactions......... (0.2033) -- (0.0740) -- -- (0.0493) --
----------- ------------- ----------- ------------- ----------- ------------- -------------
Total distributions
declared to
shareholders..... $(0.2033) $-- $(0.0740) $-- $(0.0494) $(0.0643) $--
----------- ------------- ----------- ------------- ----------- ------------- -------------
Net asset value -- end of
period................. $13.1859 $12.0804 $11.6425 $10.6232 $14.4895 $13.3898 $11.0208
----------- ------------- ----------- ------------- ----------- ------------- -------------
----------- ------------- ----------- ------------- ----------- ------------- -------------
Total return++........... 10.96%++ 20.70%++ 10.38%++ 6.20%++ 8.59%++ 22.13% 10.20%++
Ratios (to average net
assets)/Supplemental
dataSection:
Expenses##............. 0.85%+ 0.97%+ 1.18%+ 1.28%+ 0.90%+ 0.95% 1.54%+
Net investment income
(loss)............... 0.35%+ -- (0.62)%+ (0.44)%+ 0.71%+ 0.96% 1.19%+
Portfolio turnover....... 92% 66% 55% 69% 39% 122% 29%
Net assets, end of period
(000 omitted).......... $253,443 $ 81,237 $ 26,178 $ 13,280 $ 66,499 $ 39,152 $ 6,540
<CAPTION>
Research International
Series
---------------------------
Six Months
Ended Period
Per share data (for a June 30, Ended
share outstanding 1999 December 31,
throughout each period): (Unaudited) 1998*
----------- -------------
<S> <C> <C>
Net asset value --
beginning of period.... $ 9.4191 $10.0000
----------- -------------
Income (loss) from
investment operations#
--
Net investment income
(loss)Section........ $ 0.0639 $ 0.0043
Net realized and
unrealized gain
(loss) on investments
and foreign
currency............. 1.0766 (0.5852)
----------- -------------
Total from
investment
operations....... $ 1.1405 $(0.5809)
----------- -------------
Less distributions
declared to
shareholders --
From net investment
income............... $(0.0035) $--
From net realized gain
on investments and
foreign currency
transactions......... -- --
----------- -------------
Total distributions
declared to
shareholders..... $(0.0035) $--
----------- -------------
Net asset value -- end of
period................. $10.5561 $ 9.4191
----------- -------------
----------- -------------
Total return++........... 12.14%++ (5.80)%++
Ratios (to average net
assets)/Supplemental
dataSection:
Expenses##............. 1.52%+ 1.55%+
Net investment income
(loss)............... 1.33%+ 0.07%+
Portfolio turnover....... 82% 59%
Net assets, end of period
(000 omitted).......... $ 7,668 $ 3,519
</TABLE>
Section The investment adviser agreed to maintain the expenses of the New
Discovery Series and Research International Series, exclusive of management
fees, at not more than 0.35% and 0.50% of average daily net assets,
respectively, for certain of the periods indicated. The investment adviser
agreed to maintain the expenses of the Research Growth and Income Series at
not more than 1.50% of average daily net assets. To the extent actual
expenses were over these limitations, the net investment income (loss) per
share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income
(loss)................. $(0.0470) $0.0614 $0.0439 $(0.1301)
Ratios (to average net
assets):
Expenses##............. 1.60%+ 1.83% + 1.92% + 3.86% +
Net investment income
(loss)............... (0.76)% + 0.84% + 0.93% + (2.24)% +
</TABLE>
* For the period from the commencement of the Series' investment operations,
May 6, 1998, through December 31, 1998.
** For the period from the commencement of the Series' investment operations,
May 13, 1997, through December 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its Custodian and dividend disbursing agent. The Series' expenses are
calculated without reduction for this expense offset arrangement.
++ The total return information shown above does not reflect expenses that
apply to the separate accounts established by Sun Life of Canada (U.S.) and
Sun Life (N.Y.). Inclusion of these charges would reduce the total return
figures for all periods shown.
See notes to financial statements
31
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management-Registered Trademark-, as an investment
adviser and on behalf of the MFS portfolios, is committed to the
effective use of technology in managing our portfolio investments,
delivering high-quality service to MFS shareholders and contract
owners, retirement plan participants, and MFS' institutional
clients, and supporting the financial advisers who sell our
products. With that in mind, we created a separately funded Year
2000 Program Management Office in 1996 composed 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, contract owners 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-Registered Trademark-
Original Research-SM- 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.
37
<PAGE>
YEAR 2000 READINESS DISCLOSURE
[LOGO]
The potential hazard of computers having difficulty dealing with
the year 2000 has been widely reported in the media. Essentially,
the "Y2K" problem stems from some computer software being written
in a way that will handle only two digits of a year rather than
the full four digits. This becomes a problem when 2000 is
perceived as simply "00", with the result that the computer
software interprets the date as 1900 rather than 2000.
Sun Life began working on this problem in 1995 when a Company
strategy for dealing with the issue was approved by systems
management. It was apparent that effective support from senior
management was a key component to successfully correcting Sun
Life's systems. For this reason, in early 1996 Sun Life's Chairman
and CEO delivered a clear mandate to make Y2K a top priority.
Since that time project teams have inventoried and assessed nearly
2000 systems around the Company.
The vast majority of Sun Life's systems have already been tested,
and, based on these tests, have been certified as compliant. The
relatively few remaining systems will be certified compliant
during the course of 1999. Even though relatively few Y2K bugs
were actually found during analysis, it has been Sun Life's policy
to test every system before it can be certified as compliant. The
price tag for this massive project has been steep -- over $100
million (Cdn). However, we consider the money well spent when it
means that Sun Life can move into the year 2000 and beyond
confident that our systems will support Sun Life's position as a
leader in the financial services industry.
THE PRECEDING IS A YEAR 2000 READINESS DISCLOSURE PURSUANT TO THE
YEAR 2000 READINESS DISCLOSURE ACT ENACTED BY THE UNITED STATES
CONGRESS ON OCTOBER 19, 1998.
38
<PAGE>
<PAGE>
<PAGE>
MFS-REGISTERED TRADEMARK-/SUN LIFE SERIES TRUST
500 Boylston Street, Boston, MA 02116-3741
TRUSTEES
JOHN D. McNEIL*, Chairman, President and Trustee
FORMER CHAIRMAN, Sun Life Assurance Company of Canada,
Toronto, Ontario, Canada
SAMUEL ADAMS, Trustee
PARTNER, Warner & Stackpole,
Boston, Massachusetts
DAVID D. HORN*, Trustee
FORMER SENIOR VICE PRESIDENT AND GENERAL MANAGER,
Sun Life Assurance Company of Canada,
Wellesley Hills, Massachusetts
GARTH MARSTON, Trustee
FORMER CHAIRMAN, The Provident Institution for Savings,
Boston, Massachusetts
DERWYN F. PHILLIPS, Trustee
FORMER VICE CHAIRMAN, The Gillette Company,
Marblehead, Massachusetts
WILLIAM R. GUTOW, Trustee
VICE CHAIRMAN, Capital Entertainment Management Company,
PRIVATE INVESTOR AND REAL ESTATE CONSULTANT,
Dallas, Texas
J. KERMIT BIRCHFIELD, Trustee
CONSULTANT; CHAIRMAN, Display Technology, Inc.;
MANAGING DIRECTOR, Century Partners, Inc.,
Gloucester, Massachusetts
OFFICERS+
JAMES R. BORDEWICK, Jr., ASSISTANT SECRETARY
MARK E. BRADLEY, ASSISTANT TREASURER
STEPHEN E. CAVAN, SECRETARY AND CLERK
W. THOMAS LONDON, TREASURER
ELLEN MOYNIHAN, ASSISTANT TREASURER
JAMES O. YOST, ASSISTANT TREASURER
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116-3741
CUSTODIAN AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110-2875
PORTFOLIO MANAGERS+
JEAN O. ALESSANDRO
DAVID A. ANTONELLI
JOHN W. BALLEN
ARNAB KUMAR BANERJI
STEPHEN C. BRYANT
DAVID M. CALABRO
JEFFREY CHOWDHRY
MITCHELL D. DYNAN
JOSEPH C. FLAHERTY, JR.
GEOFFREY L. KURINSKY
JOHN D. LAUPHEIMER, JR.
DAVID R. MANNHEIM
PAUL M. McMAHON
STEVEN E. NOTHERN
LISA B. NURME
STEPHEN PESEK
BERNARD A. SCOZZAFAVA
MAURA A. SHAUGHNESSY
TONI Y. SHIMURA
FREDERICK J. SIMMONS
BRIAN E. STACK
*Affiliated with the Sponsor.
+Affiliated with the Investment Adviser. SUN-3C 8/99188M
