MFS[RegTM]/Sun Life Series Trust
SEMIANNUAL REPORT o June 30, 2000
Capital Opportunities Series
Equity Income Series
International Growth Series
Massachusetts Investors Growth Stock Series
New Discovery Series
Research Growth and Income Series
Research International Series
Strategic Growth Series
Technology Series
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MFS Original Research[RegTM]
Research has been central to investment management
at MFS since 1932, when we created
one of the first in-house research [Circular Graphic with words:
departments in the mutual fund ORIGINAL RESEARCH MAKES A
industry. Original ResearchSM at DIFFERENCE
MFS is more than just crunching MFS[SM]]
numbers and creating economic
models: it's getting to know each
security and each company personally.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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Letter from the President
Dear Contract Owners,
I'm sure you've noticed that whenever financial markets suffer a large decline,
as they did this past spring, there's a flurry of information on "how to deal
with market volatility" -- both in the popular press and from those of us in
the investment business. Our own thinking on this is that, first, for long-term
investors volatility is not necessarily something to be feared; occasional
volatility may in fact be healthy for the markets.
Second, our experience has been that when markets begin to fall, it's often too
late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market volatility
in stride, here are some points you may want to consider the next time you talk
with your investment professional.
1. Volatility can be a good thing
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with
very high stock prices, relative to their earnings, or with business concepts
that looked great in the euphoria of a booming market but in the end appeared
to have no fundamental backing. It has always been our view that one of the
best protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask
how they fared in previous periods of volatility, as well as in the good times.
2. Invest for the long term
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over nearly
all long-term periods -- 5, 10, 20 years, and more -- stock and bond returns,
as represented by most common indices, have been positive and have considerably
outpaced inflation. Investing is the best way we know of to make your money
work for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading. In
our view, traders who buy securities with the intention of selling them at a
profit in a matter of hours, days, or weeks are gambling. We believe this
seldom turns out to be a good strategy for increasing your wealth.
3. Invest regularly
Waiting for the "right time" to invest is almost always a poor strategy,
because only in retrospect do we know when that right time really was. Periods
of volatility are probably the worst times to make an investment decision.
Faced with turmoil in the markets, many investors have opted to simply stay on
the sidelines.
On the other hand, we think one of the best techniques for investing is through
automatic monthly or quarterly deductions from a checking or savings account.
This approach has at least three major benefits. First, you can formulate a
long-term plan -- how much to invest, how often, and into which portfolios --
in a calm, rational manner, working with your investment professional. Second,
with this approach you invest regularly without agonizing over the decision
each time you buy units. And, third, if you invest equal amounts of money at
regular intervals, you'll be taking advantage of a strategy called dollar-cost
averaging: by investing a fixed amount while the unit cost fluctuates, you end
up with an average unit cost to you that is lower than the average unit price
over your investment period.1 If all this sounds familiar, it's probably
because you're already taking advantage of dollar-cost averaging by investing
regularly for retirement through a 401(k) or similar account at work.
4. Diversify
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or value;
United States or international; stocks or bonds. The problem with this approach
is that by the time a particular area is generally recognized as "hot," you may
have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in 7 out of
10 years.2 For the decade, the MSCI EAFE's average annual performance was 23%,
compared to 18% for the S&P 500. Going into the 1990s, then, an investor
looking only at recent performance might have favored international investments
over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the `80s. Domestic
investments outperformed international investments in 7 out of 10 years, with
the S&P 500 returning an average of 18% annually for the decade and the MSCI
EAFE returning a 7% annual average. Looking ahead, however, we are optimistic
about international markets because we feel that many of the same forces that
propelled the current U.S. economic boom -- deregulation, restructuring, and
increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We would
suggest that one way to potentially profit from swings in the market -- to
potentially be invested in various asset classes before the market shifts in
their favor -- is with a diversified portfolio covering several asset classes.
If you haven't already done so, we encourage you to discuss these thoughts with
your investment professional and factor them into your long-range financial
planning. Hopefully, the next time the markets appear to be going wild, you'll
feel confident enough in your plan to view periods of volatility as a time of
potential opportunity -- or perhaps just a time to sit back and do nothing.
As always, we appreciate your confidence and welcome any questions or comments
you may have.
Respectfully,
/s/ C. James Prieur
C. James Prieur
President of the MFS[RegTM]/Sun Life Series Trust
July 17, 2000
(1) The use of a systematic investing program does not guarantee a profit or
protect against a loss in declining markets. You should consider your
financial ability to continue to invest through periods of low prices.
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Letter from the President -- continued
(2) Source: Lipper Inc. Decade performance: '80s--12/31/79-12/31/89,
'90s--12/31/89-12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization-weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. Past performance is no guarantee of future results.
Investments in variable annuities will fluctuate and may be worth more or less
upon redemption.
Variable annuities are designed for long-term retirement investing; please see
your investment professional for more information.
The opinions expressed in this letter are those of C. James Prieur, and no
forecasts can be guaranteed.
Management Review and Outlook
Capital Opportunities Series
For the six months ended June 30, 2000, the series provided a total return of
7.98%, which compares to a return of 2.53% for the average multi-cap core
portfolio tracked by Lipper Inc., an independent firm that reports performance.
The series' return also compares to a -0.42% return over the same period for
the series' benchmark, the Standard & Poor's 500 Composite Index (the S&P 500),
a popular, unmanaged index of common stock total return performance. The series
performance includes the reinvestment of any distributions but does not reflect
any applicable contract or surrender charges.
The market was extremely volatile over the period, driven mainly by
interest-rate concerns. Technology and telecommunications stocks led the market
between November and March, as interest rates climbed and investors abandoned
stocks in more economically sensitive sectors. Valuations in the technology and
telecommunications sectors reached what seemed like ridiculously high levels,
especially given that many companies showed no sign of being profitable anytime
soon. Investors finally got nervous and started selling technology and telecom
names, leading to volatility in the S&P 500 through much of the spring. This
shift caused some liquidity problems in the market -- especially among small-
and mid-cap names. As technology stocks slid, safe-haven sectors like drugs,
utilities, and food benefited. In May, we finally started seeing data that
suggested the economy was slowing. This led to speculation that the Federal
Reserve Board (the Fed) might be nearing the end of its interest rate hikes,
and investors began moving back into technology stocks.
We stuck to our disciplined investment strategy, buying stocks with strong
earnings growth that were selling at reasonable prices and selling them when we
felt they were fully valued. We tried not to get caught up in the herd instinct
known as momentum buying. Instead, we took advantage of stock price weakness to
buy names that we liked. A good example is Corning, a position we started
adding to back in January. We believe this is a company that is mostly known
for its plasticware, when in fact it's the leading manufacturer worldwide of
the fiber used in the fiber-optic networks being built for high-speed data and
Internet transmission. Its stock price bounced around a lot during the
technology debacle. But earnings accelerated during the spring, and more
investors began to understand the importance of Corning's fiber business.
Several other large investments also did quite well, including Mannesmann, a
German wireless and wireline company that was bought out at a nice premium by
Vodafone AirTouch PLC, a leading international mobile telecom provider.
During the recent volatility, we maintained a sizable stake in the
telecommunications and technology sectors but used the volatility to change our
holdings. We sold positions whose quality we were concerned about and trimmed
stocks that had held up well, including well-known names such as Oracle and
Cisco. We used the proceeds to buy stocks like Vodafone that we liked but
hadn't had big positions in because they had been too expensive. We also bought
some lesser-known names at what we thought were attractive prices. Among them
were ADC Telecommunications, a networking stock; Telesystem International
Wireless, a small Canadian cellular company with investments in Eastern Europe,
Brazil, and Asia; and Cabletron Systems, a mid-size company involved in both
networking and high-end consulting. We kept stocks like Nortel Networks -- a
Canadian leader in the optical business -- that we thought had strong earnings
growth prospects not fully reflected in their stock prices.
Our energy investments contributed to our strong performance during the period.
We had more than doubled our energy stake late last year on the expectation
that oil prices were bottoming. Our biggest increase was in the oil services
area in companies that supply services and equipment for drilling rigs and oil
wells. One of our largest investments was Baker Hughes, which was the cheapest
stock in its group last fall due mainly to management problems. The stock has
since rebounded nicely, thanks to both restructuring and the rally in oil
prices this past winter. We also added to exploration and production stocks
like Noble Drilling, as well as to natural gas pipeline stocks like Enron,
Coastal, and Dynergy -- all of which did quite well during the period.
We continued to find some good buying opportunities overseas, including Samsung
Electronics, a South Korean supplier of cellular handsets and memory chips, and
NTL, which is involved in acquiring cable firms. We also bought some
telecommunications stocks -- including Nextlink and Allegiance Telecom -- when
their stock prices nosedived this spring. In the winter, when drug stocks
tumbled on worries about changes in Medicare reimbursement policies, we added
shares of Pharmacia and Bristol-Myers Squibb. Another area in which we did some
selective buying was financial services, where we added to existing holdings
like AXA Financial. We also increased our stake in AES, a leading worldwide
independent power producer that's benefiting from the deregulation of electric
power generation. Many of these stocks have appreciated significantly since we
purchased them.
It's impossible to forecast the direction of interest rates or the market. We
could well be near the end of the Fed's increases -- which would bode well for
the market -- or we could continue to see volatility. Under either scenario,
we'll maintain our disciplined investment strategy, looking for earnings growth
at a reasonable price wherever we can find it. Our approach is to be patient and
not panic even when the market seems like a roller coaster.
Equity Income Series
For the six months ended June 30, 2000, the series provided a total return of
7.17%, which compares to a -1.91% return over the same period for the average
equity income portfolio tracked by Lipper Inc. The series' return also compares
to a -0.42% return over the same period for the series' benchmark, the S&P 500.
The series performance includes the reinvestment of any distributions but does
not reflect any applicable contract or surrender charges.
The series benefited from a broadening of the market during the latter half of
the six-month period, which followed a correction in the technology and
telecommunications stocks that had led the
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Management Review and Outlook -- continued
market earlier in the year. Though the first quarter proved challenging for
traditional value sectors like financial services, health care, consumer
staples, and industrial goods, once investors began taking interest in areas
outside of tech and telecom in late March, the environment became much more
favorable for value investors like us.
Our continued focus on high-quality companies with reasonable valuations kept
the series well positioned to participate in the areas that recovered as the
market broadened, particularly energy, financials, utilities and
pharmaceuticals. The series was able to tap into the market recovery among
financial stocks because of a big exposure to insurance companies. Insurance
companies, along with other interest-rate-sensitive stocks, had been very hard
hit during the first quarter. One catalyst for the recovery in this area was a
bid made by ING, a Netherlands-based financial institution, for ReliaStar, one
of the series' holdings. Not only did that boost the performance of ReliaStar,
it helped drive stronger performance among several life insurance companies. A
similar recovery in commercial property and casualty insurance companies,
driven by the industry's ability to raise prices, helped the performance of the
series' holdings in the St. Paul Companies and A.J. Gallagher. Another strong
performer was Hartford Financial, a company with a foot in both the life
insurance and property and casualty businesses.
During the period, we increased our holdings in energy stocks. This allowed us
to take advantage of a rally among companies that benefited from the recovery
in oil prices, especially those with exposure to gas. The series' holdings in
Phillips, Unocal, and Devon Energy were strong performers during the second
quarter. The strength in natural gas pricing also spurred a recovery in other
energy names. One particular catalyst for this recovery was the announcement of
El Paso Energy's intentions to buy Coastal Corp -- both of which we owned. The
announcement of this deal early in the year fueled greater strength in other
natural gas- related stocks at the end of March and into the second quarter.
Our anticipation of a recovery among interest-rate-sensitive companies such as
electric utilities also proved beneficial for the series' performance. Keyspan
Corp. and Pinnacle West were among our stronger performers, boosted by the
recovery in the electric utility industry, which was part of the general
broadening of the market.
Our investments in drug stocks were also notable outperformers. The drug group
as a whole, driven down earlier in the year by political concerns and the
market's exclusive focus on technology, began to recover in late March. We
increased our biotechnology stock holdings earlier this year, taking advantage
of the recovery by tapping the strong performance of companies like Pharmacia
and Abbott Laboratories.
We continued to limit our exposure to tech and telecom stocks during the period
because we believed that these companies were extremely overvalued. This
defensive posture helped the series avoid the negative impact of the correction
in these stocks in early March. As for our outlook on technology, while there
is no doubt that technology is changing the way companies conduct business,
there is a limit to the price investors will pay for these companies' stocks.
With respect to foreign stocks, we continue to believe that it makes sense to
look for good value outside of the United States, given that the U.S. market
has been such a strong performer for so long. Currently, we have about 17% of
the series' portfolio invested outside the United States. We believe that
Europe and Japan offer attractive investment opportunities, since they are both
still early in the process of restructuring, which entails cutting costs,
raising returns, and becoming more shareholder oriented.
Looking ahead, we continue to maintain our bias toward good companies with
solid businesses, strong managements, good balance sheets, and strong cash
flows. We believe the winners in this volatile market will be those companies
offering reasonable valuations, producing real earnings, and providing yield
support.
We expect the economy to slow as a result of the Federal Reserve Board's recent
interest-rate increases, and we believe that any subsequent increases will cool
inflationary pressures. If the economy does indeed slow down, we think the
market will continue to be risky for the higher-valued, high-growth areas of
the market. For this reason, we continue to be defensive and to diversify
outside of technology.
International Growth Series
For the six months ended June 30, 2000, the series provided a total return of
1.00%, which compares to returns over the same period of -3.95% and -4.11%,
respectively, for the series' benchmarks, the Morgan Stanley Capital
International (MSCI) Europe, Australia, Far East (EAFE) Index and the Lipper
International Portfolios Index. The MSCI EAFE Index is 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 Lipper indices are unmanaged, net-asset-value-weighted indices
of the largest qualifying portfolios within their respective investment
objectives, adjusted for the reinvestment of capital gain distributions and
income dividends. The series performance includes the reinvestment of any
distributions but does not reflect any applicable contract or surrender
charges.
We feel our strategy of relatively broad sector diversification was a major
factor in helping us offer competitive performance in a difficult environment.
In Asia and Europe, we witnessed the same market phenomena as in the United
States: high volatility and rotation between new-economy stocks, or companies
seen as being technology rich, and old-economy stocks, that is, companies
viewed as being technology poor and as having done business the same way for a
long time. Through February 2000, we experienced a continuation of the
late-1999 rally in new-economy stocks, or what Europeans refer to as TMT:
technology, media, and telecommunications. The rally was followed by what we
view as a natural correction in high-valuation TMT issues, with money rotating
back toward old-economy stocks.
The big drivers of the portfolio's performance early in the period were our TMT
holdings. But when we gave back a portion of our TMT gains during the market
volatility in late winter and spring, the rotation into old-economy stocks
helped some of our other sectors, such as financial services. So we feel
conditions during the period supported our long-standing belief that
diversification may serve investors well by providing competitive returns over
a variety of market cycles. We also took advantage of market volatility to buy
shares in what we believed were fundamentally sound companies with depressed
stock prices.
A factor that hurt performance, however, was the decline of the euro over the
period as the dollar strengthened. Since our results must always be converted
back into dollars, any profits we make on European equities are decreased if
the euro declines versus the dollar. Conversely, a rising euro would give an
extra boost to profits on our European holdings.
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Management Review and Outlook -- continued
Utilities and communications has remained the largest sector in the portfolio.
This is actually a byproduct of our style of individual bottom-up stock
picking, rather than a top-down decision to overweight a particular sector.
Utilities and communications, particularly telecommunications, is simply the
area in which we have found the most companies with strong earnings growth
prospects at reasonable valuations -- as opposed to some other areas of TMT,
where we feel relative valuations are not as compelling.
Although, as we mentioned, these holdings had given up some of their gains late
in the period, we still feel very positive about them as a group. Our focus has
been largely on wireless carriers and what are called alternative carriers.
These are companies that come into a market with new technology, such as
all-fiber-optic networks, and are able to undercut the incumbents' prices.
Cable & Wireless in the United Kingdom is an example of an alternative carrier.
Major wireless carriers that we hold include NTT Mobile Communications, the
largest cellular company in Japan, KPN in the Netherlands, and Vodafone
AirTouch in the United Kingdom.
The portfolio continued to benefit from research conducted firsthand by MFS
analysts around the globe. Fast Retailing is a stock that we think exemplifies
how our bottom-up Original ResearchSM may uncover new opportunities in
difficult markets. With rising unemployment and a weak economy, we would not
generally consider Japan to be a great environment in which to invest in a
retail company. But Fast Retailing is a chain of unisex casual clothing stores
that has broken out of the traditional Japanese retail mold. By cutting out
layers of middlemen, it has been able to undercut department store prices by as
much as 50% to 60%. However, until recently, the market's perception seemed to
be that the company's stock was already fully valued.
Our retail analyst in Tokyo had been following the stock for some time when he
urged us last fall to increase our existing small position in the company. The
analyst had been visiting Fast Retailing stores and seeing lines of customers
stretching around the block. Conversations with store managers confirmed that
the company was experiencing phenomenal sales growth. Further research led us
to conclude that Fast Retailing's stock was actually underpriced relative to
future earnings, and we strongly increased our position. Subsequently, the
market appears to have arrived at a similar opinion, and our holding has
appreciated considerably.
On a cautionary note, looking to the period ahead we feel that valuations in
the markets are high, so investors should not expect overall returns to be what
they've been in the past. That said, we think the prospects for earnings growth
have actually improved over the past year for a majority of the companies in
which we're invested. Japan has moved from negative to positive earnings
growth. In much of the rest of Asia, we've seen continued and accelerating
recovery from the regional financial crisis of 1998. And in Europe, our
projections of average annual earnings growth have increased from the 8% to 10%
range a year ago to 12% to 15% for 2000, a rate we feel may be sustainable into
next year.
One factor in our positive outlook is the strong dollar. We talked about this
earlier as being, in one respect, a negative for the portfolio. But it is a
positive factor for overseas firms competing against dollar-based companies. In
the United States, for example, a strong dollar makes imported goods cheaper
and therefore more competitive. We also see the establishment of the euro zone
as a positive development. We believe it is propelling European companies into
a wider marketplace, forcing them to act more competitively and to focus more
on delivering stock performance for shareholders. Other factors contributing to
our outlook for strong global earnings growth include continued deregulation in
many foreign marketplaces and industries, as well as ongoing restructuring in
Europe and Asia -- trends that echo earlier developments in the United States
that have contributed strongly to our current economic boom.
Massachusetts Investors Growth Stock Series
For the six months ended June 30, 2000, the series provided a total return of
3.75%, which compares to a 2.98% return for the average large-cap growth
portfolio tracked by Lipper Inc. The series return also compares to a -0.42%
return over the same period for its benchmark, the S&P 500. The series
performance includes the reinvestment of any distributions but does not reflect
any applicable contract or surrender changes.
During a period that included dramatic market volatility, the series
outperformed both its benchmark and a majority of its peers. We attribute that
to several factors. First, we tend to be well diversified across both companies
and sectors; we avoid taking very big positions in any individual holding. In
our experience, that mitigates some of the volatility in a down market. Second,
we cut back our technology holdings early in the first quarter of 2000 because
some of these stocks reached the price targets we had set for them and others,
we felt, had risen to overly high valuations. That helped us weather a
correction that largely affected technology stocks. Third, we used the
correction as an opportunity to add to our positions in what we view as some
very good companies at bargain prices. Cisco Systems is one example.
Over the past six months, we think the likelihood of a slowdown in corporate
earnings has risen with the Federal Reserve Board's (the Fed's) increases in
interest rates. This has led us to increase the portfolio's diversification
into sectors we believe may be less exposed to the economic cycle. Two examples
are health care and business services.
We increased our weighting in health care stocks mainly by adding
pharmaceutical holdings such as Pharmacia and Warner-Lambert. The portfolio
profited handsomely when Warner-Lambert's stock rose on the news of its pending
acquisition by Pfizer, which was completed in June, and Pfizer remains a
significant holding. Short term, we expect there will continue to be a lot of
rhetoric out of Washington regarding health care regulation, but in the long
term we don't think that will seriously impact what our research indicates are
strong earnings outlooks for our pharmaceutical holdings.
Business services companies provide services that enable larger companies to
become more efficient by downsizing and outsourcing. Two examples are Computer
Sciences, an information technology consulting firm, and Automatic Data
Processing, which we feel is the market leader in payroll processing. In
addition to their strong growth prospects, we think many business services
companies offer relatively predictable, consistent revenues, as much of their
work tends to come from long-term contracts.
We continue to have a bullish long-term outlook for the portfolio's technology
and telecommunications holdings, although in the short term we feel some of
these companies could be sensitive to an economic slowdown. A look at current
spending patterns around the world offers a reason for optimism. According to
our research, spending on information technology is increasing in every area of
the world, and spending in the United States this year is estimated to reach
nearly 5% of gross domestic product.
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Management Review and Outlook -- continued
By comparison, however, Europe will spend about half that figure, while Japan
and other Asian countries will spend even less. We believe that in the long
term these foreign economies will need to dramatically increase their
technology spending in order to remain competitive with the United States --
and that a significant portion of that spending may go to companies in our
portfolio that are already leaders of the communications and technology
revolution, such as Cisco, Nortel, Corning, and Intel.
In describing our overall investment style and strategy, two phrases we often
use are "sustainable competitive advantage" and "flexible and opportunistic."
What we try to find for the portfolio are good businesses selling at reasonable
valuations, and one of our definitions of a good business is one that exhibits
a sustainable competitive advantage. Often that's a large market share; we tend
to invest in businesses with very few competitors. A patented product is
another form of competitive advantage; an example would be a pharmaceutical
company with the most effective drug for a certain disease or condition. Lowest
cost may be another form of sustainable competitive advantage. Micron
Technology, which became one of our top-10 holdings during the period, offers
an example. We believe the company has become a dominant global manufacturer of
dynamic random access memory (DRAM) computer chips, which are essential
components of computer hard drives, wireless phones, and other devices.
According to our research, Micron's market share was about 8% in 1997 and is
expected to reach nearly 20% this year; globally, it is one of the two
lowest-cost producers. It is also the only DRAM manufacturer that has added
significant production capacity since 1996, by acquiring a chip factory from
Texas Instruments. Currently, demand for DRAM chips is outstripping supply; we
feel this situation could continue for some time and lead to dramatic price
increases. So we believe Micron has a sustainable competitive advantage as a
result of being one of the lowest-cost producers and having a dominant market
share of a product experiencing high demand.
Flexible and opportunistic are really two aspects of the same strategy. As
long-term investors, we try to buy stocks we believe we can hold for three
years or more. But we also recognize that the investing landscape changes daily
and has become increasingly volatile in recent years, due largely to the
instantaneous flow of large amounts of information. We try to be flexible and
take advantage of the opportunities that the market presents, in part by
purchasing stocks we believe have strong growth prospects over the long term
but are undervalued over the short term -- perhaps because of some negative
announcement or what we believe is a false rumor. Everything continues to be
driven by our Original ResearchSM; in many cases our analysts have identified
companies in which we would like to invest when a drop in their stock price
presents us with an opportunity.
New Discovery Series
For the six months ended June 30, 2000, the series provided a total return of
10.14%, which compares to a 9.45% return for the average small-cap growth
portfolio tracked by Lipper Inc. The series' return also compares to a 3.04%
return over the same period for the series' benchmark, 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 performance includes the reinvestment of any distributions
but does not reflect any applicable contract or surrender charges.
Despite a dramatic market correction this past spring, performance of the
portfolio remained strong. We feel this was in large measure due to our
consistent bottom-up focus on the fundamentals of each individual stock we
hold. And although ours is a growth portfolio, we remain constantly vigilant on
valuations (prices in relation to projected fundamentals and earnings). In late
1999 and into the first quarter of this year, we felt that even stocks of some
sound companies with high growth rates had reached valuations that
substantially exceeded what was fundamentally justified. This led us to reduce
our exposure to a number of technology issues. In March and April, when it
became clear that the Federal Reserve Board (the Fed) was intent upon slowing
the growth rate of the economy and muting the wealth effect created by a strong
stock market, many of the high valuation stocks that we had previously sold
were extremely hard hit. The portfolio's strong relative performance during
such difficult periods illustrates how a disciplined, research-driven approach
may translate into outperformance during down markets, as well as up markets.
Over the recent period, selected stocks in the energy, business services, and
health care sectors were among the portfolio's strongest performers. In the
energy sector, our research correctly anticipated last year that rising energy
prices would bring many deep-water oil drilling companies and natural gas
exploration and production companies out of their cyclical slump. During the
second half of 1999, at a time when the market was largely ignoring these
stocks, we increased our holdings in oil services firms such as Noble Drilling
and Cooper Cameron and natural gas producers such as EOG Resources. Over the
first half of 2000, the market apparently recognized the potential of these
companies, and their stocks have been strong performers for the portfolio.
Business services companies have been a significant theme in the portfolio for
some time. These are firms that design and implement computer and information
technology systems for other companies, helping their clients use technology to
increase productivity and reduce costs. One characteristic that makes business
services companies attractive is their relative predictability of earnings,
because much of their income is based on long-term contracts. Because they are
selling services more than products, they also appear to be able to ride the
technology wave with relatively less risk of a product becoming obsolete.
However, the stocks of many of these firms were beaten down throughout early
and mid-1999 due to fears about a Year 2000 (Y2K) related sales slump. We took
the view that the Y2K problem was going to be relatively short-lived and,
indeed, during late 1999 and the first half of 2000, many of these stocks came
back strongly. Among them were software firm CSG Systems, which does billing
for cable and telecommunications companies, and Diamond Technology Partners,
which helps Fortune 500 companies develop and implement Internet strategies.
In the health care sector, we view several companies in the medical services
and medical technology areas as having strong growth potential. These areas
have not been staples of many aggressive growth funds in the past year or so,
due largely to cutbacks in government reimbursement. In our view, however,
there will be tremendous opportunity in this sector as the average American
grows older and lives longer and as new technologies become available to treat
many conditions more effectively. Caremark Rx, provides an example of how we
use our MFS Original Research[RegTM] process to uncover new opportunities.
Caremark was a relatively unknown company in the pharmacy benefit management
(PBM) business. It manages drug benefits for HMOs and employers, addressing an
urgent need to contain prescription drug inflation. When we looked at the
company,
5
<PAGE>
Management Review and Outlook -- continued
we noted that Caremark was the second largest independent player in a
fast-growing industry. Moreover, it was achieving the industry's fastest rate
of revenue growth, and it boasted the industry's highest profit margins.
Most importantly, Caremark was relatively unknown to Wall Street. New
management had recently taken charge and discontinued some unattractive legacy
businesses. Looking more closely, we discovered two important elements of value
that hadn't yet impacted the stock price. Firstly was Caremark's chronic
disease management business. This unit provides care to patients with chronic
diseases, frequently utilizing newly developed biotechnology-based drugs. The
valuations of similar public companies suggested this unit might be worth
almost Caremark's entire share price at the time of our purchase. Secondly,
Caremark's net operating loss carryforward, which had been generated by the
discontinued lines of business, could be used to shelter future taxable income.
This asset was worth another several dollars per share. Together, the value of
these assets suggested that by buying Caremark, we were getting the
fast-growing PBM business for free. We thus acquired a sizeable position in
Caremark, which has already appreciated considerably this year. We foresee
continued strong gains for Caremark in the months ahead.
Looking ahead, we remain confident that small-cap investing presents a
compelling combination. In our view, it exposes investors to many of the
highest-growth companies in the economy, yet currently offers lower average
valuations than large-cap stocks. And even if the economy weakens in response
to higher interest rates, we think small caps may continue to enjoy rapid
earnings growth. Our experience has been that in a slowing economy, earnings
growth may be a bit more resilient among small-cap growth companies because
historically they achieve much of their growth based on innovation and seem to
be less locked in to the economic cycle.
Research Growth and Income Series
For the six months ended June 30, 2000, the series provided a total return of
1.33%, which compares to a return of -1.64% for the average large-cap value
portfolio tracked by Lipper Inc. The series' return also compares to a -0.42%
return over the same period for its benchmark, the S&P 500. The series
performance includes the reinvestment of any distributions but does not reflect
any applicable contract or surrender charges.
As we have anticipated for some time now, the market's extremely narrow,
momentum-driven run in technology and telecommunications stocks couldn't last
forever. As the market became increasingly concerned about the valuations of
these stocks, our underweighting in these sectors relative to the S&P 500
helped performance. More importantly, our focus on what we believe are
reasonably priced companies with reliable earnings growth, strong market
positions, innovative products, and management strategies that have adapted
their business models to the new economy has worked well in this volatile
environment. Finding companies that offer promising growth prospects at
reasonable prices is the starting point for our analysts. However, the ultimate
goal of our bottom-up fundamental research is to become acutely familiar with
the management and long-term business plans of every company we hold in the
portfolio. We think this will allow us to find great companies that will
outperform over time.
Within technology and telecommunications, we've tended to focus on the
industry's more stable, predictable growers -- names such as Intel, Cisco, EMC
Corp., Sun Microsystems, and Corning. While some people may argue that stocks
such as Intel, Cisco, and Sun are expensive, we see great opportunities in
them. Demand for their products and services has been accelerating, their
fundamental business prospects have seemed incredibly strong, and we believe
they can maintain their leadership positions in their respective businesses. We
see impressive demand for EMC's data storage systems continuing to drive strong
earnings growth and a similar situation in Corning's fiber-optics business.
We feel there are many different ways to determine a reasonable price for a
stock, but a stock is essentially worth the present value of its future
earnings. Nevertheless, a lot depends on the size of the opportunity and how
quickly we believe the company can capitalize on that growth potential. There
are many technology and telecommunications stocks, for example, with high
valuations, but from our standpoint some of these stocks are reasonably priced
because we feel the opportunities are so compelling.
We've recently increased our position in WorldCom because we think the stock is
undervalued. The company's shares have suffered due to antitrust concerns about
its acquisition of Sprint PCS and expectations of slower growth in its
long-distance business. While the Sprint deal is expected to be called off, we
see tremendous growth in the company's Internet-hosting business and strong
earnings prospects.
In the first quarter of 2000, we also took advantage of weakness in heathcare
stocks to increase our holdings in what we believe are top-notch companies with
strong track records, such as Pharmacia and Bristol-Myers Squibb. Some of these
stocks rallied in the second quarter, and we still believe they offer further
growth opportunities. Despite what we think may be a somewhat less robust
environment for consumer spending, we also like companies such as CVS and
Safeway because they're noncyclical businesses. People always need to buy
prescriptions, household products, and groceries, regardless of the economic
environment. We also happen to think these are two of the best-run companies in
their respective industries.
Looking forward, we'll continue to keep a close eye on the managements of the
companies, and we are always sensitive to risks in the portfolio. As a result,
we will pare back stocks or even eliminate them from the portfolio if they make
a big short-term move or exceed our expectations. We're far from greedy, and
our goal is to generate consistently competitive returns. We'll also sell a
stock if there's been an unanticipated disappointment or we believe its
fundamental business prospects have changed, but we try to avoid these
situations with our bottom-up research. Our value-oriented approach means that
we buy stocks at what we think are inexpensive valuations to begin with, so we
don't generally expect much risk of further price deterioration.
Research International Series
For the six months ended June 30, 2000, the series provided a total return of
1.18%, which compares to a return of -4.58% for the average international
portfolio tracked by Lipper Inc. The series' return also compares to a -3.95%
return over the same period for its benchmark, the MSCI EAFE Index. The series
performance includes the reinvestment of any distributions but does not reflect
any applicable contract or surrender charges.
In the first quarter of 2000, we witnessed a continuation of a powerful but
narrow worldwide rally in technology, media, and telecommunications (TMT)
stocks. The series' significant exposure and favorable stock selection in these
sectors, especially in
6
<PAGE>
Management Review and Outlook -- continued
telecommunications and media, produced exceptional performance during this
period. However, a more challenging market environment developed in the second
quarter of 2000, as TMT stocks seemed to peak in March amid continued upward
pressure on interest rates. During April and May, we witnessed significant
declines in share prices, with TMT stocks abroad taking their cues from the
meltdown in the NASDAQ Composite Index, an unmanaged, market-weighted index of
all over-the-counter common stocks traded on the National Association of
Securities Dealers Automated Quotation System.
Despite the selloff in international equity markets during the second quarter,
the series managed to produce favorable performance compared to its benchmarks,
for a couple of reasons. First, solid stock selection benefited our total
return. While international markets experienced broad-based weakness in
technology stocks, our holdings in this sector generally held up well. Our
large exposure to semiconductor and electronics manufacturers such as Chartered
Semiconductor and Samsung continued to experience accelerating earnings growth
and provided a boost to performance.
Other factors contributing to performance were the series' broad industry and
geographical diversification, which is a byproduct of our bottom-up stock
picking style. In the financial sector, large holdings in AXA Group, Skandia,
and ING Groep benefited from the corporate restructuring and consolidation
trend that the industry has embraced. We're also bullish on the giant financial
institution, HSBC Holdings. Despite recent weakness, we believe the former
Hongkong Shanghai Bank looks inexpensive given its strong franchise and robust
earnings outlook.
Our significant exposure to Japanese stocks such as Chugai Pharmaceutical and
Fast Retailing also contributed positively to performance. We added Chugai
Pharmaceutical over six months ago because our analysts discovered that,
although Chugai's earnings growth was only average or slightly above average,
it appeared to have a hidden gem that was not yet reflected in its stock price.
GenProbe, a Chugai subsidiary in San Diego, was developing a blood-screening
technology that we believe may become a world standard for screening for AIDS
and other diseases. As the market has come to recognize the potential of
GenProbe, the price of Chugai stock has risen significantly. We believe it has
further potential as its blood-screening technology comes closer to its initial
product launch. Despite relatively weak consumer spending in Japan, Fast
Retailing, the discount-clothing retailer, performed well and has seen huge
demand for its products. Although Japan's economic environment remained
uncertain, investors have bid up the company's shares because its deep-discount
business model is viewed as counter-cyclical.
On the negative side, the series was hurt by its large holdings in Vodafone
AirTouch and KPN. We continue to believe that the growth and earnings outlooks
for these companies are very positive. In spite of our outlook, however, these
stocks were sold off along with most wireless and telephone services companies
during the period due to concerns about valuations and the potential escalating
costs of third-generation cellular licenses.
Looking forward, we think the pace and benefits of global corporate
restructuring and consolidation should accelerate over the next few months.
Increasingly, company executives overseas are placing more emphasis on getting
the stock prices of their firms higher. The increasing number of corporate
announcements from international companies detailing restructuring efforts and
mergers and acquisitions is evidence of this trend. Increased competition from
abroad has also forced industry consolidation to the forefront of corporate
boardrooms.
Other factors that we see benefiting stock prices overseas are accelerating
spending on new technology and increased interest in equities. We have found
that as companies increase spending on new technology, they generally reduce
costs and increase productivity. Just as this trend helped drive the U.S.
economy and stock market higher during the '90s, we believe it is starting to
benefit foreign corporations and international stock markets. Equity investing
is becoming more commonplace in many foreign countries. On the supply side,
we've seen an explosion of initial public offerings and new technology such as
electronic and Internet trading. This trend has spurred interest in trading,
stock market innovation, and even the creation of new stock markets, such as
the Neur market in Germany. On the demand side, we believe new tax-advantaged
retirement plans as well as investors' desire for higher potential returns
could generate increased cash flows into overseas markets.
Strategic Growth Series
For the six months ended June 30, 2000, the series provided a total return of
7.91%, which compares to a 2.98% return for the average large cap growth
portfolio tracked by Lipper Inc. The series' return also compares to a -0.42%
return over the same period for the series' benchmark, the S&P 500. The series
performance includes the reinvestment of any distributions but does not reflect
any applicable contract or surrender changes.
We believe the portfolio's favorable performance during a period that included
a sharp market correction this past spring resulted from both diversification
across many sectors and strong stock selection in each of our major sectors.
Our holdings included significant investments in the technology,
telecommunications, business services, financial services, retailing, and
health care sectors. Our overall investment strategy has remained unchanged,
despite the market's turbulence. We continue to look for the best growth
companies -- companies that we feel are either established leaders in their
markets or are poised to become leaders over the next few years. And we believe
that the best way to uncover these companies is through MFS Original
Research[RegTM].
Although this year's market turbulence has been largely focused on technology
stocks, we remain confident that technology is perhaps the strongest long-term
growth sector of the economy. In our view, we have been in the midst of a major
platform shift from the personal computer to Internet computing that began in
the late 1990s. We feel it is critical to be mindful of valuation, but we
foresee the potential for significant reward in identifying and investing in
companies that have the strategies and execution skills to leverage the growth
of the Internet. To some extent the correction in the technology sector
presents a good buying opportunity in both existing and new positions.
Despite the recent volatility, our stock picks did well on a relative basis. In
our view the issue for the stock market was not that technology trends were
weakening, but that valuations had risen to unsustainable levels. According to
our research, companies that investors perceived as well positioned to
capitalize on the Internet's growth often achieved huge market capitalizations
even though they were recently formed, had barely any revenue, and had no
earnings. Many of these stocks had phenomenal performance in the fourth quarter
of 1999 but were down drastically this year. We attribute part of the
portfolio's strong performance to our finding ways to participate in the
tremendous growth of the
7
<PAGE>
Management Review and Outlook -- continued
Internet without falling into the valuation trap of buying over-hyped stocks.
Our investments in areas such as e-commerce software, in stocks such as Oracle,
Rational Software, and Siebel Systems, have done well compared to the market
and are actually up for the year. Although we expect the technology sector to
remain volatile, we think there will continue to be groups of stocks that
outperform. We will look for these types of investments, and we expect
technology to remain at about 40% of assets.
Business services is another area in which our research has uncovered
attractive opportunities. Portfolio holdings in this sector include companies
offering services such as credit-card processing (First Data), payroll
processing (Automatic Data Processing), bank processing (Fiserv), and mutual
fund processing (BISYS). These companies have large client bases and high
recurring revenue, providing what we feel is significant visibility into future
growth. Despite this attractive business model, many of these stocks suffered
in the second half of 1999 because customers deferred purchases due to Year
2000 (Y2K) concerns. With Y2K now behind us, many business services companies
are seeing a material pickup in customer interest, which translates into higher
bookings. We believe revenue growth should accelerate through the rest of this
year, particularly in the second half. On a valuation basis, we feel these
stocks remain attractive relative to historical levels and to the broader
market.
Technology Series
The series commenced investment operations on June 16, 2000. In our view there
are several reasons why an investor might choose a pure technology portfolio,
but we believe the primary reason is simple: technology stocks have
historically exhibited superior earnings growth. We have solid conviction that,
over time, earnings growth is the strongest driver of stock returns. According
to our research, the technology sector has had the highest earnings growth rate
relative to any other sector in the market. When one looks at the shareholder
returns of the historically successful technology stocks, consistently high
earnings growth tends to be the driver of outperformance. The series is focused
on trying to identify and invest in high earnings growth technology companies
early in their life cycles. Fortunately, we have an abundance of investment
opportunities in technology, largely due to the emergence of the Internet and
an acceleration of technological change.
We think it's also important to recognize that the technology sector includes a
breathtaking variety of companies. Technology stocks today encompass about a
third of the S&P 500, and more than half of the Russell 1000 Growth Index. (The
Russell 1000 Growth Index is a market-weighted total return index that measures
the performance of those Russell 1000 companies with higher price-to-book
ratios and higher forecasted growth values relative to the companies in the
Russell 1000 Value Index. The Russell 1000 Index comprises the 1,000 largest
U.S. stocks in terms of market capitalization.) We foresee these percentages
continuing to grow as technology sector earnings growth outpaces other sectors.
Our approach to technology investing is simple; we analyze many industries in
the technology sector and assess fundamental prospects on a company and
industry basis. Industries that we believe have promising fundamentals include
Internet infrastructure, storage area networking, wireless communications and
equipment, and optical technologies. At the company level, we like to
categorize tech stocks into one of five categories based on where a company
stands in terms of its development and its business model. These categories are
as follows; established leaders, next generation leaders, emerging growth,
cycle plays, and special situations.
Established leaders are in the first category. These are the "gorillas" of
technology; they tend to be large-cap companies that are dominant in their
fields and have fully developed business models. Among these big companies, our
research seeks out the few we believe have excellent growth prospects, superior
managements, and proven track records. Returns from these stocks have tended to
be consistently strong and we have high confidence in their potential to
outperform over the long term.
We believe the next two categories, next generation leaders and emerging
growth, offer the greatest potential for high returns. Next-generation leaders
are companies that are not yet household names but we feel are on the cusp of
developing into clear leadership positions in rapidly growing industries. These
companies are still developing long-term business models, but our research has
given us solid confidence in their fundamentals and future profit potentials.
We believe our choices in this category are exhibiting early signs of market
leadership or the potential to dominate an emerging high-growth industry. Some
of these companies are profitable today, while others may be a few years away
from profitability.
Our third category, emerging growth firms, consists of companies in relatively
early stages of development. Many of these are newcomers to the public market
and are exhibiting rapid growth. However, their long-term positioning and
potential profitability may not yet be entirely clear, and we feel we need to
follow these companies over time to more clearly understand the investment
opportunity. These stocks entail the highest risk in the series, and we invest
selectively in this category. Most of these firms are not yet profitable, but
we have high confidence in their management teams' vision and ability to
execute.
Cycle plays, our fourth category, focuses largely on semiconductor stocks. The
semiconductor industry has historically been very cyclical. Our intent in this
category is to try to use our research to find individual companies we believe
are positioned to benefit from upswings in the cycle, invest in them early in
the cycle, and then move out of them before the cycle turns down.
Our final category is special situations. Stocks that fall into this category
are what we consider significantly undervalued technology companies suffering
from misinformation or negative sentiment. This is a challenging area to invest
in, but we tend to find a few ideas each year in which our research uncovers
high intrinsic value potential in these stocks. Fundamentals may be currently
weak, but we can easily identify catalysts that could result in improving
fundamentals or other catalysts that may unlock the hidden value in these
special situations.
In our experience, technology over the short term tends to be a
sentiment-driven sector, and many variables influence investors' overall
sentiment. At this time, we think two main variables will drive near-term
performance of the sector: fundamental trends and interest rates. Fortunately,
fundamental revenue and earnings growth trends have been excellent and we see
this trend continuing. Uncertainty about interest rates has, we believe, caused
much of the volatility in technology this year and is likely to continue until
the market has a firmer grasp on the U.S. economy and the direction of rates.
We see, however, at least two reasons for continued long-term optimism in the
sector. First, we believe the U.S. financial system is sophisticated enough to
provide us with a soft landing, in
8
<PAGE>
Management Review and Outlook -- continued
terms of slowing down our economy. Second, and perhaps more important, our
research indicates the companies we have invested in are profiting from global
technology spending, not just from the current U.S. economic boom. We believe
that, especially with Asia coming back from its problems of 1998, technology
spending in the rest of the world has the potential to offset a slowing U.S.
economy.
-----------------------------------
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.
9
<PAGE>
Performance Summary
Because MFS[RegTM]/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.)
Total Rates of Return through June 30, 2000
Capital Opportunities Series
<TABLE>
<CAPTION>
6 Months 1 Year 3 Years Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +7.98% +34.82% +129.64% +184.33%
--------------------------------------------------------------------------------
Average Annual Total Return -- +34.82% +31.93% +29.24%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
June 3, 1996, through June 30, 2000.
Equity Income Series
<TABLE>
<CAPTION>
6 Months 1 Year Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +7.17% +4.65% +20.46%
--------------------------------------------------------------------------------
Average Annual Total Return -- +4.65% +9.04%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
May 6, 1998, through June 30, 2000.
International Growth Series(1)
<TABLE>
<CAPTION>
6 Months 1 Year 3 Years Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +1.00% +31.65% +31.86% +34.63%
--------------------------------------------------------------------------------
Average Annual Total Return -- +31.65% +9.66% +7.57%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
June 3, 1996, through June 30, 2000.
Massachusetts Investors Growth Stock Series
<TABLE>
<CAPTION>
6 Months 1 Year Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +3.75% +26.97% +70.06%
--------------------------------------------------------------------------------
Average Annual Total Return -- +26.97% +28.00%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
May 6, 1998, through June 30, 2000.
New Discovery Series(2)
<TABLE>
<CAPTION>
6 Months 1 Year Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +10.14% +59.91% +87.44%
--------------------------------------------------------------------------------
Average Annual Total Return -- +59.91% +33.93%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
May 6, 1998, through June 30, 2000.
Research Growth and Income Series
<TABLE>
<CAPTION>
6 Months 1 Year 3 Years Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +1.33% +0.98% +44.69% +47.58%
--------------------------------------------------------------------------------
Average Annual Total Return -- +0.98% +13.10% +13.23%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
May 13, 1997, through June 30, 2000.
Research International Series(1)
<TABLE>
<CAPTION>
6 Months 1 Year Life*
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return +1.18% +39.79% +47.67%
--------------------------------------------------------------------------------
Average Annual Total Return -- +39.79% +19.87%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
May 6, 1998, through June 30, 2000.
Strategic Growth Series
<TABLE>
<CAPTION>
6 Months Life*
--------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return +7.91% +30.89%
--------------------------------------------------------------------------------
</TABLE>
* For the period from the commencement of the series' investment operations,
October 29, 1999, through June 30, 2000.
Notes to Performance Summary
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of dividends and capital gains.
Investment return and principal value will fluctuate, and units, when redeemed,
may be worth more or less than their original cost. More recent returns may be
more or less than those shown. Past performance is no guarantee of future
results.
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. Please
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. Please see the prospectus for details.
10
<PAGE>
Portfolio of Investments (Unaudited) -- June 30, 2000
Capital Opportunities Series
Stocks -- 94.1%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 77.7%
Aerospace -- 1.3%
Boeing Co. ............................................ 97,900 $ 4,093,444
Honeywell International, Inc. ......................... 60,525 2,038,936
United Technologies Corp. ............................. 25,100 1,477,762
------------
$ 7,610,142
------------
Banks and Credit Companies -- 1.2%
Chase Manhattan Corp. ................................. 117,750 $ 5,423,859
Providian Financial Corp. ............................. 20,200 1,818,000
------------
$ 7,241,859
------------
Biotechnology -- 1.3%
Pharmacia Corp. ....................................... 156,521 $ 8,090,179
------------
Business Machines -- 1.3%
Hewlett-Packard Co. ................................... 22,400 $ 2,797,200
International Business Machines
Corp. ............................................... 11,000 1,205,188
Seagate Technology, Inc.* ............................. 75,600 4,158,000
------------
$ 8,160,388
------------
Business Services -- 1.5%
Adelphia Business Solutions* .......................... 59,600 $ 1,381,975
BEA Systems, Inc.* .................................... 23,400 1,156,838
Computer Sciences Corp.* .............................. 58,500 4,369,219
Finisar Corp.* ........................................ 91,500 2,396,156
------------
$ 9,304,188
------------
Cellular Telephones -- 2.6%
Motorola, Inc. ........................................ 236,160 $ 6,863,400
Sprint Corp. (PCS Group)* ............................. 77,400 4,605,300
Voicestream Wireless Corp.* ........................... 38,000 4,419,281
------------
$ 15,887,981
------------
Computer Hardware -- Systems -- 1.0%
Compaq Computer Corp. ................................. 53,800 $ 1,375,262
Dell Computer Corp.* .................................. 95,900 4,729,069
------------
$ 6,104,331
------------
Computer Software --
Personal Computers -- 0.9%
Mercury Interactive Corp.* ............................ 6,700 $ 648,225
Microsoft Corp.* ...................................... 59,800 4,784,000
------------
$ 5,432,225
------------
Computer Software -- Services -- 0.6%
EMC Corp.* ............................................ 43,600 $ 3,354,475
------------
Computer Software -- Systems -- 3.5%
BMC Software, Inc.* ................................... 74,000 $ 2,699,844
Brocade Communications Systems,
Inc.* ............................................... 5,600 1,027,513
Commerce One, Inc.* ................................... 9,800 444,675
Computer Associates International,
Inc. ................................................ 49,900 2,554,256
Digex, Inc.* .......................................... 44,300 3,009,631
Extreme Networks, Inc.* ............................... 11,200 1,181,600
I2 Technologies, Inc.* ................................ 12,650 1,318,960
Oracle Corp.* ......................................... 21,300 1,790,531
Redback Networks, Inc.* ............................... 6,800 1,210,400
Siebel Systems, Inc.* ................................. 12,800 2,093,600
StorageNetworks, Inc.* ................................ 1,000 90,250
Unisys Corp.* ......................................... 77,800 1,132,963
VERITAS Software Corp.* ............................... 24,150 2,729,327
------------
$ 21,283,550
------------
Conglomerates -- 2.8%
Tyco International Ltd. ............................... 355,952 $ 16,863,226
------------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Electrical Equipment
Capstone Turbine Corp.* ............................... 130 $ 5,858
------------
Electronics -- 7.4%
Analog Devices, Inc.* ................................. 61,560 $ 4,678,560
Applied Materials, Inc.* .............................. 29,384 2,662,925
Atmel Corp.* .......................................... 59,700 2,201,438
Fairchild Semiconductor
International Co.* .................................. 111,200 4,503,600
Flextronics International Ltd.* ....................... 19,100 1,311,931
Intel Corp. ........................................... 31,100 4,157,681
Lam Research Corp.* ................................... 38,500 1,443,750
LSI Logic Corp.* ...................................... 83,900 4,541,088
Micron Technology, Inc.* .............................. 76,000 6,692,750
Novellus Systems, Inc.* ............................... 45,700 2,584,906
Sanmina Corp.* ........................................ 30,360 2,595,780
Solectron Corp.* ...................................... 123,700 5,179,937
Teradyne, Inc.* ....................................... 31,800 2,337,300
------------
$ 44,891,646
------------
Energy -- 0.9%
Dynegy, Inc. .......................................... 31,500 $ 2,151,844
NRG Energy, Inc.* ..................................... 176,790 3,226,417
------------
$ 5,378,261
------------
Entertainment -- 2.2%
Harrah's Entertainment, Inc.* ......................... 106,264 $ 2,224,902
Hearst-Argyle Television, Inc.* ....................... 50,700 988,650
Infinity Broadcasting Corp., "A"* ..................... 237,725 8,662,105
Viacom, Inc., "B"* .................................... 22,400 1,527,400
------------
$ 13,403,057
------------
Financial Institutions -- 2.3%
Associates First Capital Corp., "A" ................... 165,100 $ 3,683,794
Citigroup, Inc. ....................................... 53,400 3,217,350
Federal National Mortgage Assn. ....................... 36,300 1,894,406
Freddie Mac Corp. ..................................... 131,800 5,337,900
------------
$ 14,133,450
------------
Financial Services -- 1.1%
AXA Financial, Inc. ................................... 195,100 $ 6,633,400
------------
Insurance -- 2.3%
American International Group, Inc. .................... 22,700 $ 2,667,250
Hartford Financial Services Group,
Inc. ................................................ 119,530 6,686,210
Lincoln National Corp. ................................ 125,800 4,544,525
------------
$ 13,897,985
------------
Internet -- 1.4%
VeriSign, Inc.* ....................................... 46,272 $ 8,167,008
VIA Net.Works, Inc.* .................................. 35,100 541,856
------------
$ 8,708,864
------------
Machinery -- 1.1%
Deere & Co., Inc. ..................................... 73,700 $ 2,726,900
Ingersoll Rand Co. .................................... 95,700 3,851,925
------------
$ 6,578,825
------------
Medical and Health Products -- 3.0%
American Home Products Corp. .......................... 45,800 $ 2,690,750
Bausch & Lomb, Inc. ................................... 50,200 3,884,225
Bristol-Myers Squibb Co. .............................. 111,500 6,494,875
Pfizer, Inc. .......................................... 111,650 5,359,200
------------
$ 18,429,050
------------
</TABLE>
11-COS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Medical and Health Technology
and Services -- 0.6%
PE Corp.- PE Biosystems Group ......................... 50,800 $ 3,346,450
------------
Metals and Minerals -- 0.3%
Phelps Dodge Corp. .................................... 54,000 $ 2,008,125
------------
Oil Services -- 5.6%
Baker Hughes, Inc. .................................... 353,700 $ 11,318,400
BJ Services Co.* ...................................... 30,700 1,918,750
Cooper Cameron Corp.* ................................. 47,700 3,148,200
Global Marine, Inc.* .................................. 46,300 1,305,081
Halliburton Co. ....................................... 106,100 5,006,594
Noble Drilling Corp.* ................................. 108,200 4,456,488
Valero Energy Corp. ................................... 44,600 1,416,050
Weatherford International, Inc.* ...................... 128,500 5,115,906
------------
$ 33,685,469
------------
Oils -- 5.2%
Coastal Corp. ......................................... 103,600 $ 6,306,650
Conoco, Inc. .......................................... 208,000 5,109,000
Conoco, Inc., "A" ..................................... 110,900 2,439,800
EOG Resources, Inc. ................................... 133,800 4,482,300
Grant Pride Co., Inc.* ................................ 120,700 3,017,500
Transocean Sedco Forex, Inc. .......................... 93,123 4,976,260
Ultramar Diamond Shamrock Corp. ....................... 94,200 2,337,338
Unocal Corp. .......................................... 86,400 2,862,000
------------
$ 31,530,848
------------
Printing and Publishing -- 0.5%
Tribune Co. ........................................... 86,600 $ 3,031,000
------------
Retail -- 1.9%
CVS Corp. ............................................. 73,000 $ 2,920,000
RadioShack Corp. ...................................... 176,400 8,356,950
------------
$ 11,276,950
------------
Supermarkets -- 1.3%
Kroger Co.* ........................................... 225,800 $ 4,981,712
Safeway, Inc.* ........................................ 64,700 2,919,588
------------
$ 7,901,300
------------
Telecommunications -- 18.3%
ADC Telecommunications, Inc.* ......................... 80,000 $ 6,710,000
Allegiance Telecom, Inc.* ............................. 106,200 6,796,800
Alltel Corp. .......................................... 55,800 3,456,112
Amdocs Ltd.* .......................................... 44,200 3,392,350
AT&T Corp. ............................................ 137,460 3,831,697
BroadWing, Inc.* ...................................... 81,700 2,119,094
Cabletron Systems, Inc.* .............................. 164,100 4,143,525
Cablevision Systems Corp. "A"* ........................ 39,700 2,694,638
CIENA Corp.* .......................................... 9,200 1,533,525
Cisco Systems, Inc.* .................................. 105,500 6,705,844
Corning, Inc. ......................................... 69,200 18,675,349
Crown Castle International Corp.* ..................... 12,900 470,850
Focal Communications Corp.* ........................... 14,400 514,800
GTE Corp. ............................................. 38,400 2,390,400
Intermedia Communications, Inc.* ...................... 700 20,825
Lucent Technologies, Inc. ............................. 62,700 3,714,975
Metromedia Fiber Network, Inc., "A"* 105,080 4,170,362
MGC Communications, Inc.* ............................. 61,900 3,710,131
Nextlink Communications, Inc., "A"* 83,200 3,156,400
NTL, Inc.* ............................................ 120,496 7,214,698
ONI Systems Corp.* .................................... 850 99,623
Pegasus Communications Corp.* ......................... 12,800 628,000
Qwest Communications
International, Inc.* ................................ 10,600 526,688
Sprint Corp. .......................................... 10,500 535,500
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Telecommunications -- continued
Tekelec Co.* .......................................... 97,500 $ 4,698,281
Tellabs, Inc.* ........................................ 24,900 1,704,094
Time Warner Telecom, Inc.* ............................ 42,000 2,703,750
UnitedGlobalCom, Inc.* ................................ 121,400 5,675,450
Vignette Corp.* ....................................... 8,100 421,327
Williams Communications Group,
Inc.* ............................................... 151,900 5,041,181
Winstar Communications, Inc.* ......................... 107,300 3,634,787
------------
$111,091,056
------------
Telecommunications and Cable -- 0.9%
Comcast Corp., "A"* ................................... 127,400 $ 5,159,700
------------
Utilities -- Electric -- 2.4%
AES Corp.* ............................................ 260,200 $ 11,871,625
Calpine Corp.* ........................................ 28,900 1,900,175
CMS Energy Corp. ...................................... 43,700 966,863
------------
$ 14,738,663
------------
Utilities -- Gas -- 1.0%
Enron Corp. ........................................... 41,400 $ 2,670,300
Williams Cos., Inc. ................................... 87,700 3,655,994
------------
$ 6,326,294
------------
Total U.S. Stocks ................................... $471,488,795
------------
Foreign Stocks -- 16.4%
Argentina -- 0.1%
IMPSAT Fiber Networks, Inc.
(Telecommunications)* ............................... 42,630 $ 714,053
------------
Australia -- 0.5%
Cable & Wireless Optus Ltd.
(Telecommunications) ................................ 1,061,100 $ 3,158,942
------------
Bermuda -- 1.7%
FLAG Telecom Holdings Ltd.
(Telecommunications)* ............................... 38,080 $ 566,440
Global Crossing Ltd.
(Telecommunications)* ............................... 366,200 9,635,637
------------
$ 10,202,077
------------
Canada -- 3.1%
AT&T Canada, Inc.
(Telecommunications)* ............................... 53,000 $ 1,758,937
Nortel Networks Corp.
(Telecommunications) ................................ 203,000 13,854,750
Telesystem International Wireless,
Inc. (Telecommunications)* .......................... 172,700 3,194,950
------------
$ 18,808,637
------------
Finland -- 1.2%
Nokia Corp., ADR
(Telecommunications) ................................ 99,900 $ 4,988,756
Sonera Oyj (Telecommunications) ....................... 56,900 2,593,625
------------
$ 7,582,381
------------
France -- 0.5%
Integra S.A. (Computer Software --
Services)* ......................................... 76,360 $ 689,570
Vivendi S.A. (Business Services) ...................... 29,000 2,559,331
------------
$ 3,248,901
------------
Hong Kong -- 0.4%
China Telecom Ltd.
(Telecommunications) ................................ 260,000 $ 2,293,137
------------
Israel -- 0.5%
Partner Communications Co. Ltd.,
ADR (Cellular Telephones)* .......................... 297,450 $ 2,825,775
------------
</TABLE>
12-COS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Japan -- 0.6%
NTT Mobile Communications
Network, Inc.
(Telecommunications) ............................................... 125 $ 3,381,882
------------
Mexico -- 0.2%
Grupo Iusacell S.A. de C.V., ADR
(Telecommunications)* .............................................. 63,060 $ 985,312
------------
Netherlands -- 2.2%
Completel Europe N.V.
(Telecommunications)* .............................................. 164,180 $ 2,037,441
KPNQwest N.V. (Internet)* ............................................ 31,400 1,234,947
Libertel N.V. (Cellular
Telecommunications)* ............................................... 162,200 2,469,637
United Pan-Europe Communications
N.V. (Telecommunications and
Cable)* ............................................................ 193,900 5,069,806
Versatel Telecommunications N.V.
(Telecommunications)* .............................................. 67,200 2,822,562
------------
$ 13,634,393
------------
South Korea -- 1.8%
Samsung Electronics (Electronics) .................................... 33,660 $ 11,140,497
------------
Sweden -- 1.1%
Tele1 Europe Holdings AB
(Telecommunications)* .............................................. 173,060 $ 2,120,304
Tele1 Europe Holdings AB, ADR
(Telecommunications)* .............................................. 8,500 102,531
Telefonaktiebolaget LM Ericsson AB
(Telecommunications) ............................................... 214,400 4,244,220
------------
$ 6,467,055
------------
United Kingdom -- 2.5%
Cable & Wireless PLC, ADR
(Telecommunications)* .............................................. 170,216 $ 2,881,076
Energis PLC (Telecommunications)* 94,790 3,552,942
NDS Group PLC, ADR (Internet)* ....................................... 12,200 744,200
Vodafone AirTouch PLC
(Telecommunications)* .............................................. 1,968,795 7,951,262
------------
$ 15,129,480
------------
Total Foreign Stocks ............................................... $ 99,572,522
------------
Total Stocks (Identified Cost, $507,847,071) ....................... $571,061,317
------------
Short-Term Obligations -- 5.0%
Principal Amount
(000 Omitted)
Associates First Capital Corp., due
7/03/00 ........................................................... $ 20,000 $ 19,992,334
Federal Home Loan Mortgage
Corp., due 7/03/00 ................................................ 10,400 10,396,204
------------
Total Short-Term Obligations, at Amortized Cost ................... $ 30,388,538
------------
Total Investments (Identified Cost, $538,235,609) ................. $601,449,855
------------
Other Assets,
Less Liabilities -- 0.9% .......................................... 5,465,737
------------
Net Assets -- 100.0% .............................................. $606,915,592
------------
</TABLE>
See portfolio footnotes and notes to financial statements.
Portfolio of Investments (Unaudited) -- June 30, 2000
Equity Income Series
Stocks -- 94.1%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 77.2%
Aerospace -- 2.2%
Boeing Co. ............................................................. 18,360 $ 767,677
TRW, Inc. .............................................................. 11,829 513,083
----------
$1,280,760
----------
Automotive -- 0.2%
Delphi Automotive Systems Corp. ........................................ 8,090 $ 117,811
----------
Banks and Credit
Companies -- 0.7%
PNC Bank Corp. ......................................................... 8,462 $ 396,656
----------
Biotechnology -- 3.1%
Abbott Laboratories, Inc. .............................................. 20,130 $ 897,043
Pharmacia Corp. ........................................................ 17,928 926,654
----------
$1,823,697
----------
Business Services -- 1.9%
Automatic Data Processing, Inc. ........................................ 8,650 $ 463,316
BISYS Group, Inc.* ..................................................... 10,300 633,450
----------
$1,096,766
----------
Chemicals -- 1.8%
Air Products & Chemicals, Inc. ......................................... 12,230 $ 376,837
Rohm & Haas Co. ........................................................ 19,150 660,675
----------
$1,037,512
----------
Computer Software -- Personal
Computers -- 0.6%
Microsoft Corp.* ....................................................... 4,400 $ 352,000
----------
Conglomerates -- 1.2%
Eastern Enterprises Co. ................................................ 10,978 $ 691,614
----------
Consumer Goods and Services -- 0.6%
International Flavours & Fragrances,
Inc. ................................................................. 11,280 $ 340,515
----------
Electrical Equipment -- 1.7%
Emerson Electric Co. ................................................... 16,770 $1,012,489
----------
Energy -- 0.9%
Devon Energy Corp. ..................................................... 9,690 $ 544,457
----------
Entertainment -- 0.6%
USA Networks, Inc.* .................................................... 16,000 $ 346,000
----------
Financial Services -- 1.3%
Mellon Financial Corp. ................................................. 21,720 $ 791,422
----------
Food and Beverage Products -- 5.7%
Archer-Daniels-Midland Co. ............................................. 57,430 $ 563,532
Coca-Cola Co. .......................................................... 5,900 338,881
General Mills, Inc. .................................................... 7,200 275,400
Keebler Foods Co. ...................................................... 8,700 322,988
PepsiCo, Inc. .......................................................... 15,700 697,669
Quaker Oats Co. ........................................................ 8,480 637,060
Smucker (J.M.) Co. ..................................................... 28,283 530,306
----------
$3,365,836
----------
Insurance -- 12.3%
American International Group, Inc. ..................................... 5,871 $ 689,842
CIGNA Corp. ............................................................ 4,036 377,366
Gallagher (Arthur J.) & Co. ............................................ 23,268 977,256
Hartford Financial Services Group,
Inc. ................................................................. 18,260 1,021,419
Jefferson Pilot Corp. .................................................. 8,532 481,525
Lincoln National Corp. ................................................. 18,437 666,037
MetLife, Inc.* ......................................................... 20,520 432,202
ReliaStar Financial Corp. .............................................. 23,595 1,237,263
St. Paul Cos., Inc. .................................................... 38,879 1,326,746
----------
$7,209,656
----------
</TABLE>
13-EIS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Machinery -- 1.2%
Deere & Co., Inc. ...................................................... 19,610 $ 725,570
-----------
Medical and Health Products -- 3.8%
American Home Products Corp. ........................................... 13,445 $ 789,894
Bristol-Myers Squibb Co. ............................................... 13,300 774,725
Schering Plough Corp. .................................................. 13,560 684,780
-----------
$ 2,249,399
-----------
Oil Services -- 4.5%
Global Marine, Inc.* ................................................... 16,100 $ 453,819
Halliburton Co. ........................................................ 22,500 1,061,719
Noble Drilling Corp.* .................................................. 13,460 554,384
Valero Energy Corp. .................................................... 17,130 543,877
-----------
$ 2,613,799
-----------
Oils -- 7.7%
Apache Corp. ........................................................... 4,100 $ 241,131
Coastal Corp. .......................................................... 14,765 898,819
Conoco, Inc. ........................................................... 5,424 133,227
Conoco, Inc., "A" ...................................................... 16,201 356,422
Exxon Mobil Corp. ...................................................... 15,036 1,180,326
Phillips Petroleum Co. ................................................. 14,233 721,435
Transocean Sedco Forex, Inc. ........................................... 5,800 309,938
Unocal Corp. ........................................................... 21,272 704,635
-----------
$ 4,545,933
-----------
Printing and Publishing -- 1.5%
Gannett Co., Inc. ...................................................... 9,236 $ 552,428
Tribune Co. ............................................................ 8,813 308,455
-----------
$ 860,883
-----------
Railroads -- 0.5%
Burlington Northern Santa Fe
Railway Co. .......................................................... 12,089 $ 277,291
-----------
Real Estate Investment Trusts -- 3.1%
Equity Office Properties Trust ......................................... 21,600 $ 595,350
Equity Residential Properties Trust .................................... 13,642 627,532
First Industrial Realty Trust, Inc. .................................... 9,979 294,381
Kilroy Realty Corp. .................................................... 11,800 306,062
-----------
$ 1,823,325
-----------
Supermarkets -- 1.7%
Kroger Co.* ............................................................ 15,473 $ 341,373
Safeway, Inc.* ......................................................... 14,700 663,337
-----------
$ 1,004,710
-----------
Telecommunications -- 3.6%
Bell Atlantic Corp. .................................................... 16,472 $ 836,984
GTE Corp. .............................................................. 13,033 811,304
SBC Communications, Inc. ............................................... 11,237 486,000
-----------
$ 2,134,288
-----------
Utilities -- Electric -- 8.1%
Duke Energy Corp. ...................................................... 9,792 $ 552,024
Florida Progress Corp. ................................................. 9,109 426,984
FPL Group, Inc. ........................................................ 10,700 529,650
GPU, Inc. .............................................................. 12,542 339,418
Keyspan Corp. .......................................................... 22,370 687,877
NSTAR Co. .............................................................. 14,013 570,154
Peco Energy Co. ........................................................ 17,492 705,146
Pinnacle West Capital Corp. ............................................ 19,554 662,392
Public Service Enterprise Group ........................................ 8,100 280,463
-----------
$ 4,754,108
-----------
Utilities -- Gas -- 6.7%
AGL Resources, Inc. .................................................... 13,914 $ 221,754
Berkshire Energy Resources Co. ......................................... 8,009 299,337
Columbia Energy Group .................................................. 4,850 318,281
El Paso Energy Corp. ................................................... 11,179 569,430
National Fuel Gas Co. .................................................. 14,968 729,690
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Utilities -- Gas -- continued
NICOR, Inc. ............................................................ 11,295 $ 368,500
Providence Energy Corp. ................................................ 4,988 202,014
Washington Gas Light Co. ............................................... 13,678 329,127
Williams Cos., Inc. .................................................... 21,724 905,619
-----------
$ 3,943,752
-----------
Total U.S. Stocks .................................................... $45,340,249
-----------
Foreign Stocks -- 16.9%
Canada -- 2.2%
Aliant, Inc. (Telecommunications) ...................................... 20,046 $ 489,803
Canadian National Railway Co.
(Railroads) .......................................................... 9,894 288,781
Manitoba Telecom Services
(Telecommunications) ................................................. 29,071 500,072
-----------
$ 1,278,656
-----------
France -- 2.0%
Axa (Insurance) ........................................................ 3,818 $ 601,370
Total Fina S.A., ADR (Oils) ............................................ 7,300 560,731
-----------
$ 1,162,101
-----------
Japan -- 0.9%
Tokyo Gas Co. Ltd. (Gas) ............................................... 201,000 $ 564,649
-----------
Netherlands -- 4.4%
Akzo Nobel N.V. (Chemicals) ............................................ 20,629 $ 876,314
ING Groep N.V. (Financial
Services)* ........................................................... 9,700 655,581
Royal Dutch Petroleum Co., ADR
(Oils) ............................................................... 17,037 1,048,840
-----------
$ 2,580,735
-----------
Switzerland -- 2.3%
Nestle S.A. (Food and Beverage
Products) ............................................................ 334 $ 668,696
Novartis AG (Medical and Health
Products) ............................................................ 400 633,800
Synthes-Stratec, Inc. (Medical and
Health Products)* .................................................... 115 52,325
-----------
$ 1,354,821
-----------
United Kingdom -- 5.1%
BAE Systems PLC (Aerospace)* ........................................... 97,581 $ 608,117
BP Amoco PLC, ADR (Oils) ............................................... 14,742 833,844
CGU PLC (Insurance)* ................................................... 39,749 661,368
Diageo PLC (Food and Beverage
Products)* ........................................................... 36,553 327,870
HSBC Holdings PLC (Banks and
Credit Cos.)* ........................................................ 51,000 582,813
-----------
$ 3,014,012
-----------
Total Foreign Stocks ................................................. $ 9,954,974
-----------
Total Stocks (Identified Cost, $50,991,418) .......................... $55,295,223
-----------
Convertible Preferred Stocks -- 2.1%
U.S. Stocks -- 1.9%
Insurance -- 0.9%
Lincoln National Corp., 7.75% 5,745 $ 116,336
Metlife Capital Trust I, 8.00% 5,700 394,369
-----------
$ 510,705
-----------
Telecommunications -- 0.4%
Cox Communications, Inc., 7.75% 2,300 $ 253,299
-----------
Utilities -- Electric -- 0.6%
NiSource, Inc., 7.75% 5,376 $ 212,688
TXU Corp., 9.25% 3,565 138,589
-----------
$ 351,277
-----------
Total U.S. Stocks .................................................... $ 1,115,281
-----------
</TABLE>
14-EIS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Convertible Preferred Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- 0.2%
Canada -- 0.2%
Canadian National Railway Co.,
5.25%, (Railroads) ............... 2,723 $ 122,535
-----------
Total Convertible Preferred Stocks
(Identified Cost, $1,208,496) ............. $ 1,237,816
-----------
Convertible Bond -- 0.7%
Principal Amount
(000 Omitted)
Conglomerates -- 0.7%
Loews Corp., 3.125s, 2007
(Identified Cost, $385,272) ...... $ 465 $ 387,112
-----------
Short-Term Obligation -- 2.6%
Federal Home Loan Bank, due
7/03/00, at Amortized Cost ....... $1,530 $ 1,529,442
-----------
Total Investments
(Identified Cost, $54,114,628) .......... $58,449,593
-----------
Other Assets,
Less Liabilities -- 0.5% .................. 275,685
-----------
Net Assets -- 100.0% ...................... $58,725,278
-----------
</TABLE>
See portfolio footnotes and notes to financial statements.
Portfolio of Investments (Unaudited) -- June 30, 2000
International Growth Series
Stocks -- 94.6%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- 91.9%
Australia -- 2.7%
Publishing & Broadcasting Ltd.
(Broadcasting) .......................... 106,400 $ 817,336
QBE Insurance Group Ltd.
(Insurance)* ............................ 343,093 1,676,086
----------
$2,493,422
----------
Bermuda -- 0.4%
FLAG Telecom Holdings Ltd.
(Telecommunications)* ................... 27,060 $ 402,517
----------
Canada -- 4.7%
Anderson Exploration Ltd. (Oils)* ......... 44,600 $ 810,909
AT&T Canada, Inc.
(Telecommunications)* ................... 15,300 507,769
BCE, Inc. (Telecommunications) ............ 34,466 817,679
Canadian National Railway Co.
(Railroads) ............................. 54,580 1,593,054
Nortel Networks Corp.
(Telecommunications) .................... 9,376 650,838
----------
$4,380,249
----------
Finland -- 2.7%
Helsingin Puhelin Oyj
(Telecommunications) .................... 20,400 $1,998,016
HPY Holding -- HTF Holding Oyj
Abp (Telecommunications)* ............... 10,800 494,865
----------
$2,492,881
----------
France -- 10.7%
Aventis S.A. (Pharmaceuticals) ............ 13,000 $ 948,729
Banque Nationale de Paris (Banks
and Credit Cos.) ........................ 14,000 1,347,132
Bouygues S.A.
(Telecommunications) .................... 1,940 1,296,347
Sanofi-Synthelabo S.A. (Medical
and Health Products)* ................... 39,500 1,881,565
Technip S.A. (Construction) ............... 10,200 1,233,668
Television Francaise
(Entertainment)* ........................ 5,200 362,366
Total S.A., "B" (Oils) .................... 10,100 1,548,419
Vivendi S.A. (Business Services) .......... 15,500 1,367,918
----------
$9,986,144
----------
Germany -- 3.2%
Prosieben Media AG, Preferred
(Entertainment) ......................... 23,700 $2,946,779
----------
Greece -- 0.3%
Antenna TV S.A., ADR
(Broadcasting)* ......................... 18,695 $ 289,772
----------
Ireland -- 0.2%
Anglo Irish Bank Corp. PLC (Banks
and Credit Cos.) ........................ 84,462 $ 182,693
----------
Israel -- 0.3%
Partner Communications Co. Ltd.,
ADR (Cellular Telephones)* .............. 33,700 $ 320,150
----------
Italy -- 1.4%
Telecom Italia Mobile S.p.A.
(Telecommunications) .................... 55,900 $ 570,975
Telecom Italia Mobile S.p.A., Saving
Shares (Telecommunications)* ............ 138,400 696,255
----------
$1,267,230
----------
Japan -- 22.8%
Canon, Inc. (Special Products and
Services) ............................... 60,000 $2,986,425
</TABLE>
15-IGS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Japan -- continued
Chugai Pharmaceutical Co. Ltd.
(Pharmaceuticals) .................................................... 147,000 $ 2,778,422
Chukyo Coca-Cola Bottling Co. Ltd.
(Food and Beverage Products) ......................................... 21,800 219,891
Fast Retailing Co. (Retail) ............................................ 4,400 1,841,629
Fuji Heavy Industries Ltd.
(Automotive) ......................................................... 113,000 820,230
Fujitsu Ltd. (Computer Hardware --
Systems) ............................................................ 40,000 1,383,861
Hitachi Ltd. (Electronics) ............................................. 205,000 2,956,731
Mikuni Coca-Cola Bottling Co. Ltd.
(Food and Beverage Products) ......................................... 32,000 464,253
Mitsubishi Electric Corp.
(Electronics) ........................................................ 75,000 811,652
Mitsubishi Motors Corp.
(Automotive) ......................................................... 119,000 508,173
Nippon Telegraph & Telephone Co.
(Utilities -- Telephone) ............................................. 88 1,169,683
NTT Mobile Communications
Network, Inc.
(Telecommunications) ................................................. 110 2,976,056
Sony Corp. (Electronics) ............................................... 5,700 531,957
Tokyo Broadcasting System, Inc.
(Entertainment) ...................................................... 30,000 1,295,249
Toshiba Corp. (Electronics) ............................................ 43,000 485,209
-----------
$21,229,421
-----------
Mexico -- 0.9%
Grupo Television S.A. de C.V., GDR
(Entertainment)* ..................................................... 12,500 $ 861,719
-----------
Netherlands -- 10.3%
Akzo Nobel N.V. (Chemicals) ............................................ 60,200 $ 2,557,278
Completel Europe N.V.
(Telecommunications)* ................................................ 860 10,673
ING Groep N.V. (Financial Services)* ................................... 23,398 1,581,370
Philips Electronics N.V. (Electronics) 38,200 1,801,407
KPN N.V. (Telecommunications)* ......................................... 38,886 1,739,099
Libertel N.V. (Cellular
Telecommunications)* ................................................. 25,500 388,260
Royal Dutch Petroleum Co. (Oils) ....................................... 25,300 1,572,255
-----------
$ 9,650,342
-----------
Norway -- 0.8%
Schibsted ASA (Publishing) ............................................. 28,940 $ 536,426
Sparebanken NOR (Banks and
Credit Cos.) ......................................................... 8,200 184,017
-----------
$ 720,443
-----------
Portugal -- 0.8%
Telecel -- Comunicacoes Pessoais,
S.A. (Cellular
Telecommunications)* ................................................. 46,200 $ 701,230
-----------
Singapore -- 3.1%
Overseas Union Bank Ltd. (Banks
and Credit Cos.) ..................................................... 332,248 $ 1,289,349
Overseas-Chinese Banking Corp.
Ltd. (Banks and Credit Cos.) ......................................... 134,000 923,603
Singapore Press Holdings Ltd.
(Printing and Publishing) ............................................ 42,000 656,820
-----------
$ 2,869,772
-----------
Spain -- 0.9%
Repsol S.A. (Oils) ..................................................... 43,600 $ 867,789
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Sweden -- 3.2%
NetCom AB (Telecommunications)* ........................................ 11,600 $ 856,676
Saab AB, "B" (Aerospace) ............................................... 256,000 2,149,064
Tele1 Europe Holdings AB
(Telecommunications)* ................................................ 690 8,454
-----------
$ 3,014,194
-----------
Switzerland -- 2.5%
Novartis AG (Medical and Health
Products) ............................................................ 1,350 $ 2,139,073
Synthes-Stratec, Inc. (Medical and
Health Products)* .................................................... 475 216,125
-----------
$ 2,355,198
-----------
United Kingdom -- 20.0%
AstraZeneca Group PLC (Medical
and Health Products) ................................................. 32,697 $ 1,520,791
BAE Systems PLC (Aerospace)* ........................................... 181,491 1,131,037
BP Amoco PLC (Oils) .................................................... 166,500 1,596,716
Cable & Wireless PLC, ADR
(Telecommunications)* ................................................ 92,841 1,571,427
Capital Radio PLC (Broadcasting) ....................................... 24,600 574,894
Carlton Communications PLC
(Broadcasting) ....................................................... 119,400 1,535,138
CGU PLC (Insurance)* ................................................... 101,966 1,696,572
Diageo PLC (Food and Beverage
Products)* ........................................................... 129,510 1,161,669
NDS Group PLC, ADR (Internet)* ......................................... 1,070 65,270
Next PLC (Retail) ...................................................... 83,000 725,655
Reckitt Benckiser PLC (Consumer
Goods and Services)* ................................................. 84,600 946,949
Royal Bank of Scotland PLC (Banks
and Credit Cos.)* .................................................... 81,907 1,370,252
United News & Media PLC
(Broadcasting) ....................................................... 134,300 1,929,852
Vodafone AirTouch PLC
(Telecommunications)* ................................................ 704,441 2,844,986
-----------
$18,671,208
-----------
Total Foreign Stocks ................................................. $85,703,153
-----------
U.S. Stocks -- 2.7%
Oils -- 0.5%
Santa Fe International Corp. ........................................... 13,700 $ 478,644
-----------
Telecommunications -- 2.2%
NTL, Inc.* ............................................................. 34,039 $ 2,038,085
-----------
Total U.S. Stocks .................................................... $ 2,516,729
-----------
Total Stocks (Identified Cost, $79,281,024) .......................... $88,219,882
-----------
Short-Term Obligations -- 5.3%
Principal Amount
(000 Omitted)
Associates First Capital Corp., due
7/03/00 .............................................................. $ 3,000 $ 2,998,850
Federal Home Loan Bank, due
7/03/00 .............................................................. 1,961 1,960,284
-----------
Total Short-Term Obligations, at Amortized Cost ...................... $ 4,959,134
-----------
Total Investments (Identified Cost, $84,240,158) ..................... $93,179,016
-----------
Other Assets,
Less Liabilities -- 0.1% ............................................. 51,737
-----------
Net Assets -- 100.0% ................................................. $93,230,753
-----------
</TABLE>
See portfolio footnotes and notes to financial statements.
16-IGS
<PAGE>
Portfolio of Investments (Unaudited) -- June 30, 2000
Massachusetts Investors Growth Stock Series
Stocks -- 94.2%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 86.1%
Banks and Credit Companies -- 0.5%
Providian Financial Corp. .............................................. 46,800 $ 4,212,000
U.S. Bancorp ........................................................... 27 520
-----------
$ 4,212,520
-----------
Biotechnology -- 2.3%
Abbott Laboratories, Inc. .............................................. 230,100 $10,253,831
Waters Corp.* .......................................................... 65,900 8,225,144
-----------
$18,478,975
-----------
Business Machines -- 2.1%
Seagate Technology, Inc.* .............................................. 134,800 $ 7,414,000
Sun Microsystems, Inc.* ................................................ 108,076 9,828,161
-----------
$17,242,161
-----------
Business Services -- 3.9%
Automatic Data Processing, Inc. ........................................ 188,700 $10,107,244
BEA Systems, Inc.* ..................................................... 21,600 1,067,850
BISYS Group, Inc.* ..................................................... 46,100 2,835,150
Computer Sciences Corp.* ............................................... 132,538 9,898,932
First Data Corp. ....................................................... 125,500 6,227,937
Fiserv, Inc.* .......................................................... 22,900 990,425
-----------
$31,127,538
-----------
Cellular Telephones -- 2.2%
Motorola, Inc. ......................................................... 132,484 $ 3,850,316
Sprint Corp. (PCS Group)* .............................................. 199,540 11,872,630
Voicestream Wireless Corp.* ............................................ 16,000 1,860,750
-----------
$17,583,696
-----------
Computer Hardware -- Systems -- 1.7%
Compaq Computer Corp. .................................................. 99,900 $ 2,553,694
Dell Computer Corp.* ................................................... 225,600 11,124,900
-----------
$13,678,594
-----------
Computer Software --
Personal Computers -- 3.3%
Mercury Interactive Corp.* ............................................. 21,200 $ 2,051,100
Microsoft Corp.* ....................................................... 301,692 24,135,360
-----------
$26,186,460
-----------
Computer Software -- Services -- 1.4%
EMC Corp.* ............................................................. 145,956 $11,229,490
-----------
Computer Software -- Systems -- 5.9%
BMC Software, Inc.* .................................................... 122,788 $ 4,479,843
Cadence Design Systems, Inc.* .......................................... 268,534 5,471,380
Commerce One, Inc.* .................................................... 17,900 812,213
Computer Associates International,
Inc. ................................................................. 136,000 6,961,500
Comverse Technology, Inc.* ............................................. 58,200 5,412,600
E.piphany, Inc.* ....................................................... 16,000 1,715,000
Foundry Networks, Inc.* ................................................ 11,000 1,210,000
I2 Technologies, Inc.* ................................................. 2,900 302,370
Oracle Corp.* .......................................................... 121,900 10,247,219
Rational Software Corp.* ............................................... 84,200 7,825,337
Siebel Systems, Inc.* .................................................. 17,100 2,796,919
StorageNetworks, Inc.* ................................................. 1,330 120,033
VERITAS Software Corp.* ................................................ 3,500 395,555
-----------
$47,749,969
-----------
Conglomerates -- 2.4%
Tyco International Ltd. ................................................ 406,408 $19,253,579
-----------
Consumer Goods and Services -- 0.6%
Clorox Co. ............................................................. 45,700 $ 2,047,931
Dial Corp. ............................................................. 9,597 99,569
Philip Morris Cos., Inc. ............................................... 98,000 2,603,125
-----------
$ 4,750,625
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Electrical Equipment -- 2.1%
Capstone Turbine Corp.* ................................................ 430 $ 19,377
Emerson Electric Co. ................................................... 35,400 2,137,275
General Electric Co. ................................................... 274,100 14,527,300
-----------
$16,683,952
-----------
Electronics -- 9.9%
Altera Corp.* .......................................................... 40,400 $ 4,118,275
Analog Devices, Inc.* .................................................. 47,800 3,632,800
Applied Materials, Inc.* ............................................... 20,300 1,839,688
Atmel Corp.* ........................................................... 52,400 1,932,250
Flextronics International Ltd.* ........................................ 125,226 8,601,461
Intel Corp. ............................................................ 148,300 19,825,856
Lam Research Corp.* .................................................... 138,000 5,175,000
LSI Logic Corp.* ....................................................... 137,700 7,453,012
Marvell Technology Group Ltd.* ......................................... 400 22,800
Micron Technology, Inc.* ............................................... 232,900 20,509,756
National Semiconductor Corp.* .......................................... 115,700 6,565,975
-----------
$79,676,873
-----------
Energy -- 0.3%
Dynegy, Inc. ........................................................... 34,600 $ 2,363,613
-----------
Entertainment -- 3.5%
Fox Entertainment Group, Inc.* ......................................... 48 $ 1,458
Infinity Broadcasting Corp., "A"* ...................................... 100,700 3,669,256
Time Warner, Inc. ...................................................... 82,207 6,247,732
Univision Communications, Inc., "A"* 35,194 3,642,579
USA Networks, Inc.* .................................................... 202,000 4,368,250
Viacom, Inc., "B"* ..................................................... 152,142 10,374,183
-----------
$28,303,458
-----------
Financial Institutions -- 3.4%
American Express Co. ................................................... 44,925 $ 2,341,716
Associates First Capital Corp., "A" .................................... 166,400 3,712,800
Citigroup, Inc. ........................................................ 141,200 8,507,300
Freddie Mac Corp. ...................................................... 162,000 6,561,000
Morgan Stanley Dean Witter & Co. ....................................... 4,700 391,275
State Street Corp. ..................................................... 52,000 5,515,250
-----------
$27,029,341
-----------
Financial Services -- 0.7%
AXA Financial, Inc. .................................................... 173,400 $ 5,895,600
-----------
Food and Beverage Products -- 1.9%
Anheuser-Busch Cos., Inc. .............................................. 99,700 $ 7,446,344
Coca-Cola Co. .......................................................... 135,000 7,754,062
-----------
$15,200,406
-----------
Healthcare -- 0.6%
HCA Healthcare Co.* .................................................... 146,300 $ 4,443,862
-----------
Insurance -- 3.1%
American International Group, Inc. ..................................... 108,297 $12,724,897
Hartford Financial Services Group,
Inc. ................................................................. 146,900 8,217,219
Marsh & McLennan Cos., Inc. ............................................ 37,600 3,926,850
-----------
$24,868,966
-----------
Internet -- 2.3%
Art Technology Group, Inc.* ............................................ 12,700 $ 1,281,906
Juniper Networks, Inc.* ................................................ 9,600 1,397,400
VeriSign, Inc.* ........................................................ 91,612 16,169,518
-----------
$18,848,824
-----------
Machinery -- 0.4%
Deere & Co., Inc. ...................................................... 90,100 $ 3,333,700
-----------
</TABLE>
17-MIS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Medical and Health Products -- 3.5%
Alza Corp.* ............................................................ 33,800 $ 1,998,425
American Home Products Corp. ........................................... 236,307 13,883,036
Bausch & Lomb, Inc. .................................................... 62,100 4,804,988
Bristol-Myers Squibb Co. ............................................... 135,300 7,881,225
------------
$ 28,567,674
------------
Medical and Health Technology
and Services -- 0.7%
Genzyme Corp.* ......................................................... 13,800 $ 820,237
PE Corp.- PE Biosystems Group .......................................... 76,800 5,059,200
------------
$ 5,879,437
------------
Oil Services -- 2.6%
Baker Hughes, Inc. ..................................................... 223,900 $ 7,164,800
Global Marine, Inc.* ................................................... 147,400 4,154,837
Halliburton Co. ........................................................ 126,000 5,945,625
Noble Drilling Corp.* .................................................. 92,600 3,813,963
------------
$ 21,079,225
------------
Oils -- 1.5%
Apache Corp. ........................................................... 18,500 $ 1,088,031
Coastal Corp. .......................................................... 81,900 4,985,663
Transocean Sedco Forex, Inc. ........................................... 107,500 5,744,531
------------
$ 11,818,225
------------
Pharmaceuticals -- 4.0%
Pfizer, Inc. ........................................................... 324,675 $ 15,584,400
Pharmacia Corp. ........................................................ 266,162 13,757,248
Sepracor, Inc.* ........................................................ 22,000 2,653,750
------------
$ 31,995,398
------------
Retail -- 2.3%
CVS Corp. .............................................................. 260,593 $ 10,423,720
Office Depot, Inc.* .................................................... 70,728 442,050
RadioShack Corp. ....................................................... 116,200 5,504,975
Wal-Mart Stores, Inc. .................................................. 33,400 1,924,675
------------
$ 18,295,420
------------
Supermarkets -- 2.2%
Kroger Co.* ............................................................ 152,700 $ 3,368,944
Safeway, Inc.* ......................................................... 310,600 14,015,825
------------
$ 17,384,769
------------
Telecommunications -- 11.9%
Alltel Corp. ........................................................... 34,300 $ 2,124,456
Amdocs Ltd.* ........................................................... 37,650 2,889,638
American Tower Corp., "A"* ............................................. 195,800 8,162,412
AT&T Corp., "A"* ....................................................... 221,400 5,368,950
Cabletron Systems, Inc.* ............................................... 62,900 1,588,225
Cisco Systems, Inc.* ................................................... 364,524 23,170,057
Corning, Inc. .......................................................... 59,500 16,057,562
Metromedia Fiber Network, Inc., "A"* 230,120 9,132,887
NEXTEL Communications, Inc.* ........................................... 75,700 4,631,894
Nextlink Communications, Inc., "A"* 112,000 4,249,000
NTL, Inc.* ............................................................. 88,600 5,304,925
Tellabs, Inc.* ......................................................... 58,600 4,010,438
UnitedGlobalCom, Inc.* ................................................. 35,900 1,678,325
Vignette Corp.* ........................................................ 9,200 478,544
WorldCom, Inc.* ........................................................ 139,600 6,404,150
------------
$ 95,251,463
------------
Telecommunications and Cable -- 1.0%
Comcast Corp., "A"* .................................................... 196,300 $ 7,950,150
------------
Utilities -- Electric -- 1.8%
AES Corp.* ............................................................. 312,400 $ 14,253,250
------------
Utilities -- Gas -- 0.1%
Enron Corp. ............................................................ 8,700 $ 561,150
------------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Total U.S. Stocks .................................................... $691,178,363
------------
Foreign Stocks -- 8.1%
Bermuda -- 1.0%
Global Crossing Ltd.
(Telecommunications)* ................................................ 302,800 $ 7,967,425
------------
Canada -- 2.7%
Nortel Networks Corp.
(Telecommunications) ................................................. 311,900 $ 21,287,175
------------
Israel -- 0.8%
Check Point Software Technologies
Ltd. (Computer Software --
Services)* .......................................................... 30,900 $ 6,543,075
------------
Japan -- 0.5%
Fast Retailing Co. (Retail) ............................................ 10,300 $ 4,311,086
------------
Netherlands -- 1.4%
Royal Dutch Petroleum Co. (Oils) ....................................... 178,700 $ 11,105,217
------------
Sweden -- 0.2%
Telefonaktiebolaget LM Ericsson AB
(Telecommunications)* ................................................ 65,700 $ 1,300,584
------------
United Kingdom -- 1.5%
HSBC Holdings PLC (Banks and
Credit Cos.) ......................................................... 161,100 $ 1,841,002
Vodafone AirTouch PLC
(Telecommunications)* ................................................ 2,608,618 10,535,280
------------
$ 12,376,282
------------
Total Foreign Stocks ................................................. $ 64,890,844
------------
Total Stocks (Identified Cost, $701,730,743) ......................... $756,069,207
------------
Short-Term Obligations -- 6.6%
Principal Amount
(000 Omitted)
Associates Corp. of North America,
due 7/03/00 .......................................................... $ 26,325 $ 26,314,909
General Electric Capital Corp., due
7/03/00 .............................................................. 20,000 19,992,278
Salomon Smith Barney Holdings,
Inc., due 7/03/00 .................................................... 6,140 6,137,680
------------
Total Short-Term Obligations, at Amortized Cost ...................... $ 52,444,867
------------
Total Investments (Identified Cost, $754,175,610)
$808,514,074
------------
Other Assets, Less
Liabilities -- (0.8)% ................................................
(6,149,975)
------------
Net Assets -- 100.0% ................................................. $802,364,099
------------
</TABLE>
See portfolio footnotes and notes to financial statements.
18-MIS
<PAGE>
Portfolio of Investments (Unaudited) -- June 30, 2000
New Discovery Series
Stocks -- 92.3%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 89.2%
Advertising -- 0.1%
24 / 7 Media, Inc.* .................................................... 14,214 $ 222,094
-----------
Airlines -- 0.8%
Atlas Air, Inc.* ....................................................... 22,593 $ 810,524
Skywest, Inc. .......................................................... 13,264 491,597
-----------
$ 1,302,121
-----------
Agricultural Products -- 0.6%
Delta and Pine Land Co. ................................................ 37,320 $ 935,332
-----------
Auto Parts -- 0.5%
Brooks Automation, Inc.* ............................................... 13,259 $ 847,747
-----------
Business Machines -- 1.0%
Affiliated Computer Services,
Inc., "A"* ........................................................... 46,090 $ 1,523,851
-----------
Business Services -- 17.4%
BISYS Group, Inc.* ..................................................... 23,342 $ 1,435,533
Braun Consulting, Inc.* ................................................ 17,000 359,125
Carbo Ceramics, Inc. ................................................... 15,240 535,305
Complete Business Solutions, Inc.*# 47,029 825,947
Computer Horizons Corp.* ............................................... 23,980 322,231
Concord EFS, Inc.* ..................................................... 94,390 2,454,140
CSG Systems International, Inc.* ....................................... 11,280 632,385
Dendrite International, Inc.* .......................................... 45,811 1,526,079
Diamond Technology Partners,
Inc., "A"* ........................................................... 9,654 849,552
Digimarc Corp.* ........................................................ 5,470 210,595
EGL, Inc.* ............................................................. 45,640 1,403,430
eLoyalty Corp.* ........................................................ 123,944 1,580,286
Gartner Group, Inc.,"A"* ............................................... 26,880 322,560
iGATE Capital Corp.* ................................................... 30,740 422,675
IMRglobal Corp.* ....................................................... 91,948 1,201,071
infoUSA, Inc.* ......................................................... 62,552 406,588
Interim Services, Inc.* ................................................ 35,840 636,160
Learning Tree International, Inc.* ..................................... 5,940 363,825
Meta Group, Inc.* ...................................................... 17,524 337,337
Mettler Toledo International, Inc.* .................................... 15,090 603,600
Modis Professional Services, Inc.* ..................................... 84,598 645,060
National Data Corp. .................................................... 57,890 1,331,470
Navigant Consulting Co.* ............................................... 101,740 432,395
NCO Group, Inc.* ....................................................... 27,420 634,087
Nextera Enterprises, Inc.* ............................................. 58,615 280,253
NOVA Corp.* ............................................................ 87,967 2,457,578
Peregrine Systems, Inc.* ............................................... 56,647 1,964,943
Probusiness Services, Inc.* ............................................ 18,860 500,969
Radiant Systems, Inc.* ................................................. 64,640 1,551,360
Renaissance Worldwide, Inc.* ........................................... 63,018 98,466
S1 Corp.* .............................................................. 23,426 546,118
Technology Solutions Co.* .............................................. 98,254 607,946
-----------
$27,479,069
-----------
Computer Software -- Personal
Computers -- 1.2%
HNC Software, Inc.* .................................................... 14,855 $ 917,296
Verity, Inc.* .......................................................... 27,210 1,033,980
-----------
$ 1,951,276
-----------
Computer Software -- Services -- 5.4%
Concord Communications, Inc.* .......................................... 16,590 $ 661,526
ePresence, Inc.* ....................................................... 41,320 299,570
Hyperion Solutions Corp.* .............................................. 43,114 1,398,510
Lightspan, Inc.* ....................................................... 110,480 607,640
RSA Security, Inc.* .................................................... 74,600 5,166,050
Tier Technologies, Inc.* ............................................... 57,654 302,684
-----------
$ 8,435,980
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Computer Software -- Systems -- 10.9%
Acxiom Corp.* .......................................................... 24,910 $ 678,797
Alteon Websystems, Inc.* ............................................... 4,750 475,297
Aspen Technology, Inc.* ................................................ 66,263 2,551,125
AVT Corp.* ............................................................. 71,430 526,796
Cadence Design Systems, Inc.* .......................................... 19,900 405,463
Cambridge Technology Partners,
Inc.* ................................................................ 56,680 494,179
Checkfree Holdings Corp.* .............................................. 24,309 1,253,433
Computer Network Technology
Corp.* ............................................................... 69,780 1,212,427
Cysive, Inc.* .......................................................... 13,840 330,430
Exchange Applications Software* ........................................ 26,758 712,432
Intelligroup, Inc.* .................................................... 23,040 276,480
Mercator Software, Inc.* ............................................... 13,110 901,312
MMC Networks, Inc.* .................................................... 75,220 4,019,569
New Era of Networks, Inc.* ............................................. 17,390 739,075
Packeteer, Inc.* ....................................................... 10,300 299,988
RAVISENT Technologies, Inc.* ........................................... 70,400 497,200
StorageNetworks, Inc.* ................................................. 260 23,465
Transaction System Architects,
Inc., "A"* ........................................................... 63,853 1,093,483
Wind River Systems, Inc.* .............................................. 18,381 696,180
-----------
$17,187,131
-----------
Conglomerates -- 0.4%
Sodexho Marriott Services, Inc. ........................................ 39,953 $ 639,248
-----------
Consumer Goods and
Services -- 0.3%
Sportsline USA, Inc.* .................................................. 26,723 $ 455,961
-----------
Containers -- 0.5%
Ivex Packaging Corp.* .................................................. 76,789 $ 854,278
-----------
Electrical Equipment
Capstone Turbine Corp.* ................................................ 1,250 $ 56,328
-----------
Electronics -- 8.4%
Alliance Semiconductor Corp.* .......................................... 8,910 $ 218,852
Burr-Brown Corp.* ...................................................... 30,631 2,655,325
Cable Design Technologies Corp.* ....................................... 17,751 594,658
Credence Systems Corp.* ................................................ 12,238 675,385
DuPont Photomasks, Inc.* ............................................... 21,976 1,505,356
GaSonics International Corp.* .......................................... 24,413 962,788
Integrated Device Technology, Inc.* 22,080 1,322,040
Marvell Technology Group Ltd.* ......................................... 1,000 57,000
MKS Instruments, Inc.* ................................................. 12,046 471,300
Photronics, Inc.* ...................................................... 44,005 1,248,642
Sawtek, Inc.* .......................................................... 5,000 287,812
SIPEX Corp.* ........................................................... 20,371 564,022
Triquint Semiconductor, Inc.* .......................................... 7,190 687,993
Varian Semiconductor Equipment
Associates, Inc.* .................................................... 18,490 1,161,403
Veeco Instruments, Inc.* ............................................... 11,020 807,215
-----------
$13,219,791
-----------
Entertainment -- 0.6%
Emmis Broadcasting Corp., "A"* ......................................... 12,090 $ 500,224
Spanish Broadcasting Systems,
Inc.* ................................................................ 20,150 414,334
-----------
$ 914,558
-----------
Financial Institutions -- 0.5%
Federated Investors, Inc., "A" ......................................... 18,660 $ 654,266
Financial Federal Corp.* ............................................... 11,511 200,004
-----------
$ 854,270
-----------
</TABLE>
19-NDS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Food and Beverage Products -- 0.2%
Del Monte Foods Co.* ................................................... 51,227 $ 348,984
------------
Healthcare -- 3.2%
Caremark Rx, Inc.* ..................................................... 732,177 $ 4,987,956
------------
Insurance -- 0.2%
Inspire Insurance Solutions, Inc.* ..................................... 117,530 $ 352,590
------------
Internet -- 3.0%
Digital Insight Corp.* ................................................. 9,730 $ 330,820
HealthGate Data Corp.* ................................................. 4,720 7,670
Jupiter Communications, Inc.* .......................................... 19,835 456,205
L90, Inc.* ............................................................. 16,000 168,000
Lante Corp.* ........................................................... 9,810 200,492
Netopia, Inc.* ......................................................... 4,320 173,880
Netzee, Inc.* .......................................................... 8,630 49,353
Onesource Information Services,
Inc.* ................................................................ 34,430 258,225
Ticketmaster Online-Citysearch,
Inc.* ................................................................ 8,510 135,628
VeriSign, Inc.* ........................................................ 13,227 2,334,566
Versata, Inc.* ......................................................... 13,860 558,731
Virage, Inc.* .......................................................... 320 5,780
------------
$ 4,679,350
------------
Machinery -- 0.6%
Applied Science and Technology,
Inc.* ................................................................ 9,690 $ 250,729
Asyst Technologies, Inc.* .............................................. 21,086 722,195
------------
$ 972,924
------------
Manufacturing -- 0.4%
Kemet Corp.*# .......................................................... 22,290 $ 558,643
------------
Media -- 0.1%
Radio One, Inc.* ....................................................... 5,270 $ 116,269
------------
Medical and Health Products -- 1.7%
Closure Med Corp.* ..................................................... 18,510 $ 425,730
CONMED Corp.* .......................................................... 34,870 902,261
Haemonetics Corp.* ..................................................... 41,427 869,967
ORATEC Interventions, Inc.* ............................................ 16,350 545,681
------------
$ 2,743,639
------------
Medical and Health Technology
and Services -- 7.0%
Allos Therapeutics, Inc.* .............................................. 18,850 $ 183,788
BioSource International, Inc.* ......................................... 9,090 202,252
Cyberonics, Inc.* ...................................................... 34,180 410,160
Cytyc Corp.* ........................................................... 36,616 1,954,379
Express Scripts, Inc.* ................................................. 4,620 287,017
IDEXX Laboratories, Inc.*# ............................................. 45,666 1,044,610
IDX Systems Corp.* ..................................................... 27,976 395,161
Impath, Inc.* .......................................................... 15,862 860,513
LifePoint Hospitals, Inc.* ............................................. 34,315 763,509
Lincare Holdings, Inc.* ................................................ 29,040 715,110
Martek Biosciences Corp.* .............................................. 5,538 103,838
Omnicare, Inc. ......................................................... 68,580 621,506
Orthodontic Centers of America,
Inc.* ................................................................ 30,201 683,298
Osteotech, Inc.* ....................................................... 49,000 514,500
Parexel International Corp.* ........................................... 58,160 556,155
Summit Technology, Inc.* ............................................... 28,330 534,729
Superior Consultant Holdings Corp.* 1,482 7,040
Total Renal Care Holdings, Inc.* ....................................... 107,935 647,610
V. I. Technologies, Inc.* .............................................. 42,437 297,059
VISX, Inc.* ............................................................ 7,800 218,887
------------
$ 11,001,121
------------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Oil Services -- 6.8%
Cooper Cameron Corp.* .................................................. 11,028 $ 727,848
Dril-Quip, Inc.*# ...................................................... 10,008 467,874
Global Industries, Inc.* ............................................... 174,478 3,293,273
Input/Output, Inc.* .................................................... 64,789 546,657
Key Energy Services, Inc.* ............................................. 48,190 463,829
National Oilwell, Inc.* ................................................ 22,262 731,863
Noble Drilling Corp.* .................................................. 56,694 2,335,084
Trico Marine Services, Inc.* ........................................... 122,140 1,557,285
Weatherford International, Inc.* ....................................... 16,773 667,775
------------
$ 10,791,488
------------
Oils -- 4.8%
EOG Resources, Inc. .................................................... 26,580 $ 890,430
Grant Pride Co., Inc.* ................................................. 16,773 419,325
Houston Exploration Co.* ............................................... 37,950 953,494
Louis Dreyfus Natural Gas Corp.* ....................................... 19,410 607,776
Marine Drilling Companies, Inc.* ....................................... 48,140 1,347,920
Newfield Exploration Co.*# ............................................. 30,456 1,191,591
Oceaneering International, Inc.* ....................................... 55,800 1,060,200
Santa Fe Snyder Corp.* ................................................. 100,710 1,145,576
------------
$ 7,616,312
------------
Printing and Publishing -- 0.8%
Scholastic Corp.* ...................................................... 19,430 $ 1,187,659
------------
Restaurants and Lodging -- 1.0%
Papa John's International, Inc.* ....................................... 36,346 $ 890,477
Sonic Corp.* ........................................................... 22,381 657,442
------------
$ 1,547,919
------------
Retail -- 0.4%
CSK Auto Corp.* ........................................................ 13,852 $ 104,756
PETCO Animal Supplies, Inc.* ........................................... 26,536 520,769
------------
$ 625,525
------------
Special Products and Services -- 0.6%
Harmonic Lightwaves, Inc.* ............................................. 5,000 $ 123,750
Sylvan Learning Systems, Inc.* ......................................... 63,810 877,387
------------
$ 1,001,137
------------
Technology -- 1.1%
Galileo Technology Ltd.* ............................................... 29,030 $ 624,145
Varian, Inc.* .......................................................... 23,480 1,083,015
------------
$ 1,707,160
------------
Telecommunications -- 8.7%
Advanced Fibre Communications,
Inc.* ................................................................ 19,620 $ 889,031
American Tower Corp., "A"* ............................................. 8 334
ANTEC Corp.* ........................................................... 23,370 971,316
Aware, Inc.* ........................................................... 17,080 873,215
Cabletron Systems, Inc.* ............................................... 45,510 1,149,128
California Amplifier, Inc.* ............................................ 16,230 742,523
Carrier Access Corp.* .................................................. 9,350 494,381
Emulex Corp.* .......................................................... 13,820 907,801
Intermedia Communications, Inc.* ....................................... 35,763 1,063,949
MGC Communications, Inc.* .............................................. 15,150 908,053
Natural Microsystems Corp.* ............................................ 13,930 1,566,254
Net Perceptions, Inc.* ................................................. 12,350 196,056
Pinnacle Holdings, Inc.*# .............................................. 28,456 1,536,624
Proxim, Inc.* .......................................................... 7,364 728,806
Tekelec Co.* ........................................................... 19,030 917,008
Telaxis Communications Corp.* .......................................... 19,020 594,375
Viasystems Group, Inc.* ................................................ 5,750 93,078
------------
$ 13,631,932
------------
Total U.S. Stocks ....................................................
$140,749,643
------------
</TABLE>
20-NDS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- 3.1%
Canada -- 0.5%
Intertape Polymer Group, Inc.
(Containers) ................. 45,370 $ 782,632
------------
Ireland -- 2.0%
SmartForce PLC* (Internet) ..... 65,404 $ 3,139,392
------------
Israel -- 0.6%
Fundtech Ltd.*# (Computer
Software -- Systems) ......... 33,150 $ 861,900
------------
Total Foreign Stocks ..................... $ 4,783,924
------------
Total Stocks (Identified Cost, $133,773,342) $145,533,567
------------
Preferred Stock -- 0.3%
Business Services -- 0.3%
Sitara Networks Inc. (Identified
Cost, $482,391)............... 74,100 $ 482,391
------------
Warrant
Medical and Health Technology and Services
Martek Biosciences Corp.##
(Identified Cost, $0)......... 1,661 $ 31,144
------------
Short-Term Obligations -- 5.5%
Principal Amount
(000 Omitted)
Federal Home Loan Bank, due
7/03/00 ...................... $3,657 $ 3,655,665
Morgan Stanley Dean Witter, due
7/05/00 ...................... 5,000 4,996,195
------------
Total Short-Term Obligations, at Amortized $ 8,651,860
------------
Cost
Total Investments (Identified Cost, $154,698,962
$142,907,593) ............... ------------
Security Sold Short -- (0.2)%
Shares
Internet -- (0.2)%
Retek, Inc.* (Proceeds Received,
$545,842)..................... (7,500) $ (240,000)
------------
Other Assets,
Less Liabilities -- 2.1% .............. 3,284,725
------------
Net Assets -- 100.0% .................. $157,743,687
------------
</TABLE>
# Security or a portion of the security was pledged to cover collateral
requirements for securities sold short. At June 30, 2000, the value of the
securities pledged amounted to $886,264.
See portfolio footnotes and notes to financial statements.
Portfolio of Investments (Unaudited) -- June 30, 2000
Research Growth and Income Series
Stocks -- 98.9%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 89.9%
Aerospace -- 2.3%
Boeing Co. ............................................................... 20,900 $ 873,881
General Dynamics Corp. ................................................... 5,650 295,213
United Technologies Corp. ................................................ 12,710 748,301
----------
$1,917,395
----------
Automotive -- 0.4%
Delphi Automotive Systems Corp. .......................................... 22,730 $ 331,006
----------
Banks and Credit Companies -- 2.9%
Capital One Financial Corp. .............................................. 11,890 $ 530,591
Chase Manhattan Corp. .................................................... 18,435 849,162
PNC Bank Corp. ........................................................... 18,030 845,157
U.S. Bancorp ............................................................. 11,200 215,600
----------
$2,440,510
----------
Biotechnology -- 2.1%
Pharmacia Corp. .......................................................... 33,715 $1,742,644
----------
Business Machines -- 5.5%
Hewlett-Packard Co. ...................................................... 7,900 $ 986,513
International Business Machines
Corp. .................................................................. 11,700 1,281,881
Sun Microsystems, Inc.* .................................................. 26,560 2,415,300
----------
$4,683,694
----------
Business Services -- 1.5%
Automatic Data Processing, Inc. .......................................... 20,500 $1,098,031
Computer Sciences Corp.* ................................................. 2,400 179,250
----------
$1,277,281
----------
Cellular Telephones -- 1.2%
Motorola, Inc. ........................................................... 34,690 $1,008,178
----------
Chemicals -- 1.7%
Dow Chemical Co. ......................................................... 5,790 $ 174,786
Eastman Chemical Co. ..................................................... 4,400 210,100
Rohm & Haas Co. .......................................................... 29,400 1,014,300
----------
$1,399,186
----------
Computer Software -- Personal
Computers -- 1.9%
Microsoft Corp.* ......................................................... 20,410 $1,632,800
----------
Computer Software -- Services -- 2.3%
EMC Corp.* ............................................................... 25,400 $1,954,212
----------
Computer Software -- Systems -- 1.8%
Computer Associates International,
Inc. ................................................................... 2,870 $ 146,908
Oracle Corp.* ............................................................ 16,540 1,390,394
----------
$1,537,302
----------
Conglomerates -- 2.3%
Tyco International Ltd. .................................................. 40,260 $1,907,317
----------
Consumer Goods and Services -- 1.9%
Clorox Co. ............................................................... 7,630 $ 341,919
Colgate-Palmolive Co. .................................................... 15,390 921,476
Fortune Brands, Inc. ..................................................... 13,480 310,883
----------
$1,574,278
----------
Containers -- 0.1%
Owens Illinois, Inc.* .................................................... 7,310 $ 85,436
----------
Electrical Equipment -- 0.7%
Emerson Electric Co. ..................................................... 10,500 $ 633,937
----------
Electronics -- 5.7%
Intel Corp. .............................................................. 29,500 $3,943,781
Micron Technology, Inc.* ................................................. 4,300 378,669
SCI Systems, Inc.* ....................................................... 2,700 105,806
Solectron Corp.* ......................................................... 10,400 435,500
----------
$4,863,756
----------
</TABLE>
21-RGI
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Energy -- 0.4%
Sierra Pacific Resources Co. ........................................... 27,710 $ 348,107
-----------
Entertainment -- 2.6%
Time Warner, Inc. ...................................................... 14,147 $ 1,075,172
Viacom, Inc., "B"* ..................................................... 17,100 1,166,006
-----------
$ 2,241,178
-----------
Financial Institutions -- 4.8%
Associates First Capital Corp., "A" .................................... 23,060 $ 514,526
Citigroup, Inc. ........................................................ 28,430 1,712,908
FleetBoston Financial Corp. ............................................ 26,080 886,720
Freddie Mac Corp. ...................................................... 22,520 912,060
Goldman Sachs Group, Inc. .............................................. 720 68,310
-----------
$ 4,094,524
-----------
Financial Services -- 0.8%
AXA Financial, Inc. .................................................... 20,500 $ 697,000
-----------
Food and Beverage Products -- 3.2%
Anheuser-Busch Cos., Inc. .............................................. 11,800 $ 881,312
Keebler Foods Co. ...................................................... 22,640 840,510
Quaker Oats Co. ........................................................ 13,590 1,020,949
-----------
$ 2,742,771
-----------
Insurance -- 4.6%
American International Group, Inc. ..................................... 6,105 $ 717,337
Gallagher (Arthur J.) & Co. ............................................ 23,900 1,003,800
Hartford Financial Services Group,
Inc. ................................................................. 15,270 854,166
Marsh & McLennan Cos., Inc. ............................................ 3,800 396,863
Nationwide Financial Services,
Inc., "A" ............................................................ 29,000 953,375
-----------
$ 3,925,541
-----------
Machinery -- 2.2%
Deere & Co., Inc. ...................................................... 12,800 $ 473,600
Ingersoll Rand Co. ..................................................... 11,900 478,975
W.W. Grainger, Inc. .................................................... 29,900 921,294
-----------
$ 1,873,869
-----------
Medical and Health
Products -- 6.1%
American Home Products Corp. ........................................... 30,520 $ 1,793,050
Bausch & Lomb, Inc. .................................................... 13,600 1,052,300
Bristol-Myers Squibb Co. ............................................... 40,580 2,363,785
-----------
$ 5,209,135
-----------
Medical and Health Technology
and Services -- 1.9%
Medtronic, Inc. ........................................................ 31,900 $ 1,589,019
-----------
Metals and Minerals -- 1.0%
Alcoa, Inc. ............................................................ 30,360 $ 880,440
-----------
Oil Services -- 2.6%
Baker Hughes, Inc. ..................................................... 12,200 $ 390,400
Cooper Cameron Corp.* .................................................. 5,420 357,720
Global Marine, Inc.* ................................................... 30,100 848,443
Weatherford International, Inc.* ....................................... 15,500 617,094
-----------
$ 2,213,657
-----------
Oils -- 4.4%
Conoco, Inc. ........................................................... 58,810 $ 1,444,521
Exxon Mobil Corp. ...................................................... 24,848 1,950,568
Santa Fe International Corp. ........................................... 8,800 307,450
-----------
$ 3,702,539
-----------
Printing and Publishing -- 0.9%
Tribune Co. ............................................................ 22,660 $ 793,100
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Real Estate Investment Trusts -- 1.0%
Highwoods Properties, Inc. ............................................. 34,720 $ 833,280
-----------
Retail -- 3.8%
CVS Corp. .............................................................. 25,360 $ 1,014,400
Wal-Mart Stores, Inc. .................................................. 37,570 2,164,971
-----------
$ 3,179,371
-----------
Supermarkets -- 1.8%
Kroger Co.* ............................................................ 21,690 $ 478,536
Safeway, Inc.* ......................................................... 23,020 1,038,777
-----------
$ 1,517,313
-----------
Telecommunications -- 11.5%
Bell Atlantic Corp. .................................................... 20,820 $ 1,057,916
Cabletron Systems, Inc.* ............................................... 9,900 249,975
Cisco Systems, Inc.* ................................................... 48,940 3,110,749
Corning, Inc. .......................................................... 6,154 1,660,811
Qwest Communications
International, Inc.* ................................................. 3,400 168,938
Sprint Corp. ........................................................... 34,100 1,739,100
Tellabs, Inc.* ......................................................... 3,800 260,062
WorldCom, Inc.* ........................................................ 32,365 1,484,744
-----------
$ 9,732,295
-----------
Utilities -- Electric -- 1.2%
CMS Energy Corp. ....................................................... 15,530 $ 343,601
Peco Energy Co. ........................................................ 16,410 661,528
-----------
$ 1,005,129
-----------
Utilities -- Gas -- 0.8%
Columbia Energy Group .................................................. 10,910 $ 715,969
-----------
Total U.S. Stocks .................................................... $76,283,169
-----------
Foreign Stocks -- 9.0%
Bermuda -- 0.7%
Global Crossing Ltd.
(Telecommunications)* ................................................ 21,500 $ 565,719
-----------
Canada -- 2.0%
Canadian National Railway Co.
(Railroads) .......................................................... 30,876 $ 901,193
Nortel Networks Corp.
(Telecommunications) ................................................. 12,300 839,475
-----------
$ 1,740,668
-----------
Japan -- 1.0%
Fast Retailing Co. (Retail) ............................................ 500 $ 209,276
Nippon Telegraph & Telephone Co.
(Utilities -- Telephone) ............................................. 49 651,301
-----------
$ 860,577
-----------
Netherlands -- 1.7%
ING Groep N.V. (Financial
Services)* ........................................................... 8,682 $ 586,779
Royal Dutch Petroleum Co. (Oils) ....................................... 13,400 832,736
-----------
$ 1,419,515
-----------
Switzerland -- 0.1%
Nestle S.A. (Food and Beverage
Products) ............................................................ 53 $ 106,111
-----------
United Kingdom -- 3.5%
BAE Systems PLC (Aerospace)* ........................................... 82,800 $ 516,002
BP Amoco PLC, ADR (Oils) ............................................... 27,658 1,564,406
Lloyds TSB Group PLC (Banks and
Credit Cos.)* ........................................................ 43 406
</TABLE>
22-RGI
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
United Kingdom -- continued
Vodafone AirTouch PLC
(Telecommunications)* ...................... 211,089 $ 852,513
-----------
$ 2,933,327
-----------
Total Foreign Stocks ....................... $ 7,625,917
-----------
Total Stocks (Identified Cost, $74,510,268) $83,909,086
-----------
Short-Term Obligation -- 0.9%
Principal Amount
(000 Omitted)
General Electric Capital Corp., due
7/03/00, at Amortized Cost ................. $801 $ 800,691
-----------
Total Investments (Identified Cost, $75,310,959) ........ $84,709,777
-----------
Other Assets,
Less Liabilities -- 0.2% ................................ 132,648
-----------
Net Assets -- 100.0% .................................... $84,842,425
-----------
</TABLE>
See portfolio footnotes and notes to financial statements.
Portfolio of Investments (Unaudited) -- June 30, 2000
Research International Series
Stocks -- 97.6%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- 95.0%
Australia -- 2.2%
Australia & New Zealand Banking
Group Ltd. (Banks and Credit
Cos.)* ............................. 68,980 $ 528,236
Cable & Wireless Optus Ltd.
(Telecommunications) ............... 112,591 335,189
Telstra Corp. Ltd.
(Telecommunications) ............... 50,510 204,721
----------
$1,068,146
----------
Belgium -- 0.2%
Lernout & Hauspie Speech
Products N.V. "B" (Business
Services)* ......................... 1,680 $ 71,820
Lernout & Hauspie Speech
Products N.V. (Business
Services)* ......................... 20 821
Lernout & Hauspie Speech
Products N.V., New Shares
(Business Services)* ............... 420 17,641
----------
$ 90,282
----------
Bermuda -- 0.1%
FLAG Telecom Holdings Ltd.
(Telecommunications)* .............. 4,140 $ 61,582
----------
Brazil -- 0.9%
Telecomunicacoes de Sao Paulo
S.A. (Telecommunications)* ......... 14,930 $ 413,570
----------
Canada -- 3.4%
AT&T Canada, Inc.
(Telecommunications)* .............. 8,570 $ 284,417
BCE, Inc. (Telecommunications) ....... 20,670 492,204
Manitoba Telecom Services
(Telecommunications) ............... 14,690 252,694
Nortel Networks Corp.
(Telecommunications) ............... 8,552 583,674
----------
$1,612,989
----------
Denmark -- 0.6%
ISS International Service Systems
Co. (Business Services)* ........... 3,490 $ 265,724
----------
Finland -- 0.5%
Sonera Oyj (Telecommunications) ...... 2,750 $ 125,351
Tieto Corp. (Computer Software --
Systems) .......................... 3,726 124,311
----------
$ 249,662
----------
France -- 8.9%
Alcatel Co. (Telecommunications) ..... 8,420 $ 552,192
Axa (Insurance) ...................... 3,837 604,362
Banque Nationale de Paris (Banks
and Credit Cos.) ................... 4,220 406,064
Business Objects S.A., ADR
(Computer Software -- Systems)* 1,060 93,413
Integra S.A. (Computer Software --
Services)* ........................ 3,610 32,600
Natexis Co. (Financial Services) ..... 1,310 93,664
Sanofi-Synthelabo S.A. (Medical
and Health Products)* .............. 6,250 297,716
Societe Television Francaise 1
(Entertainment) .................... 4,360 303,830
StMicroelectronics N.V. (Electronics) 7,080 446,066
Technip S.A. (Construction) .......... 4,585 554,546
Total S.A., "B" (Oils) ............... 4,815 738,182
Wavecom S.A., ADR (Electronics)* ..... 1,446 $ 159,060
----------
$4,281,695
----------
</TABLE>
23-RIS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Germany -- 3.3%
comdirect bank AG (Financial
Services)* .......................... 120 $ 3,706
Freenet.de AG (Internet)* ............. 60 4,926
Fresenius AG (Medical Supplies) ....... 1,460 337,279
Fresenius AG, Preferred (Medical
Supplies) ........................... 2,230 93,240
GFT Technology AG (Computer
Software -- Services)* .............. 620 118,370
Henkel KGaA, Preferred
(Chemicals) ......................... 4,027 229,882
Poet Holdings, Inc. (Computer
Software -- Services)* .............. 990 37,708
Prosieben Media AG, Preferred
(Entertainment)* .................... 3,860 479,939
SAP AG (Computer Software --
Services) .......................... 1,470 270,829
-----------
$ 1,575,879
-----------
Hong Kong -- 2.6%
China Telecom Ltd.
(Telecommunications) ................ 68,000 $ 599,744
Li & Fung Ltd. (Consumer Goods
and Services)* ...................... 132,000 660,423
-----------
$ 1,260,167
-----------
Ireland -- 0.1%
Trintech Group PLC, ADR
(Computer Software -- Products)* 2,130 $ 41,968
-----------
Italy -- 1.4%
Banca Intesa S.p.A. (Financial
Services) ........................... 85,400 $ 382,342
San Paolo -- Imi S.p.A. (Banks and
Credit Cos.) ........................ 15,733 279,198
-----------
$ 661,540
-----------
Japan -- 22.1%
Murata Manufacturing Co. Ltd.
(Electronics) ....................... 3,000 $ 430,430
Canon, Inc. (Special Products and
Services) ........................... 14,000 696,833
Chugai Pharmaceutical Co. Ltd.
(Pharmaceuticals) ................... 55,000 1,039,546
Daikin Industries Ltd. (Consumer
Goods and Services) ................. 19,000 441,506
Eisai Co. Ltd. (Medical and Health
Products) ........................... 11,000 352,564
Fast Retailing Co. (Retail) ........... 3,500 1,464,932
Fujitsu Ltd. (Computer Hardware --
Systems) ........................... 13,000 449,755
Hitachi Ltd. (Electronics) ............ 22,700 327,404
Keyence Corp. (Electronics) ........... 1,400 461,915
Meitec Corp. (Computer Software --
Systems) ........................... 6,300 249,434
Mimasu Semiconductor Industry Co.
Ltd. (Electronics) .................. 13,200 241,403
Mitsubishi Electric Corp.
(Electronics) ....................... 34,000 367,949
Nintendo Co. (Entertainment) .......... 1,300 226,961
Nippon Telegraph & Telephone Co.
(Utilities -- Telephone) ............ 63 837,387
Nitto Denko Corp. (Industrial Goods
and Services) ....................... 6,000 231,335
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Japan -- continued
NTT Mobile Communications
Network, Inc.
(Telecommunications) ................ 21 $ 568,156
Pioneer Electronic Corp.
(Electronics) ....................... 8,000 311,463
Rohm Co. (Electronics) ................ 1,500 438,348
Secom Co. (Consumer Goods and
Services) ........................... 5,000 365,290
Softbank Corp. (Internet) ............. 1,900 257,919
Tokyo Gas Co. Ltd. (Gas) .............. 84,000 235,973
Ushio, Inc. (Electronics) ............. 12,000 330,317
Victor Company of Japan
(Telecommunications) ................ 33,000 290,865
-----------
$10,617,685
-----------
Mexico -- 0.6%
Telefonos de Mexico S.A., ADR
(Utilities -- Telephone) ............ 5,240 $ 299,335
-----------
Netherlands -- 12.2%
ABN Amro Holdings N.V. (Finance) ...... 5,000 $ 122,475
Akzo Nobel N.V. (Chemicals) ........... 9,977 423,820
Fugro N.V. (Engineering)* ............. 6,195 353,347
Hunter Douglas N.V., ADR
(Consumer Goods and Services)* 10,069 272,497
ING Groep N.V. (Financial
Services)* .......................... 17,978 1,215,056
Jomed N.V. (Medical and Health
Products) ........................... 7,640 302,171
Philips Electronics N.V. (Electronics) 10,654 502,413
Koninklijke Ahrend Groep N.V.
(Consumer Goods and Services)* 13,203 168,888
KPN N.V. (Telecommunications)* ........ 22,166 991,330
Libertel N.V. (Cellular
Telecommunications)* ................ 14,500 220,775
Royal Dutch Petroleum Co. (Oils) ...... 14,620 908,552
Versatel Telecommunications N.V.
(Telecommunications)* ............... 8,770 368,361
-----------
$ 5,849,685
-----------
Singapore -- 3.5%
Chartered Semiconductor
Manufacturing Co., ADR
(Electronics)* ...................... 5,285 $ 475,650
Datacraft Asia Ltd.
(Telecommunications) ................ 42,023 369,803
DBS Group Holdings Ltd. (Financial
Services) ........................... 18,141 233,264
Natsteel Electronics Ltd.
(Electronics) ....................... 37,000 113,582
Overseas Union Bank Ltd. (Banks
and Credit Cos.) .................... 54,000 209,557
Singapore Press Holdings Ltd.
(Printing and Publishing) ........... 16,000 250,217
-----------
$ 1,652,073
-----------
South Korea -- 1.9%
Korea Telecom Corp.
(Telecommunications)* ............... 4,593 $ 222,187
Samsung Electronics (Electronics) ..... 2,120 701,659
-----------
$ 923,846
-----------
</TABLE>
24-RIS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Spain -- 1.9%
Altadis S.A. (Tobacco)* ................................................ 22,008 $ 336,142
Cortefiel S.A. (Retail) ................................................ 13,831 299,974
Telefonica S.A.
(Telecommunications)* ................................................ 13,010 279,435
-----------
$ 915,551
-----------
Sweden -- 3.4%
Allgon AB, "B" (Electronics) ........................................... 6,720 $ 80,045
Saab AB, "B" (Aerospace) ............................................... 70,136 588,776
Scandinavia Online Co. (Internet)* ..................................... 6,020 90,146
Skandia Forsakrings AB
(Insurance) .......................................................... 13,114 346,632
Tele1 Europe Holdings AB
(Telecommunications)* ................................................ 650 7,964
Telefonaktiebolaget LM Ericsson AB
(Telecommunications) ................................................. 26,912 532,745
-----------
$ 1,646,308
-----------
Switzerland -- 3.5%
Nestle S.A. (Food and Beverage
Products) ............................................................ 205 $ 410,427
Novartis AG (Medical and Health
Products) ............................................................ 525 831,862
Synthes-Stratec, Inc. (Medical and
Health Products)* .................................................... 935 425,425
-----------
$ 1,667,714
-----------
United Kingdom -- 21.7%
AstraZeneca Group PLC (Medical
and Health Products) ................................................. 14,298 $ 667,198
BAE Systems PLC (Aerospace)* ........................................... 114,847 715,717
Boots Co. PLC (Retail)* ................................................ 29,500 224,447
BP Amoco PLC, ADR (Oils) ............................................... 19,612 1,109,304
British Telecommunications PLC
(Telecommunications)* ................................................ 25,690 331,853
Cable & Wireless PLC, ADR
(Telecommunications)* ................................................ 31,183 527,804
Capital Radio PLC (Broadcasting) ....................................... 9,946 232,435
Carlton Communications PLC
(Broadcasting) ....................................................... 22,840 293,656
CGU PLC (Insurance)* ................................................... 39,158 651,535
Diageo PLC (Food and Beverage
Products)* ........................................................... 42,362 379,975
HSBC Holdings PLC (Banks and
Credit Cos.) ......................................................... 82,100 938,214
HSBC Holdings PLC, HK REG
(Banks and Credit Cos.) .............................................. 38,000 435,087
Lloyds TSB Group PLC (Banks and
Credit Cos.)* ........................................................ 27,443 259,024
Matalan PLC (Apparel and Textiles)...................................... 26,870 211,753
Next PLC (Retail) ...................................................... 26,862 234,850
Reuters Group PLC (Business
Services) ............................................................ 21,944 374,080
Royal Bank of Scotland PLC (Banks
and Credit Cos.)* .................................................... 15,430 258,134
United News & Media PLC
(Broadcasting) ....................................................... 55,030 790,765
Vodafone AirTouch PLC
(Telecommunications)* ................................................ 443,031 1,789,244
-----------
$10,425,075
-----------
Total Foreign Stocks ................................................................... $45,580,476
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 2.6%
Biotechnology -- 0.8%
Pharmacia Corp. ........................................................ 7,096 $ 366,775
-----------
Internet -- 0.1%
VIA Net.Works, Inc.* ................................................... 3,760 $ 58,045
-----------
Oils -- 0.5%
Santa Fe International Corp. ........................................... 7,200 $ 251,550
-----------
Telecommunications -- 1.2%
NTL, Inc.* ............................................................. 6,577 $ 393,798
UnitedGlobalCom, Inc.* ................................................. 3,570 166,897
-----------
$ 560,695
-----------
Total U.S. Stocks ...................................................................... $ 1,237,065
-----------
Total Stocks (Identified Cost, $45,038,139) ............................................ $46,817,541
-----------
Short-Term Obligation -- 2.3%
Principal Amount
(000 Omitted)
Federal Home Loan Bank, due
7/03/00, at Amortized Cost ........................................... $ 1,076 $ 1,075,607
-----------
Total Investments (Identified Cost, $46,113,746) ....................................... $47,893,148
-----------
Other Assets,
Less Liabilities -- 0.1% ............................................................... 56,169
-----------
Net Assets -- 100.0% ................................................................... $47,949,317
-----------
</TABLE>
See portfolio footnotes and notes to financial statements.
25-RIS
<PAGE>
Portfolio of Investments (Unaudited) -- June 30, 2000
Strategic Growth Series
Stocks -- 93.1%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 82.5%
Banks and Credit Companies -- 0.5%
Bank of New York Co., Inc. ............................................. 1,090 $ 50,685
Capital One Financial Corp. ............................................ 1,040 46,410
Providian Financial Corp. .............................................. 1,682 151,380
----------
$ 248,475
----------
Biotechnology -- 1.7%
Pharmacia Corp. ........................................................ 13,237 $ 684,187
Waters Corp.* .......................................................... 1,505 187,843
----------
$ 872,030
----------
Business Machines -- 2.6%
Affiliated Computer Services,
Inc., "A"* ........................................................... 11,320 $ 374,267
Egain Communications Corp.* ............................................ 2,190 26,554
Seagate Technology, Inc.* .............................................. 10,015 550,825
Sun Microsystems, Inc.* ................................................ 3,800 345,563
----------
$1,297,209
----------
Business Services -- 8.5%
Automatic Data Processing, Inc. ........................................ 13,460 $ 720,951
BEA Systems, Inc.* ..................................................... 1,600 79,100
BISYS Group, Inc.* ..................................................... 8,990 552,885
Computer Sciences Corp.* ............................................... 9,430 704,303
Concord EFS, Inc.* ..................................................... 10,150 263,900
First Data Corp. ....................................................... 14,575 723,285
Fiserv, Inc.* .......................................................... 14,400 622,800
Teletech Holdings, Inc.* ............................................... 18,900 587,081
----------
$4,254,305
----------
Cellular Telephones -- 2.1%
Motorola, Inc. ......................................................... 13,677 $ 397,488
Sprint Corp. (PCS Group)* .............................................. 11,430 680,085
----------
$1,077,573
----------
Computer Hardware -- Systems -- 1.8%
Dell Computer Corp.* ................................................... 18,350 $ 904,884
----------
Computer Software -- Personal
Computers -- 3.3%
Mercury Interactive Corp.* ............................................. 1,260 $ 121,905
Microsoft Corp.* ....................................................... 19,150 1,532,000
----------
$1,653,905
----------
Computer Software -- Services -- 1.1%
EMC Corp.* ............................................................. 3,520 $ 270,820
Portal Software, Inc.* ................................................. 4,680 298,935
----------
$ 569,755
----------
Computer Software -- Systems -- 11.4%
BMC Software, Inc.* .................................................... 27,405 $ 999,854
Cadence Design Systems, Inc.* .......................................... 36,570 745,114
Commerce One, Inc.* .................................................... 1,330 60,349
Computer Associates International,
Inc. ................................................................. 24,150 1,236,178
Compuware Corp.* ....................................................... 18,970 196,814
E.piphany, Inc.* ....................................................... 960 102,900
I2 Technologies, Inc.* ................................................. 860 89,668
Liberate Technologies* ................................................. 290 8,501
Oracle Corp.* .......................................................... 8,290 696,878
Rational Software Corp.* ............................................... 9,975 927,051
Siebel Systems, Inc.* .................................................. 2,910 475,967
VERITAS Software Corp.* ................................................ 1,667 188,397
----------
$5,727,671
----------
Conglomerates -- 3.0%
Tyco International Ltd. ................................................ 31,600 $1,497,050
----------
Electrical Equipment -- 2.1%
Emerson Electric Co. ................................................... 1,150 $ 69,431
General Electric Co. ................................................... 18,440 977,320
----------
$1,046,751
----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Electronics -- 7.3%
Analog Devices, Inc.* .................................................. 4,910 $ 373,160
Applied Materials, Inc.* ............................................... 860 77,938
Atmel Corp.* ........................................................... 6,060 223,462
Fairchild Semiconductor
International Co.* ................................................... 2,910 117,855
Intel Corp. ............................................................ 4,220 564,161
LSI Logic Corp.* ....................................................... 8,710 471,429
Micron Technology, Inc.* ............................................... 11,890 1,047,063
National Semiconductor Corp.* .......................................... 5,800 329,150
Teradyne, Inc.* ........................................................ 5,260 386,610
Vitesse Semiconductor Corp.* ........................................... 1,250 91,95
----------
$3,682,781
----------
Entertainment -- 2.9%
Cox Radio, Inc., "A"* .................................................. 600 $ 16,800
Hearst-Argyle Television, Inc.* ........................................ 700 13,650
Infinity Broadcasting Corp., "A"* ...................................... 18,175 662,252
USA Networks, Inc.* .................................................... 11,110 240,254
Viacom, Inc., "B"* ..................................................... 8,023 547,068
----------
$1,480,024
----------
Financial Institutions -- 2.9%
Associates First Capital Corp., "A" .................................... 9,520 $ 212,415
Citigroup, Inc. ........................................................ 4,790 288,597
Federal National Mortgage Assn. ........................................ 420 21,919
FleetBoston Financial Corp. ............................................ 740 25,160
Freddie Mac Corp. ...................................................... 10,110 409,455
Merrill Lynch & Co., Inc. .............................................. 450 51,750
Morgan Stanley Dean Witter & Co. ....................................... 610 50,782
State Street Corp. ..................................................... 3,785 401,447
----------
$1,461,525
----------
Insurance -- 2.4%
American International Group, Inc. ..................................... 5,670 $ 666,225
Gallagher (Arthur J.) & Co. ............................................ 7,710 323,820
Hartford Financial Services Group,
Inc. ................................................................. 200 11,188
St. Paul Cos., Inc. .................................................... 6,260 213,622
----------
$1,214,855
----------
Internet -- 0.3%
VeriSign, Inc.* ........................................................ 898 $ 158,497
----------
Medical and Health Products -- 2.6%
American Home Products Corp. ........................................... 3,695 $ 217,081
Bausch & Lomb, Inc. .................................................... 7,730 598,109
Bristol-Myers Squibb Co. ............................................... 8,070 470,077
----------
$1,285,267
----------
Medical and Health Technology
and Services -- 0.7%
PE Corp.- PE Biosystems Group .......................................... 4,400 $ 289,850
VISX, Inc.* ............................................................ 2,100 58,931
----------
$ 348,781
----------
Oil Services -- 4.2%
Baker Hughes, Inc. ..................................................... 10,320 $ 330,240
Cooper Cameron Corp.* .................................................. 4,850 320,100
Global Marine, Inc.* ................................................... 12,720 358,545
Halliburton Co. ........................................................ 9,640 454,887
Noble Drilling Corp.* .................................................. 7,720 317,968
Weatherford International, Inc.* ....................................... 8,630 343,582
----------
$2,125,322
----------
</TABLE>
26-SSG
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Oils -- 0.8%
Conoco, Inc. ............................................................. 2,770 $ 68,038
Transocean Sedco Forex, Inc. ............................................. 6,582 351,726
-----------
$ 419,764
-----------
Printing and Publishing -- 0.2%
Tribune Co. .............................................................. 2,730 $ 95,550
-----------
Restaurants and Lodging -- 0.1%
Cendant Corp.* ........................................................... 4,210 $ 58,940
-----------
Retail -- 3.3%
Costco Wholesale Corp.* .................................................. 590 $ 19,470
CVS Corp. ................................................................ 14,570 582,800
Office Depot, Inc.* ...................................................... 31,660 197,875
RadioShack Corp. ......................................................... 12,620 597,872
Wal-Mart Stores, Inc. .................................................... 4,820 277,753
-----------
$ 1,675,770
-----------
Supermarkets -- 2.1%
Kroger Co.* .............................................................. 23,060 $ 508,761
Safeway, Inc.* ........................................................... 11,855 534,957
-----------
$ 1,043,718
-----------
Telecommunications -- 12.8%
Allegiance Telecom, Inc.* ................................................ 5,280 $ 337,920
Alltel Corp. ............................................................. 5,070 314,023
American Tower Corp., "A"* ............................................... 4,640 193,430
AT&T Corp., "A"* ......................................................... 7,420 179,935
Cabletron Systems, Inc.* ................................................. 13,740 346,935
Cisco Systems, Inc.* ..................................................... 10,530 669,313
Corning, Inc. ............................................................ 5,820 1,570,673
Cox Communications, Inc.* ................................................ 4,930 224,623
Metromedia Fiber Network,
Inc., "A"* ............................................................. 10,848 430,530
NEXTEL Communications, Inc.* ............................................. 4,060 248,421
Nextlink Communications, Inc., "A"* 5,940 225,349
NTL, Inc.* ............................................................... 2,319 138,850
Time Warner Telecom, Inc.* ............................................... 3,780 243,338
UnitedGlobalCom, Inc.* ................................................... 8,900 416,075
Vignette Corp.* .......................................................... 6,260 325,618
Winstar Communications, Inc.* ............................................ 7,600 257,450
WorldCom, Inc.* .......................................................... 6,830 313,326
-----------
$ 6,435,809
-----------
Telecommunications and Cable -- 1.1%
Comcast Corp., "A"* ...................................................... 13,960 $ 565,380
-----------
Utilities -- Electric -- 0.7%
AES Corp.* ............................................................... 5,330 $ 243,181
Calpine Corp.* ........................................................... 1,530 100,598
-----------
$ 343,779
-----------
Total U.S. Stocks ....................................................................... $41,545,370
-----------
Foreign Stocks -- 10.6%
Bermuda -- 1.1%
FLAG Telecom Holdings Ltd.
(Telecommunications)* .................................................. 2,680 $ 39,865
Global Crossing Ltd.
(Telecommunications)* .................................................. 19,210 505,463
-----------
$ 545,328
-----------
Brazil -- 0.7%
Tele Sudeste Celular Participacoes
S.A. (Telecommunications) .............................................. 1,400 $ 65,221
Telecomunicacoes de Sao Paulo
S.A. (Telecommunications)* ............................................. 10,120 280,330
-----------
$ 345,551
-----------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Canada -- 1.2%
Nortel Networks Corp.
(Telecommunications) ................................................... 9,100 $ 621,075
-----------
Finland -- 0.5%
Nokia Corp., ADR
(Telecommunications) ................................................... 4,840 $ 241,697
-----------
France -- 1.1%
Business Objects S.A., ADR
(Computer Software -- Systems)* 2,050 $ 180,656
Vivendi S.A. (Business Services) ......................................... 4,020 354,776
-----------
$ 535,432
-----------
Israel
Check Point Software Technologies
Ltd. (Computer Software --
Services)* ............................................................ 130 $ 27,528
-----------
Italy -- 0.4%
Telecom Italia Mobile S.p.A.
(Telecommunications) ................................................... 19,740 $ 201,629
-----------
Japan -- 0.9%
Fast Retailing Co. (Retail) .............................................. 540 $ 226,018
Nippon Telegraph & Telephone Co.
(Utilities -- Telephone) ............................................... 13 172,794
NTT Mobile Communications
Network, Inc.
(Telecommunications) ................................................... 2 54,110
-----------
$ 452,922
-----------
Netherlands -- 1.6%
Asm International N.V. (Electronics)* 16,870 $ 447,055
KPN N.V. (Telecommunications)* ........................................... 7,818 349,645
-----------
$ 796,700
-----------
Peru
Telefonica del Peru S.A., ADR
(Telecommunications) ................................................... 2,660 $ 30,258
-----------
South Korea -- 0.4%
Samsung Electronics Co.
(Electronics) .......................................................... 1,070 $ 209,185
-----------
Sweden -- 0.5%
Ericsson LM, ADR
(Telecommunications) ................................................... 3,920 $ 78,400
Tele1 Europe Holdings AB
(Telecommunications)* .................................................. 20 245
Telefonaktiebolaget LM Ericsson AB
(Telecommunications) ................................................... 7,780 154,011
-----------
$ 232,656
-----------
United Kingdom -- 2.2%
COLT Telecom Group PLC, ADR
(Telecommunications)* .................................................. 550 $ 74,594
BP Amoco PLC, ADR (Oils) ................................................. 2,930 165,728
Cable & Wireless PLC, ADR
(Telecommunications)* .................................................. 12,155 205,736
HSBC Holdings PLC (Banks and
Credit Cos.) ........................................................... 20,370 232,782
Vodafone AirTouch PLC
(Telecommunications)* .................................................. 104,594 422,418
-----------
$ 1,101,258
-----------
Total Foreign Stocks .................................................................... $ 5,341,219
-----------
Total Stocks (Identified Cost, $45,346,299) ............................................. $46,886,589
-----------
</TABLE>
27-SSG
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Convertible Preferred Stock
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Insurance
Lincoln National Corp. 1.85%
(Identified Cost, $6,058) ......... 350 $5,250
------
</TABLE>
Convertible Bond
<TABLE>
<CAPTION>
Principal Amount
(000 Omitted)
<S> <C> <C>
Financial Services
Bell Atlantic Financial Services,
Inc., 4.25s, 2005##
(Identified Cost, $7,879) ...... $ 6 $ 7,290
-----------
Short-Term Obligation -- 6.5%
Federal Home Loan Bank, due
7/03/00, at Amortized Cost ..... $3,245 $ 3,243,816
-----------
Total Investments (Identified Cost, $48,604,052) . $50,142,945
-----------
Other Assets,
Less Liabilities -- 0.4% ......................... 199,659
-----------
Net Assets -- 100.0% ............................. $50,342,604
-----------
</TABLE>
See portfolio footnotes and notes to financial statements.
Portfolio of Investments (Unaudited) -- June 30, 2000
Technology Series
Stocks -- 90.9%
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- 80.0%
Biotechnology -- 0.5%
Pharmacia Corp. .......................................................... 20 $ 1,034
-------
Business Machines -- 3.8%
Seagate Technology, Inc.* ................................................ 80 $ 4,400
Sun Microsystems, Inc.* .................................................. 50 4,547
-------
$ 8,947
-------
Business Services -- 3.4%
Amgen, Inc.* ............................................................. 10 $ 702
BEA Systems, Inc.* ....................................................... 20 989
BISYS Group, Inc.* ....................................................... 20 1,230
Finisar Corp.* ........................................................... 100 2,619
Radiant Systems, Inc.* ................................................... 50 1,200
Teletech Holdings, Inc.* ................................................. 40 1,242
-------
$ 7,982
-------
Cellular Telephones -- 1.9%
Motorola, Inc. ........................................................... 90 $ 2,616
Sprint Corp. (PCS Group)* ................................................ 30 1,785
-------
$ 4,401
-------
Computer Software -- Personal
Computers -- 1.4%
Mercury Interactive Corp.* ............................................... 10 $ 967
Microsoft Corp.* ......................................................... 30 2,400
-------
$ 3,367
-------
Computer Software -- Services -- 3.7%
EMC Corp.* ............................................................... 70 $ 5,385
TIBCO Software, Inc.* .................................................... 20 2,145
Yahoo, Inc.* ............................................................. 10 1,239
-------
$ 8,769
-------
Computer Software -- Systems -- 16.9%
Alteon Websystems, Inc.* ................................................. 20 $ 2,001
Brocade Communications Systems,
Inc.* .................................................................. 10 1,835
Checkfree Holdings Corp.* ................................................ 60 3,094
Comverse Technology, Inc.* ............................................... 60 5,580
CSG Systems International, Inc.* ......................................... 50 2,803
Digex, Inc.* ............................................................. 30 2,038
E.piphany, Inc.* ......................................................... 10 1,072
Extreme Networks, Inc.* .................................................. 30 3,165
Foundry Networks, Inc.* .................................................. 10 1,100
I2 Technologies, Inc.* ................................................... 10 1,043
Oracle Corp.* ............................................................ 20 1,681
Rational Software Corp.* ................................................. 40 3,717
Redback Networks, Inc.* .................................................. 20 3,560
Siebel Systems, Inc.* .................................................... 30 4,907
VERITAS Software Corp.* .................................................. 20 2,260
-------
$39,856
-------
Electronics -- 11.6%
Analog Devices, Inc.* .................................................... 40 $ 3,040
Applied Materials, Inc.* ................................................. 20 1,813
Atmel Corp.* ............................................................. 30 1,106
Credence Systems Corp.* .................................................. 30 1,656
E Tek Dynamics, Inc.* .................................................... 10 2,638
Flextronics International Ltd.* .......................................... 40 2,748
Lam Research Corp.* ...................................................... 40 1,500
Micron Technology, Inc.* ................................................. 30 2,642
Sanmina Corp.* ........................................................... 20 1,710
Teradyne, Inc.* .......................................................... 40 2,940
Varian Semiconductor Equipment
Associates, Inc.* ...................................................... 30 1,884
Veeco Instruments, Inc.* ................................................. 50 3,662
-------
$27,339
-------
</TABLE>
28-TS
<PAGE>
Portfolio of Investments (Unaudited) -- continued
Stocks -- continued
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
U.S. Stocks -- continued
Entertainment -- 1.0%
Time Warner, Inc. ...................................................... 30 $ 2,280
--------
Internet -- 8.0%
Art Technology Group, Inc.* ............................................ 20 $ 2,019
CacheFlow, Inc.* ....................................................... 50 3,078
Interwoven, Inc.* ...................................................... 20 2,200
Juniper Networks, Inc.* ................................................ 10 1,456
Phone.com, Inc.* ....................................................... 20 1,302
VeriSign, Inc.* ........................................................ 50 8,825
--------
$ 18,880
--------
Oil Services -- 0.9%
Cooper Cameron Corp.* .................................................. 20 $ 1,320
Global Marine, Inc.* ................................................... 30 846
--------
$ 2,166
--------
Special Products and Services -- 1.0%
SPX Corp.* ............................................................. 20 $ 2,419
--------
Telecommunications -- 25.9%
Allegiance Telecom, Inc.* .............................................. 20 $ 1,280
Amdocs Ltd.* ........................................................... 30 2,302
Ancor Communications, Inc.* ............................................ 60 2,146
Aware, Inc.* ........................................................... 50 2,556
Cabletron Systems, Inc.* ............................................... 200 5,050
CIENA Corp.* ........................................................... 40 6,667
Cisco Systems, Inc.* ................................................... 101 6,420
Corning, Inc. .......................................................... 20 5,397
Ditech Communications Corp.* ........................................... 30 2,837
Emulex Corp.* .......................................................... 70 4,598
Level 3 Communications, Inc.* .......................................... 30 2,640
McLeodUSA, Inc., "A"* .................................................. 170 3,517
Metromedia Fiber Network, Inc., "A"* 90 3,572
Natural Microsystems Corp.* ............................................ 20 2,249
Netro Corp.* ........................................................... 40 2,295
Nextlink Communications, Inc., "A"* 20 759
Spectrasite Holdings, Inc.* ............................................ 40 1,135
Tekelec Co.* ........................................................... 60 2,891
Time Warner Telecom, Inc.* ............................................. 10 644
Vignette Corp.* ........................................................ 40 2,081
--------
$ 61,036
--------
Total U.S. Stocks .................................................................... $188,476
--------
Foreign Stocks -- 10.9%
Bermuda -- 0.8%
Global Crossing Ltd.
(Telecommunications)* ................................................ 70 $ 1,842
--------
Canada -- 2.6%
Nortel Networks Corp.
(Telecommunications) ................................................. 90 $ 6,142
--------
Finland -- 1.7%
Nokia Corp., ADR
(Telecommunications) ................................................. 80 $ 3,995
--------
Israel -- 1.8%
Check Point Software Technologies
Ltd. (Computer Software --
Services)* .......................................................... 20 $ 4,235
--------
Netherlands -- 1.0%
ASM Lithography Holding N.V.
(Computer Software -- Systems)*....................................... 30 $ 1,324
United Pan-Europe Communications
N.V. (Telecommunications and
Cable)* .............................................................. 40 1,046
--------
$ 2,370
--------
</TABLE>
<TABLE>
<CAPTION>
Issuer Shares Value
<S> <C> <C>
Foreign Stocks -- continued
Sweden -- 2.2%
Ericsson LM, ADR
(Telecommunications) ................................................. 260 $ 5,200
--------
United Kingdom -- 0.8%
Vodafone AirTouch PLC, ADR
(Telecommunications) ................................................. 47 $ 1,948
--------
Total Foreign Stocks ................................................................. $ 25,732
--------
Total Stocks (Identified Cost, $203,906) ............................................. $214,208
--------
Short-Term Obligation -- 5.5%
Principal Amount
(000 Omitted)
Federal Home Loan Bank, due
7/03/00, at Amortized Cost ........................................... $ 13 $ 12,995
--------
Total Investments (Identified Cost, $216,901) ........................................ $227,203
--------
Other Assets,
Less Liabilities -- 3.6% ............................................................. 8,391
--------
Net Assets -- 100.0% ................................................................. $235,594
--------
</TABLE>
See portfolio footnotes and notes to financial statements.
Portfolio Footnotes:
* Non-income producing security.
## SEC Rule 144A restriction.
29-TS
<PAGE>
MFS/Sun Life Series Trust
Statement of Assets and Liabilities (Unaudited) -- June 30, 2000
<TABLE>
<CAPTION>
Capital Equity
Opportunities Income
Assets: Series Series
Investments -- ------------- ------------
<S> <C> <C>
Unaffiliated issuers, at cost .......................................................... $538,235,609 $ 54,114,628
Unrealized appreciation ................................................................ 63,214,246 4,334,965
------------ ------------
Total investments, at value .......................................................... $601,449,855 $ 58,449,593
Investments of cash collateral for securities loaned, at identified cost and value ...... 48,826,198 5,212,831
Cash .................................................................................... 29,589 718
Foreign currency, at value (identified cost, $75,514, $7,645, $22,075, and $1,748, 78,539 7,552
respectively)
Receivable for investments sold ......................................................... 8,429,203 60,892
Receivable for series shares sold ....................................................... 1,113,492 91,013
Interest and dividends receivable ....................................................... 189,097 132,296
Other assets ............................................................................ 1,502 26
------------ ------------
Total assets ......................................................................... $660,117,475 $ 63,954,921
============ ============
Liabilities:
Payable for investments purchased ....................................................... $ 4,300,318 $ --
Payable for series shares reacquired .................................................... 11,457 4,337
Collateral for securities loaned, at value .............................................. 48,826,198 5,212,831
Payable to affiliates --
Management fee ......................................................................... 11,732 1,217
Administrative fee ..................................................................... 288 28
Accrued expenses and other liabilities .................................................. 51,890 11,230
------------ --------------
Total liabilities .................................................................... $ 53,201,883 $ 5,229,643
------------ --------------
Net assets ............................................................................... $606,915,592 $ 58,725,278
============ ==============
Net assets consist of:
Paid-in capital ......................................................................... $475,517,295 $ 53,677,794
Unrealized appreciation on investments and translation of assets and liabilities in 63,216,873 4,335,561
foreign currencies
Accumulated undistributed net realized gain on investments and foreign currency 68,449,983 220,217
transactions
Accumulated undistributed net investment income (loss) .................................. (268,559) 491,706
------------ --------------
Total ............................................................................... $606,915,592 $ 58,725,278
============ ==============
Shares of beneficial interest outstanding ............................................... 25,818,241 4,940,426
============ ==============
Net asset value, offering price and redemption price per share
(net assets divided by shares of beneficial interest outstanding) ...................... $ 23.51 $ 11.89
============ ==============
<CAPTION>
Massachusetts
Investors
International Growth
Growth Stock
Assets: Series Series
Investments -- ------------- -------------
<S> <C> <C>
Unaffiliated issuers, at cost .......................................................... $ 84,240,158 $ 754,175,610
Unrealized appreciation ................................................................ 8,938,858 54,338,464
------------- -------------
Total investments, at value .......................................................... $ 93,179,016 $ 808,514,074
Investments of cash collateral for securities loaned, at identified cost and value ...... 9,831,237 42,256,320
Cash .................................................................................... 1,038 25,742
Foreign currency, at value (identified cost, $75,514, $7,645, $22,075, and $1,748, 21,702 1,657
respectively)
Receivable for investments sold ......................................................... 940,648 10,929,316
Receivable for series shares sold ....................................................... 173,370 1,884,988
Interest and dividends receivable ....................................................... 136,411 261,967
Other assets ............................................................................ 181 211
------------- -------------
Total assets ......................................................................... $ 104,283,603 $ 863,874,275
============= =============
Liabilities:
Payable for investments purchased ....................................................... $ 1,147,994 $ 18,898,634
Payable for series shares reacquired .................................................... 23,761 255,159
Collateral for securities loaned, at value .............................................. 9,831,237 42,256,320
Payable to affiliates --
Management fee ......................................................................... 2,480 16,293
Administrative fee ..................................................................... 45 868
Accrued expenses and other liabilities .................................................. 47,333 82,902
------------- -------------
Total liabilities .................................................................... $ 11,052,850 $ 61,510,176
------------- -------------
Net assets ............................................................................... $ 93,230,753 $ 802,364,099
============= =============
Net assets consist of:
Paid-in capital ......................................................................... $ 77,564,267 $ 684,019,769
Unrealized appreciation on investments and translation of assets and liabilities in 8,940,093 54,335,548
foreign currencies
Accumulated undistributed net realized gain on investments and foreign currency 5,893,055 63,729,448
transactions
Accumulated undistributed net investment income (loss) .................................. 833,338 279,334
------------- -------------
Total ............................................................................... $ 93,230,753 $ 802,364,099
============= =============
Shares of beneficial interest outstanding ............................................... 7,187,655 50,070,212
============= =============
Net asset value, offering price and redemption price per share
(net assets divided by shares of beneficial interest outstanding) ...................... $ 12.97 $ 16.02
============= =============
</TABLE>
See notes to financial statements.
30
<PAGE>
MFS/Sun Life Series Trust
Statement of Assets and Liabilities (Unaudited) -- June 30, 2000
<TABLE>
<CAPTION>
Research
New Growth and
Discovery Income
Assets: Series Series
Investments -- ------------- -----------
<S> <C> <C>
Unaffiliated issuers, at cost .......................................................... $142,907,593 $ 75,310,959
Unrealized appreciation ................................................................ 11,791,369 9,398,818
------------ ------------
Total investments, at value .......................................................... $154,698,962 $ 84,709,777
Investments of cash collateral for securities loaned, at identified cost and value ...... 24,978,722 2,452,802
Cash .................................................................................... 559 1,202
Foreign currency, at value (identified cost, $0, $921, $28,577, $4,960 and $0, -- 921
respectively)
Deposits with brokers for securities sold short ......................................... 545,842 --
Receivable for investments sold ......................................................... 1,823,998 497,470
Receivable for series shares sold ....................................................... 1,103,993 9,811
Interest and dividends receivable ....................................................... 3,946 65,983
Other assets ............................................................................ 775 247
------------ ------------
Total assets ......................................................................... $183,156,797 $ 87,738,213
============ ============
Liabilities:
Securities sold short, at value (proceeds received, $545,842) ........................... $ 240,000 $
--
Payable for investments purchased ....................................................... 173,457 390,252
Payable for series shares reacquired .................................................... 1,892 25,673
Collateral for securities loaned, at value .............................................. 24,978,722 2,452,802
Payable to affiliates --
Management fee ......................................................................... 3,814 1,744
Administrative fee ..................................................................... 74 41
Accrued expenses and other liabilities .................................................. 15,151 25,276
------------ -------------
Total liabilities .................................................................... $ 25,413,110 $ 2,895,788
------------ -------------
Net assets ............................................................................... $157,743,687 $ 84,842,425
============ =============
Net assets consist of:
Paid-in capital ......................................................................... $134,229,787 $ 76,389,236
Unrealized appreciation on investments and translation of assets and liabilities in 12,097,211 9,399,376
foreign currencies
Accumulated undistributed net realized gain (loss) on investments and foreign currency 11,682,948 (1,186,096)
transactions
Accumulated undistributed net investment income (loss) .................................. (266,259) 239,909
------------ -------------
Total ............................................................................... $157,743,687 $ 84,842,425
============ =============
Shares of beneficial interest outstanding ............................................... 8,992,551 5,905,274
============ =============
Net asset value, offering price and redemption price per share
(net assets divided by shares of beneficial interest outstanding) ...................... $ 17.54 $ 14.37
============ =============
<CAPTION>
Research Strategic
International Growth
Assets: Series Series
Investments -- -------------- -----------
<S> <C> <C>
Unaffiliated issuers, at cost .......................................................... $ 46,113,746 $48,604,052
Unrealized appreciation ................................................................ 1,779,402 1,538,893
------------ -----------
Total investments, at value .......................................................... $ 47,893,148 $50,142,945
Investments of cash collateral for securities loaned, at identified cost and value ...... 5,546,058 2,724,898
Cash .................................................................................... 737 18,584
Foreign currency, at value (identified cost, $0, $921, $28,577, $4,960 and $0, 28,554 5,199
respectively)
Deposits with brokers for securities sold short ......................................... -- --
Receivable for investments sold ......................................................... 672,237 360,620
Receivable for series shares sold ....................................................... 145,422 417,521
Interest and dividends receivable ....................................................... 79,372 14,943
Other assets ............................................................................ 222 --
------------ -----------
Total assets ......................................................................... $ 54,365,750 $53,684,710
============ ===========
Liabilities:
Securities sold short, at value (proceeds received, $545,842) ........................... $ $
-- --
Payable for investments purchased ....................................................... 839,358 612,603
Payable for series shares reacquired .................................................... 9,367 9
Collateral for securities loaned, at value .............................................. 5,546,058 2,724,898
Payable to affiliates --
Management fee ......................................................................... 1,305 1,012
Administrative fee ..................................................................... 23 24
Accrued expenses and other liabilities .................................................. 20,322 3,560
------------- ------------
Total liabilities .................................................................... $ 6,416,433 $ 3,342,106
------------- ------------
Net assets ............................................................................... $ 47,949,317 $50,342,604
============= ============
Net assets consist of:
Paid-in capital ......................................................................... $ 41,932,183 $47,645,298
Unrealized appreciation on investments and translation of assets and liabilities in 1,781,262 1,539,172
foreign currencies
Accumulated undistributed net realized gain (loss) on investments and foreign currency 3,442,287 1,164,207
transactions
Accumulated undistributed net investment income (loss) .................................. 793,585 (6,073)
------------- ------------
Total ............................................................................... $ 47,949,317 $50,342,604
============= ============
Shares of beneficial interest outstanding ............................................... 3,436,116 3,850,107
============= ============
Net asset value, offering price and redemption price per share
(net assets divided by shares of beneficial interest outstanding) ...................... $ 13.95 $ 13.08
============= ============
<CAPTION>
Technology
Assets: Series
Investments -- ----------
<S> <C>
Unaffiliated issuers, at cost .......................................................... $ 216,901
Unrealized appreciation ................................................................ 10,302
---------
Total investments, at value .......................................................... $ 227,203
Investments of cash collateral for securities loaned, at identified cost and value ...... --
Cash .................................................................................... 11,045
Foreign currency, at value (identified cost, $0, $921, $28,577, $4,960 and $0, --
respectively)
Deposits with brokers for securities sold short ......................................... --
Receivable for investments sold ......................................................... 1,700
Receivable for series shares sold ....................................................... --
Interest and dividends receivable ....................................................... 2
Other assets ............................................................................ --
---------
Total assets ......................................................................... $ 239,950
=========
Liabilities:
Securities sold short, at value (proceeds received, $545,842) ........................... $ --
Payable for investments purchased ....................................................... 4,344
Payable for series shares reacquired .................................................... --
Collateral for securities loaned, at value .............................................. --
Payable to affiliates --
Management fee ......................................................................... 5
Administrative fee ..................................................................... --
Accrued expenses and other liabilities .................................................. 7
-----------
Total liabilities .................................................................... $ 4,356
-----------
Net assets ............................................................................... $ 235,594
===========
Net assets consist of:
Paid-in capital ......................................................................... $ 225,000
Unrealized appreciation on investments and translation of assets and liabilities in 10,302
foreign currencies
Accumulated undistributed net realized gain (loss) on investments and foreign currency 269
transactions
Accumulated undistributed net investment income (loss) .................................. 23
-----------
Total ............................................................................... $ 235,594
===========
Shares of beneficial interest outstanding ............................................... 22,500
===========
Net asset value, offering price and redemption price per share
(net assets divided by shares of beneficial interest outstanding) ...................... $ 10.47
===========
</TABLE>
See notes to financial statements.
31
<PAGE>
MFS/Sun Life Series Trust
Statements of Operations (Unaudited) -- Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
Capital Equity
Opportunities Income
Net investment income (loss): Series Series
Income -- ------------- ----------
<S> <C> <C>
Interest ..................................................................... $ 507,364 $ 72,598
Dividends .................................................................... 1,421,851 630,364
Foreign taxes withheld ....................................................... (44,108) (11,820)
------------- ----------
Total investment income ..................................................... $ 1,885,107 $ 691,142
------------- ----------
Expenses --
Management fee ............................................................... $ 1,926,818 $ 182,717
Trustees' compensation ....................................................... 4,261 394
Administrative fee ........................................................... 43,892 3,999
Custodian fee ................................................................ 140,224 8,021
Printing ..................................................................... 27,536 4,177
Auditing fees ................................................................ 14,500 7,750
Legal fees ................................................................... 643 --
Miscellaneous ................................................................ -- --
------------- ----------
Total expenses .............................................................. $ 2,157,874 $ 207,058
Fees paid indirectly ......................................................... (4,208) (2,055)
------------- ----------
Net expenses ................................................................ $ 2,153,666 $ 205,003
------------- ----------
Net investment income (loss) ............................................... $ (268,559) $ 486,139
------------- ----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) --
Investment transactions ...................................................... $ 68,856,425 $ 344,473
Foreign currency transactions ................................................ (36,390) (1,576)
------------- ----------
Net realized gain on investments and foreign currency transactions .......... $ 68,820,035 $ 342,897
------------- ----------
Change in unrealized appreciation (depreciation) --
Investments .................................................................. $ (31,789,791) $3,117,010
Translation of assets and liabilities in foreign currencies .................. (705) 593
------------- ----------
Net unrealized gain (loss) on investments and foreign currency translation .. $ (31,790,496) $3,117,603
------------- ----------
Net realized and unrealized gain on investments and foreign currency ....... $ 37,029,539 $3,460,500
------------- ----------
Increase in net assets from operations .................................... $ 36,760,980 $3,946,639
============= ==========
<CAPTION>
Massachusetts
International Investors
Growth Growth Stock
Net investment income (loss): Series Series
Income -- ------------- -------------
<S> <C> <C>
Interest ..................................................................... $ 188,294 $ 1,660,443
Dividends .................................................................... 1,257,333 1,357,407
Foreign taxes withheld ....................................................... (110,013) (17,294)
------------ -------------
Total investment income ..................................................... $ 1,335,614 $ 3,000,556
------------ -------------
Expenses --
Management fee ............................................................... $ 385,442 $ 2,545,789
Trustees' compensation ....................................................... 647 5,298
Administrative fee ........................................................... 6,458 55,505
Custodian fee ................................................................ 72,523 131,802
Printing ..................................................................... 7,723 36,532
Auditing fees ................................................................ 28,750 7,250
Legal fees ................................................................... -- 444
Miscellaneous ................................................................ -- 17,314
------------ -------------
Total expenses .............................................................. $ 501,543 $ 2,799,934
Fees paid indirectly ......................................................... (4,403) (35,102)
------------ -------------
Net expenses ................................................................ $ 497,140 $ 2,764,832
------------ -------------
Net investment income (loss) ............................................... $ 838,474 $ 235,724
------------ -------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) --
Investment transactions ...................................................... $ 5,984,759 $ 70,050,806
Foreign currency transactions ................................................ (8,375) (156,614)
------------ -------------
Net realized gain on investments and foreign currency transactions .......... $ 5,976,384 $ 69,894,192
------------ -------------
Change in unrealized appreciation (depreciation) --
Investments .................................................................. $ (5,212,740) $ (45,837,899)
Translation of assets and liabilities in foreign currencies .................. 2,600 (2,867)
------------ -------------
Net unrealized gain (loss) on investments and foreign currency translation .. $ (5,210,140) $ (45,840,766)
------------ -------------
Net realized and unrealized gain on investments and foreign currency ....... $ 766,244 $ 24,053,426
------------ -------------
Increase in net assets from operations .................................... $ 1,604,718 $ 24,289,150
============ =============
</TABLE>
See notes to financial statements.
32
<PAGE>
MFS/Sun Life Series Trust
Statements of Operations (Unaudited) -- Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
Research
New Growth and
Discovery Income
Net investment income (loss): Series Series
Income -- ------------ ------------
<S> <C> <C>
Interest ........................................................................ $ 255,652 $ 68,798
Dividends ....................................................................... 15,106 532,728
Foreign taxes withheld .......................................................... (661) (3,023)
------------ ------------
Total investment income ........................................................ $ 270,097 $ 598,503
------------ ------------
Expenses --
Management fee .................................................................. $ 496,215 $ 304,065
Trustees' compensation .......................................................... 633 765
Administrative fee .............................................................. 9,086 6,612
Custodian fee ................................................................... 23,005 19,215
Printing ........................................................................ 3,664 4,182
Auditing fees ................................................................... 7,250 27,000
Legal fees ...................................................................... 138 --
Miscellaneous ................................................................... 362 785
------------ ------------
Total expenses ................................................................. $ 540,353 $ 362,624
Fees paid indirectly ............................................................ (3,997) (2,675)
Reduction of expenses by investment adviser ..................................... -- --
------------ ------------
Net expenses ................................................................... $ 536,356 $ 359,949
------------ ------------
Net investment income (loss) .................................................. $ (266,259) $ 238,554
------------ ------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) --
Investment transactions ......................................................... $ 12,212,411 $ (1,029,697)
Securities sold short ........................................................... (94,090) --
Foreign currency transactions ................................................... 4 (1,635)
------------ ------------
Net realized gain (loss) on investments and foreign currency transactions ...... $ 12,118,325 $ (1,031,332)
------------ ------------
Change in unrealized appreciation (depreciation) --
Investments ..................................................................... $ (4,739,886) $ 2,037,201
Securities sold short ........................................................... 324,544 --
Translation of assets and liabilities in foreign currencies ..................... -- 692
------------ ------------
Net unrealized gain (loss) on investments and foreign currency translation ..... $ (4,415,342) $ 2,037,893
------------ ------------
Net realized and unrealized gain (loss) on investments and foreign currency ... $ 7,702,983 $ 1,006,561
------------ ------------
Increase in net assets from operations ....................................... $ 7,436,724 $ 1,245,115
============ ============
<CAPTION>
Research Strategic
International Growth Technology
Net investment income (loss): Series Series Series*
Income -- ------------ ----------- ----------
<S> <C> <C> <C>
Interest ........................................................................ $ 62,321 $ 99,774 $ 96
Dividends ....................................................................... 983,522 53,112 3
Foreign taxes withheld .......................................................... (38,747) (1,817) --
------------ ---------- --------
Total investment income ........................................................ $ 1,007,096 $ 151,069 $ 99
------------ ---------- --------
Expenses --
Management fee .................................................................. $ 194,713 $ 117,781 $ 57
Trustees' compensation .......................................................... 286 89 --
Administrative fee .............................................................. 3,190 1,701 1
Custodian fee ................................................................... 46,593 10,983 58
Printing ........................................................................ 431 28,478 367
Auditing fees ................................................................... 7,500 9,750 2,296
Legal fees ...................................................................... 106 779 38
Miscellaneous ................................................................... -- 5 7
------------ ---------- --------
Total expenses ................................................................. $ 252,819 $ 169,566 $ 2,824
Fees paid indirectly ............................................................ (1,253) (2,400) --
Reduction of expenses by investment adviser ..................................... -- (10,071) (2,748)
------------ ---------- --------
Net expenses ................................................................... $ 251,566 $ 157,095 $ 76
------------ ---------- --------
Net investment income (loss) .................................................. $ 755,530 $ (6,026) $ 23
------------ ---------- --------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) --
Investment transactions ......................................................... $ 3,650,902 $1,166,885 $ 268
Securities sold short ........................................................... -- -- --
Foreign currency transactions ................................................... (11,689) (1,243) 1
------------ ---------- --------
Net realized gain (loss) on investments and foreign currency transactions ...... $ 3,639,213 $1,165,642 $ 269
------------ ---------- --------
Change in unrealized appreciation (depreciation) --
Investments ..................................................................... $ (3,682,711) $ 954,601 $ 10,302
Securities sold short ........................................................... -- -- --
Translation of assets and liabilities in foreign currencies ..................... 2,174 293 --
------------ ---------- --------
Net unrealized gain (loss) on investments and foreign currency translation ..... $ (3,680,537) $ 954,894 $ 10,302
------------ ---------- --------
Net realized and unrealized gain (loss) on investments and foreign currency ... $ (41,324) $2,120,536 $ 10,571
------------ ---------- --------
Increase in net assets from operations ....................................... $ 714,206 $2,114,510 $ 10,594
============ ========== ========
</TABLE>
* For the period from the commencement of the series' investment operations,
June 16, 2000, through June 30, 2000.
See notes to financial statements.
33
<PAGE>
MFS/Sun Life Series Trust
Statements of Changes in Net Assets (Unaudited) -- Six Months Ended
June 30, 2000
<TABLE>
<CAPTION>
Capital
Opportunities
Increase (decrease) in net assets: Series
From operations -- -------------
<S> <C>
Net investment income (loss) ............................................................ $ (268,559)
Net realized gain on investments and foreign currency transactions ...................... 68,820,035
Net unrealized gain (loss) on investments and foreign currency translation .............. (31,790,496)
-------------
Increase in net assets from operations ................................................. $ 36,760,980
-------------
Distributions declared to shareholders --
From net investment income .............................................................. $ --
From net realized gain on investments and foreign currency transactions ................. (60,732,979)
--------------
Total distributions declared to shareholders ........................................... $ (60,732,979)
--------------
Net increase in net assets from series share transactions ................................ $ 193,683,288
--------------
Total increase in net assets .......................................................... $ 169,711,289
Net assets --
At beginning of period .................................................................. 437,204,303
--------------
At end of period ........................................................................ $ 606,915,592
==============
Accumulated undistributed net investment income (loss) included in
net assets at end of period ............................................................ $(268,559)
==============
<CAPTION>
Equity International
Income Growth
Increase (decrease) in net assets: Series Series
From operations -- ----------- ------------
<S> <C> <C>
Net investment income (loss) ............................................................ $ 486,139 $ 838,474
Net realized gain on investments and foreign currency transactions ...................... 342,897 5,976,384
Net unrealized gain (loss) on investments and foreign currency translation .............. 3,117,603 (5,210,140)
----------- ------------
Increase in net assets from operations ................................................. $ 3,946,639 $ 1,604,718
----------- ------------
Distributions declared to shareholders --
From net investment income .............................................................. $ (302,108) $ (238,767)
From net realized gain on investments and foreign currency transactions ................. (247,579) (1,340,602)
----------- ------------
Total distributions declared to shareholders ........................................... $ (549,687) $ (1,579,369)
----------- ------------
Net increase in net assets from series share transactions ................................ $14,156,821 $ 26,298,548
----------- ------------
Total increase in net assets .......................................................... $17,553,773 $ 26,323,897
Net assets --
At beginning of period .................................................................. 41,171,505 66,906,856
----------- ------------
At end of period ........................................................................ $58,725,278 $ 93,230,753
=========== ============
Accumulated undistributed net investment income (loss) included in
net assets at end of period ............................................................ $ 491,706 $ 833,338
=========== ============
<CAPTION>
Massachusetts
Investors
Growth
Stock
Increase (decrease) in net assets: Series
From operations -- -------------
<S> <C>
Net investment income (loss) ............................................................ $ 235,724
Net realized gain on investments and foreign currency transactions ...................... 69,894,192
Net unrealized gain (loss) on investments and foreign currency translation .............. (45,840,766)
-------------
Increase in net assets from operations ................................................. $ 24,289,150
-------------
Distributions declared to shareholders --
From net investment income .............................................................. $ (610,814)
From net realized gain on investments and foreign currency transactions ................. (28,550,473)
-------------
Total distributions declared to shareholders ........................................... $ (29,161,287)
-------------
Net increase in net assets from series share transactions ................................ $ 263,305,807
-------------
Total increase in net assets .......................................................... $ 258,433,670
Net assets --
At beginning of period .................................................................. 543,930,429
-------------
At end of period ........................................................................ $ 802,364,099
=============
Accumulated undistributed net investment income (loss) included in
net assets at end of period ............................................................ $ 279,334
=============
</TABLE>
<TABLE>
<CAPTION>
Research
New Growth and
Discovery Income
Increase (decrease) in net assets: Series Series
From operations -- ------------ ------------
<S> <C> <C>
Net investment income (loss) ............................................................ $ (266,259) $ 238,554
Net realized gain (loss) on investments and foreign currency transactions ............... 12,118,325 (1,031,332)
Net unrealized gain (loss) on investments and foreign currency translation .............. (4,415,342) 2,037,893
------------ ------------
Increase in net assets from operations ................................................. $ 7,436,724 $ 1,245,115
------------ ------------
Distributions declared to shareholders --
From net investment income .............................................................. $ -- $ (372,523)
From net realized gain on investments and foreign currency transactions ................. (7,196,933) (1,093,642)
------------ ------------
Total distributions declared to shareholders ........................................... $ (7,196,933) $ (1,466,165)
------------ ------------
Net increase in net assets from series share transactions ................................ $ 91,721,615 $ 5,971,907
------------ ------------
Total increase in net assets .......................................................... $ 91,961,406 $ 5,750,857
Net assets --
At beginning of period .................................................................. 65,782,281 79,091,568
------------ ------------
At end of period ........................................................................ $157,743,687 $ 84,842,425
============ ============
Accumulated undistributed net investment income (loss) included in
net assets at end of period ............................................................ $ (266,259) $ 239,909
============ ============
<CAPTION>
Research Strategic
International Growth
Increase (decrease) in net assets: Series Series
From operations -- ------------ -----------
<S> <C> <C>
Net investment income (loss) ............................................................ $ 755,530 $ (6,026)
Net realized gain (loss) on investments and foreign currency transactions ............... 3,639,213 1,165,642
Net unrealized gain (loss) on investments and foreign currency translation .............. (3,680,537) 954,894
------------ -----------
Increase in net assets from operations ................................................. $ 714,206 $ 2,114,510
------------ -----------
Distributions declared to shareholders --
From net investment income .............................................................. $ (2,362) $ (16,241)
From net realized gain on investments and foreign currency transactions ................. (2,214,427) (10,880)
------------ -----------
Total distributions declared to shareholders ........................................... $ (2,216,789) $ (27,121)
------------ -----------
Net increase in net assets from series share transactions ................................ $ 19,301,934 $39,097,056
------------ -----------
Total increase in net assets .......................................................... $ 17,799,351 $41,184,445
Net assets --
At beginning of period .................................................................. 30,149,966 9,158,159
------------ -----------
At end of period ........................................................................ $ 47,949,317 $50,342,604
============ ===========
Accumulated undistributed net investment income (loss) included in
net assets at end of period ............................................................ $ 793,585 $ (6,073)
============ ===========
<CAPTION>
Technology
Increase (decrease) in net assets: Series*
From operations -- ----------
<S> <C>
Net investment income (loss) ............................................................ $ 23
Net realized gain (loss) on investments and foreign currency transactions ............... 269
Net unrealized gain (loss) on investments and foreign currency translation .............. 10,302
--------
Increase in net assets from operations ................................................. $ 10,594
--------
Distributions declared to shareholders --
From net investment income .............................................................. $ --
From net realized gain on investments and foreign currency transactions ................. --
--------
Total distributions declared to shareholders ........................................... $ --
--------
Net increase in net assets from series share transactions ................................ $225,000
--------
Total increase in net assets .......................................................... $235,594
Net assets --
At beginning of period .................................................................. --
--------
At end of period ........................................................................ $235,594
========
Accumulated undistributed net investment income (loss) included in
net assets at end of period ........................................................... $ 23
========
</TABLE>
See notes to financial statements.
34
<PAGE>
MFS/Sun Life Series Trust
Statements of Changes in Net Assets -- Year Ended December 31, 1999
<TABLE>
<CAPTION>
Capital Equity
Opportunities Income
Increase (decrease) in net assets: Series Series
From operations -- ------------- -----------
<S> <C> <C>
Net investment income ................................................................... $ 63,930 $ 411,403
Net realized gain on investments and foreign currency transactions ...................... 59,744,094 99,115
Net unrealized gain on investments and foreign currency translation ..................... 62,452,322 709,386
------------ -----------
Increase in net assets from operations ................................................. $122,260,346 $ 1,219,904
------------ -----------
Distributions declared to shareholders --
From net investment income .............................................................. $ (438,071) $ (47,860)
From net realized gain on investments and foreign currency transactions ................. (4,929,801) --
------------ -----------
Total distributions declared to shareholders ........................................... $ (5,367,872) $ (47,860)
------------ -----------
Net increase in net assets from series share transactions ................................ $129,599,457 $31,506,627
------------ -----------
Total increase in net assets .......................................................... $246,491,931 $32,678,671
Net assets --
At beginning of period .................................................................. 190,712,372 8,492,834
------------ -----------
At end of period ........................................................................ $437,204,303 $41,171,505
============ ===========
Accumulated undistributed net investment income included in net assets at end of period .. $ -- $ 307,675
============ ===========
<CAPTION>
Massachusetts
Investors
International Growth
Growth Stock
Increase (decrease) in net assets: Series Series
From operations -- ------------- -------------
<S> <C> <C>
Net investment income ................................................................... $ 264,196 $ 660,046
Net realized gain on investments and foreign currency transactions ...................... 5,821,807 23,149,464
Net unrealized gain on investments and foreign currency translation ..................... 10,626,538 90,749,757
----------- ------------
Increase in net assets from operations ................................................. $16,712,541 $114,559,267
----------- ------------
Distributions declared to shareholders --
From net investment income .............................................................. $ (218,603) $ --
From net realized gain on investments and foreign currency transactions ................. -- (3,090,851)
----------- ------------
Total distributions declared to shareholders ........................................... $ (218,603) $ (3,090,851)
----------- ------------
Net increase in net assets from series share transactions ................................ $14,731,699 $351,224,761
----------- ------------
Total increase in net assets .......................................................... $31,225,637 $462,693,177
Net assets --
At beginning of period .................................................................. 35,681,219 81,237,252
----------- ------------
At end of period ........................................................................ $66,906,856 $543,930,429
=========== ============
Accumulated undistributed net investment income included in net assets at end of period .. $ 233,631 $ 654,424
=========== ============
</TABLE>
<TABLE>
<CAPTION>
New
Discovery
Increase (decrease) in net assets: Series
From operations -- -----------
<S> <C>
Net investment income (loss) ............................................................ $ (179,437)
Net realized gain on investments and foreign currency transactions ...................... 7,151,680
Net unrealized gain on investments and foreign currency translation ..................... 15,011,090
-----------
Increase in net assets from operations ................................................. $21,983,333
-----------
Distributions declared to shareholders --
From net investment income .............................................................. $ --
From net realized gain on investments and foreign currency transactions ................. (135,762)
-----------
Total distributions declared to shareholders ........................................... $ (135,762)
-----------
Net increase in net assets from series share transactions ................................ $30,654,767
-----------
Capital contribution by investment adviser .............................................. $ --
-----------
Total increase in net assets .......................................................... $52,502,338
Net assets --
At beginning of period .................................................................. 13,279,943
-----------
At end of period ........................................................................ $65,782,281
===========
Accumulated undistributed net investment income included in net assets at end of period .. $ --
===========
<CAPTION>
Research
Growth and Research
Income International
Increase (decrease) in net assets: Series Series
From operations -- ------------ -------------
<S> <C> <C>
Net investment income (loss) ............................................................ $ 391,915 $ 28,215
Net realized gain on investments and foreign currency transactions ...................... 1,687,554 2,143,478
Net unrealized gain on investments and foreign currency translation ..................... 2,434,026 5,318,222
----------- -----------
Increase in net assets from operations ................................................. $ 4,513,495 $ 7,489,915
----------- -----------
Distributions declared to shareholders --
From net investment income .............................................................. $ (197,936) $ (1,910)
From net realized gain on investments and foreign currency transactions ................. -- --
----------- -----------
Total distributions declared to shareholders ........................................... $ (197,936) $ (1,910)
----------- -----------
Net increase in net assets from series share transactions ................................ $35,624,229 $19,142,651
----------- -----------
Capital contribution by investment adviser .............................................. $ -- $ --
----------- -----------
Total increase in net assets .......................................................... $39,939,788 $26,630,656
Net assets --
At beginning of period .................................................................. 39,151,780 3,519,310
----------- -----------
At end of period ........................................................................ $79,091,568 $30,149,966
=========== ===========
Accumulated undistributed net investment income included in net assets at end of period .. $ 373,878 $ 40,417
=========== ===========
<CAPTION>
Strategic
Growth
Increase (decrease) in net assets: Series*
From operations -- ----------
<S> <C>
Net investment income (loss) ............................................................ $ 15,457
Net realized gain on investments and foreign currency transactions ...................... 10,182
Net unrealized gain on investments and foreign currency translation ..................... 584,278
----------
Increase in net assets from operations ................................................. $ 609,917
----------
Distributions declared to shareholders --
From net investment income .............................................................. $ --
From net realized gain on investments and foreign currency transactions ................. --
----------
Total distributions declared to shareholders ........................................... $ --
----------
Net increase in net assets from series share transactions ................................ $8,422,214
----------
Capital contribution by investment adviser .............................................. $ 126,028
----------
Total increase in net assets .......................................................... $9,158,159
Net assets --
At beginning of period .................................................................. --
----------
At end of period ........................................................................ $9,158,159
==========
Accumulated undistributed net investment income included in net assets at end of period .. $ 16,194
==========
</TABLE>
See notes to financial statements.
35
<PAGE>
MFS/Sun Life Series Trust
Financial Highlights
<TABLE>
<CAPTION>
Capital Opportunities Series
-------------------------------------------------------
Six Months
Ended
June 30, Year Ended December 31,
2000 -------------------------------------
Per share data (for a share (Unaudited) 1999 1998 1997
outstanding throughout each period): ----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value -- beginning of period ........... $ 24.5081 $ 16.9825 $ 13.9339 $ 11.0055
----------- --------- --------- ---------
Income from investment operations# --
Net investment income (loss)[sec] ............... $ (0.0126) $ 0.0046 $ 0.0477 $ 0.1466
Net realized and unrealized gain on
investments and foreign currency ............... 1.8487 7.9499 3.6598 2.8785
----------- --------- --------- ---------
Total from investment operations .............. $ 1.8361 $ 7.9545 $ 3.7075 $ 3.0251
----------- --------- --------- ---------
Less distributions declared to shareholders --
From net investment income ...................... $ -- $ (0.0350) $ (0.0620) $ (0.0221)
From net realized gain on investments and
foreign currency transactions .................. (2.8369) (0.3939) (0.5969) (0.0746)
----------- --------- --------- ---------
Total distributions declared to
shareholders ................................ $ (2.8369) $ (0.4289) $ (0.6589) $ (0.0967)
----------- --------- --------- ---------
Net asset value -- end of period ................. $ 23.5073 $ 24.5081 $ 16.9825 $ 13.9339
=========== ========= ========= =========
Total return++ ................................... 7.98%++ 47.65% 26.97% 27.57%
Ratios (to average net assets)/Supplemental
data[sec]:
Expenses## ...................................... 0.81%+ 0.84% 0.86% 0.77%
Net investment income ........................... -- + 0.02% 0.31% 1.15%
Portfolio turnover ............................... 65% 145% 135% 129%
Net assets, end of period (000 Omitted) .......... $ 606,916 $ 437,204 $ 190,712 $ 87,744
[sec]The investment adviser voluntarily waived a portion of its fee for the Capital Opportunities Series for
certain of the periods indicated. In addition, the investment adviser agreed to maintain the expenses of
the Capital Opportunities Series at not more than 1.00% of average daily net assets for certain of the
periods indicated. The investment adviser agreed to maintain the expenses of the Equity Income Series,
exclusive of management fees, at not more than 0.25% of average daily net assets for the period 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 ratios would have been:
Net investment income ............................ $ 0.1296
Ratios (to average net assets):
Expenses## ...................................... 0.90%
Net investment income ........................... 1.03%
<CAPTION>
Capital
Opportunities
Series Equity Income Series
------------ ----------------------------------------------
Six Months
Period Ended Year Period
Ended June 30, Ended Ended
December 31, 2000 December 31, December 31,
Per share data (for a share 1996* (Unaudited) 1999 1998**
outstanding throughout each period): ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net asset value -- beginning of period ........... $ 10.0000 $ 11.2114 $ 10.5038 $ 10.0000
----------- ----------- --------- -----------
Income from investment operations# --
Net investment income (loss)[sec] ............... $ 0.0916 $ 0.1122 $ 0.1989 $ 0.1379
Net realized and unrealized gain on
investments and foreign currency ............... 0.9139 0.6844 0.5389 0.3659
----------- ----------- --------- -----------
Total from investment operations .............. $ 1.0055 $ 0.7966 $ 0.7378 $ 0.5038
----------- ----------- --------- -----------
Less distributions declared to shareholders --
From net investment income ...................... $ -- $ (0.0667) $ (0.0302) $ --
From net realized gain on investments and
foreign currency transactions .................. -- (0.0546) -- --
----------- ----------- --------- -----------
Total distributions declared to
shareholders ................................ $ -- $ (0.1213) $ (0.0302) $ --
----------- ----------- --------- -----------
Net asset value -- end of period ................. $ 11.0055 $ 11.8867 $ 11.2114 $ 10.5038
=========== =========== ========= ===========
Total return++ ................................... 10.10%++ 7.17%++ 7.05% 5.00%++
Ratios (to average net assets)/Supplemental
data[sec]:
Expenses## ...................................... 0.63%+ 0.85%+ 1.01% 1.03%+
Net investment income ........................... 1.75%+ 0.02%+ 1.81% 2.16%+
Portfolio turnover ............................... 52% 46% 76% 101%
Net assets, end of period (000 Omitted) .......... $ 16,700 $ 58,725 $ 41,172 $ 8,493
[sec]The investment adviser voluntarily waived a portion of its fee for the Capital Opportunities Series for certain
of the periods indicated. In addition, the investment adviser agreed to maintain the expenses of the Capital
Opportunities Series at not more than 1.00% of average daily net assets for certain of the periods indicated. The
investment adviser agreed to maintain the expenses of the Equity Income Series, exclusive of management fees, at
not more than 0.25% of average daily net assets for the period 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 ratios would
have been:
Net investment income ............................ $ 0.0537 $ 0.1070
Ratios (to average net assets):
Expenses## ...................................... 1.35%+ 1.51%+
Net investment income ........................... 1.02%+ 1.68%+
</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.
##Ratios do not reflect expense reductions from directed brokerage and certain
expense offset arrangements.
++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.
36
<PAGE>
MFS/Sun Life Series Trust
Financial Highlights -- continued
<TABLE>
<CAPTION>
International Growth Series
----------------------------------------------------------
Six Months
Ended
June 30, Year Ended December 31,
2000 ----------------------------------------
Per share data (for a share (Unaudited) 1999 1998 1997
outstanding throughout each period): ----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Net asset value -- beginning of period ............ $ 13.0994 $ 9.7306 $ 9.6480 $ 9.8213
----------- --------- --------- -----------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ................ $ 0.1355 $ 0.0615 $ 0.0843 $ 0.1201
Net realized and unrealized gain (loss) on
investments and foreign currency ................ (0.0153) 3.3625 0.1060 (0.2747)
----------- --------- --------- -----------
Total from investment operations ............... $ 0.1202 $ 3.4240 $ 0.1903 $ (0.1546)
----------- --------- --------- -----------
Less distributions declared to shareholders --
From net investment income ....................... $ (0.0376) $ (0.0552) $ (0.1077) $ (0.0187)
From net realized gain on investments and
foreign currency transactions ................... (0.2110) -- -- --
----------- --------- --------- -----------
Total distributions declared to
shareholders .................................. $ (0.2486) $ (0.0552) $ (0.1077) $ (0.0187)
----------- --------- --------- -----------
Net asset value -- end of period .................. $ 12.9710 $ 13.0994 $ 9.7306 $ 9.6480
=========== ========= ========= ===========
Total return++ .................................... 1.00%++ 35.24% 1.94 % (1.64)%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ....................................... 1.27%+ 1.23% 1.32 % 1.11%
Net investment income ............................ 2.12%+ 0.59% 0.86 % 1.23%
Portfolio turnover ................................ 41% 88% 77% 261%
Net assets, end of period (000 Omitted) ........... $ 93,231 $ 66,907 $ 35,681 $ 23,401
[sec]The investment adviser agreed to maintain the expenses of the International Growth Series, exclusive of
management fees, at not more than 1.50% of average daily net assets, for certain of the periods indicated. In
addition, the investment adviser voluntarily waived all or a portion of its fee for the International Growth
Series for certain of 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:
Net investment income ............................. $ 0.1036
Ratios (to average net assets):
Expenses## ....................................... 1.28%
Net investment income ............................ 1.06%
<CAPTION>
International
Growth Series Massachusetts Investors Growth Stock Series
----------------- ----------------------------------------------
Six Months
Period Ended Year Period
Ended June 30, Ended Ended
December 31, 2000 December 31, December 31,
Per share data (for a share 1996* (Unaudited) 1999 1998**
outstanding throughout each period): ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net asset value -- beginning of period ............ $ 10.0000 $ 16.1293 $ 12.0804 $ 10.0000
---------- ----------- --------- -----------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ................ $ 0.0748 $ 0.0057 $ 0.0337 $ (0.0001)
Net realized and unrealized gain (loss) on
investments and foreign currency ................ (0.2535) 0.6893 4.2185 2.0805
---------- ----------- --------- -----------
Total from investment operations ............... $ (0.1787) $ 0.6950 $ 4.2522 $ 2.0804
---------- ----------- --------- -----------
Less distributions declared to shareholders --
From net investment income ....................... $ -- $ (0.1409) $ -- $ --
From net realized gain on investments and
foreign currency transactions ................... -- (0.6586) (0.2033) --
----------- ----------- --------- -----------
Total distributions declared to
shareholders .................................. $ -- $ (0.7995) $ (0.2033) $ --
---------- ----------- --------- -----------
Net asset value -- end of period .................. $ 9.8213 $ 16.0248 $ 16.1293 $ 12.0804
========== =========== ========= ===========
Total return++ .................................... (1.70)%++ 3.75%++ 35.80% 20.70%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ....................................... 1.56%+ 0.83%+ 0.83% 0.97%+
Net investment income ............................ 1.47%+ 0.01%+ 0.25% -- +
Portfolio turnover ................................ 3% 125% 147% 66%
Net assets, end of period (000 Omitted) ........... $ 5,525 $ 802,364 $ 543,930 $ 81,237
[sec]The investment adviser agreed to maintain the expenses of the International Growth Series, exclusive of management
fees, at not more than 1.50% of average daily net assets, for certain of
the periods indicated. In addition, the investment adviser voluntarily waived all or a portion of its fee for the
International Growth Series for certain of 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:
Net investment income ............................. $ 0.0265
Ratios (to average net assets):
Expenses## ....................................... 2.50%+
Net investment income ............................ 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.
##Ratios do not reflect expense reductions from directed brokerage and certain
expense offset arrangements.
++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.
37
<PAGE>
MFS/Sun Life Series Trust
Financial Highlights -- continued
<TABLE>
<CAPTION>
New Discovery Series
---------------------------------------------
Six Months
Ended
June 30, Year Ended Period Ended
2000 December 31, December 31,
Per share data (for a share (Unaudited) 1999 1998**
outstanding throughout each period): ----------- ------------ -------------
<S> <C> <C> <C>
Net asset value -- beginning of period ........................ $ 16.8942 $ 10.6232 $ 10.0000
----------- --------- ----------
Income from investment operations# --
Net investment income (loss)[sec] ............................ $ (0.0423) $ (0.0761) $ (0.0273)
Net realized and unrealized gain on investments and
foreign currency ............................................ 1.6817 6.4211 0.6505
----------- --------- ----------
Total from investment operations ........................... $ 1.6394 $ 6.3450 $ 0.6232
----------- --------- ----------
Less distributions declared to shareholders --
From net investment income ................................... $ -- $ -- $ --
From net realized gain on investments and foreign currency
transactions ................................................ (0.9894) (0.0740) --
----------- --------- ----------
Total distributions declared to shareholders ............... $ (0.9894) $ (0.0740) $ --
----------- --------- ----------
Net asset value -- end of period .............................. $ 17.5442 $ 16.8942 $ 10.6232
=========== ========= ==========
Total return++ ................................................ 10.14%++ 60.25% 6.20%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................... 0.98%+ 1.06% 1.28%+
Net investment income (loss) ................................. (0.48)%+ (0.65)% (0.44)%+
Portfolio turnover ............................................ 42% 149% 69%
Net assets, end of period (000 Omitted) ....................... $ 157,744 $ 65,782 $ 13,280
[sec]The investment adviser voluntarily agreed to maintain the expenses of the New Discovery Series, exclusive
of management fees, at not more than 0.35% of average daily net assets, for the period 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, for the period indicated. To the extent actual expenses were over
these limitations, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) .................................. $ (0.0470)
Ratios (to average net assets):
Expenses## ................................................... 1.60%+
Net investment income (loss) ................................. (0.76%)+
<CAPTION>
Research Growth and Income Series
----------------------------------------------------------
Six Months
Ended
June 30, Year Ended December 31, Period Ended
2000 ----------------------- December 31,
Per share data (for a share (Unaudited) 1999 1998 1997*
outstanding throughout each period): ----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value -- beginning of period ........................ $ 14.4373 $ 13,3898 $ 11.0208 $ 10.0000
----------- --------- --------- -----------
Income from investment operations# --
Net investment income (loss)[sec] ............................ $ 0.0417 $ 0.0891 $ 0.1170 $ 0.0821
Net realized and unrealized gain on investments and
foreign currency ............................................ 0.1450 1.0078 2.3163 0.9387
----------- --------- --------- -----------
Total from investment operations ........................... $ 0.1867 $ 1.0969 $ 2.4333 $ 1.0208
----------- --------- --------- -----------
Less distributions declared to shareholders --
From net investment income ................................... $ (0.0652) $ (0.0494) $ (0.0150) $ --
From net realized gain on investments and foreign currency
transactions ................................................ (0.1915) -- (0.0493) --
----------- --------- --------- -----------
Total distributions declared to shareholders ............... $ (0.2567) $ (0.0494) $ (0.0643) $ --
----------- --------- --------- -----------
Net asset value -- end of period .............................. $ 14.3673 $ 14.4373 $ 13.3898 $ 11.0208
=========== ========= ========= ===========
Total return++ ................................................ 1.33%++ 8.21% 22.13% 10.20%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................... 0.90%+ 0.86% 0.95% 1.54%+
Net investment income (loss) ................................. 0.59%+ 0.63% 0.96% 1.19%+
Portfolio turnover ............................................ 35% 73% 122% 29%
Net assets, end of period (000 Omitted) ....................... $ 84,842 $ 79,092 $ 39,152 $ 6,540
[sec]The investment adviser voluntarily agreed to maintain the expenses of the New Discovery Series, exclusive of management
fees, at not more than 0.35% of average daily net assets, for the period 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, for
the period indicated. To the extent actual expenses were over these limitations, the net investment income (loss) per
share and the ratios would have been:
Net investment income (loss) .................................. $ 0.0614
Ratios (to average net assets):
Expenses## ................................................... 1.83%+
Net investment income (loss) ................................. 0.84%+
</TABLE>
*For the period from the commencement of the series' investment operations,
May 13, 1997, through December 31, 1997.
**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.
##Ratios do not reflect expense reductions from directed brokerage and
certain expense offset arrangements.
++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.
38
<PAGE>
MFS/Sun Life Series Trust
Financial Highlights -- continued
<TABLE>
<CAPTION>
Research International Series
-------------------------------
Six Months
Ended
June 30, Year Ended
2000 December 31,
Per share data (for a share (Unaudited) 1999
outstanding throughout each period): ---------- ------------
<S> <C> <C>
Net asset value -- beginning of period ..................................... $ 14.5896 $ 9.4191
---------- ---------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ......................................... $ 0.2761 $ 0.0300
Net realized and unrealized gain (loss) on investments and
foreign currency ......................................................... (0.1323) 5.1440
---------- ---------
Total from investment operations ........................................ $ 0.1438 $ 5.1740
---------- ---------
Less distributions declared to shareholders --
From net investment income ................................................ $ (0.0008) $ (0.0035)
From net realized gain on investments and foreign currency transactions ... (0.7781) --
---------- ---------
Total distributions declared to shareholders ............................ $ (0.7789) $ (0.0035)
---------- ---------
Capital contribution by investment adviser ................................. $ -- $ --
---------- ---------
Net asset value -- end of period ........................................... $ 13.9545 $ 14.5896
========== =========
Total return++ ............................................................. 1.18%++ 54.94%
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................................ 1.31%+ 1.50%
Net investment income (loss) .............................................. 0.04%+ 0.28%
Portfolio turnover ......................................................... 68% 164%
Net assets, end of period (000 Omitted) .................................... $ 47,949 $ 30,150
[sec]The investment adviser agreed to maintain the expenses of the Research International Series at not more
than 0.50% of average daily net assets for the period indicated. The investment adviser agreed to maintain
the expenses of the Strategic Growth Series and Technology Series, exclusive of management fees, at not
more than 0.25% of average daily net assets, for the periods indicated. To the extent actual expenses were
over these limitations, the net investment loss per share and the ratios would have been:
Net investment loss ........................................................
Ratios (to average net assets):
Expenses## ................................................................
Net investment loss .......................................................
<CAPTION>
Research
International Series
--------------------
Period Ended
December 31,
Per share data (for a share 1998*
outstanding throughout each period): --------------------
<S> <C>
Net asset value -- beginning of period ..................................... $ 10.0000
----------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ......................................... $ 0.0043
Net realized and unrealized gain (loss) on investments and
foreign currency ......................................................... (0.5852)
----------
Total from investment operations ........................................ $ (0.5809)
----------
Less distributions declared to shareholders --
From net investment income ................................................ $ --
From net realized gain on investments and foreign currency transactions ... --
----------
Total distributions declared to shareholders ............................ $ --
----------
Capital contribution by investment adviser ................................. $ --
----------
Net asset value -- end of period ........................................... $ 9.4191
==========
Total return++ ............................................................. (5.80)%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................................ 1.55%+
Net investment income (loss) .............................................. 0.07%+
Portfolio turnover ......................................................... 59%
Net assets, end of period (000 Omitted) .................................... $ 3,519
[sec]The investment adviser agreed to maintain the expenses of the Research International
Series at not more than 0.50% of average daily net assets for the period indicated.
The investment adviser agreed to maintain the expenses of the Strategic Growth Series
and Technology Series, exclusive of management fees, at not more than 0.25% of average
daily net assets, for the periods indicated. To the extent actual expenses were over
these limitations, the net investment loss per share and the ratios would have been:
Net investment loss ........................................................ $ (0.1301)
Ratios (to average net assets):
Expenses## ................................................................ 3.86%+
Net investment loss ....................................................... (2.24%)+
<CAPTION>
Strategic Growth Series
-----------------------------------
Six Months
Ended
June 30, Period Ended
2000 December 31,
Per share data (for a share (Unaudited) 1999**
outstanding throughout each period): ------------- ------------
<S> <C> <C>
Net asset value -- beginning of period ..................................... $ 12.1280 $ 10.0000
----------- ------------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ......................................... $ (0.0024) $ 0.0566
Net realized and unrealized gain (loss) on investments and
foreign currency ......................................................... 0.9580 1.6101
----------- ------------
Total from investment operations ........................................ $ 0.9556 $ 1.6667
----------- ------------
Less distributions declared to shareholders --
From net investment income ................................................ $ (0.0052) $ --
From net realized gain on investments and foreign currency transactions ... (0.0035) --
----------- ------------
Total distributions declared to shareholders ............................ $ (0.0087) $ --
----------- ------------
Capital contribution by investment adviser ................................. $ -- $ 0.4613
----------- ------------
Net asset value -- end of period ........................................... $ 13.0749 $ 12.1280
=========== ============
Total return++ ............................................................. 7.91%++ 21.30%++****
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................................ 1.02%+ 1.00%+
Net investment income (loss) .............................................. (0.04)%+ 2.61%+
Portfolio turnover ......................................................... 78% 4%
Net assets, end of period (000 Omitted) .................................... $ 50,343 $ 9,158
[sec]The investment adviser agreed to maintain the expenses of the Research International Series at not more than 0.50% of
average daily net assets for the period indicated. The investment adviser agreed to maintain the expenses of the
Strategic Growth Series and Technology Series, exclusive of management fees, at not more than 0.25% of average daily net
assets, for the periods indicated. To the extent actual expenses were over these limitations, the net investment loss per
share and the ratios would have been:
Net investment loss ........................................................ $ (0.0062) $ (0.0088)
Ratios (to average net assets):
Expenses## ................................................................ 1.08%+ 4.01%+
Net investment loss ....................................................... (0.10)%+ (0.40)%+
<CAPTION>
Technology
Series
--------------
Period Ended
June 30,
2000***
Per share data (for a share (Unaudited)
outstanding throughout each period): --------------
<S> <C>
Net asset value -- beginning of period ..................................... $ 10.0000
-----------
Income (loss) from investment operations# --
Net investment income (loss)[sec] ......................................... $ 0.0010
Net realized and unrealized gain (loss) on investments and
foreign currency ......................................................... 0.4699
-----------
Total from investment operations ........................................ $ 0.4709
-----------
Less distributions declared to shareholders --
From net investment income ................................................ $ --
From net realized gain on investments and foreign currency transactions ... --
-----------
Total distributions declared to shareholders ............................ $ --
-----------
Capital contribution by investment adviser ................................. $ --
-----------
Net asset value -- end of period ........................................... $ 10.4709
===========
Total return++ ............................................................. 4.60%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## ................................................................ 1.00%+
Net investment income (loss) .............................................. 0.30%+
Portfolio turnover ......................................................... 7%
Net assets, end of period (000 Omitted) .................................... $ 236
[sec]The investment adviser agreed to maintain the expenses of the Research International
Series at not more than 0.50% of average daily net assets for the period indicated.
The investment adviser agreed to maintain the expenses of the Strategic Growth Series
and Technology Series, exclusive of management fees, at not more than 0.25% of average
daily net assets, for the periods indicated. To the extent actual expenses were over
these limitations, the net investment loss per share and the ratios would have been:
Net investment loss ........................................................ $ (0.1211)
Ratios (to average net assets):
Expenses## ................................................................ 37.32%+
Net investment loss ....................................................... (36.12)%+
</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,
October 29, 1999, through December 31, 1999.
***For the period from the commencement of the series' investment operations,
June 16, 2000, through June 30, 2000.
****The investment adviser voluntarily agreed to make a capital contribution of
$128,028 to the Strategic Growth Series in order to equate the series' total
return for the period to that of another MFS Fund with the same portfolio
manager and investment objective. To the extent the investment adviser had
not made this capital contribution, the total return of the series would
have been 10.16%.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##Ratios do not reflect expense reductions from directed brokerage and
certain expense offset arrangements.
++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.
39
<PAGE>
MFS/Sun Life Series Trust
Notes to Financial Statements (Unaudited)
(1) Business and Organization
The trust is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company consisting of twenty-eight separate series (the series) of
shares: Bond Series, Capital Appreciation Series, Capital Opportunities
Series*, Emerging Growth Series, Emerging Markets Series, Equity Income
Series*, Global Asset Allocation Series, Global Government Series, Global
Growth Series, Global Total Return Series, Government Securities Series, High
Yield Series, International Growth Series*, International Growth and Income
Series, Managed Sectors Series, Massachusetts Investors Growth Stock Series*,
Massachusetts Investors Trust Series, Money Market Series, New Discovery
Series*, Research Series, Research Growth and Income Series*, Research
International Series*, Strategic Growth Series*, Strategic Income Series,
Technology Series*, Total Return Series, Utilities Series, and Zero Coupon
Series, 2000 Portfolio. All of these series are diversified except for the
Global Asset Allocation Series, Global Governments Series, Global Growth
Series, Global Total Return Series, High Yield Series, Managed Sectors Series,
Strategic Income Series, and Utilities Series which are non-diversified, as
that term is defined in the Investment Company Act of 1940, as amended. The
shares of each series are sold only to variable accounts established by Sun
Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity
Company of New York to fund benefits under variable contracts issued by such
companies.
The series denoted with an asterisk above are included within these financial
statements.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The series
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted
bid prices. Debt securities (other than short-term obligations which mature in
60 days or less), including listed issues and forward contracts, are valued on
the basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in 60
days or less, are valued at amortized cost, which approximates market value.
Non-U.S. dollar denominated short-term obligations are valued at amortized cost
as calculated in the foreign currency and translated into U.S. dollars at the
closing daily exchange rate. Securities for which there are no such quotations
or valuations are valued in good faith, at fair value, by the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction gains
and losses. That portion of both realized and unrealized gains and losses on
investments that results from fluctuations in foreign currency exchange rates
is not separately disclosed.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of each series, excluding the Technology
Series, to certain qualified institutions (the "Borrowers") approved by each
series. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street provides the series with indemnification against Borrower
default. The series bears the risk of loss with respect to the investment of
cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the series and the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the series and the lending agents. Income
from securities lending is included in interest income on the Statements of
Operations. The dividend and interest income earned on the securities loaned is
accounted for in the same manner as other dividend and interest income.
At June 30, 2000, the value of securities loaned and the collateral on these
loans were as follows:
<TABLE>
<CAPTION>
Massachusetts
Capital Equity International Investors
Opportunities Income Growth Growth Stock
Series Series Series Series
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value of securities loaned ......... $50,462,180 $5,045,591 $10,482,512 $41,074,618
Collateralized by:
U.S. Treasury securities .......... 3,123,112 -- 1,196,692 --
Cash .............................. 48,826,198 5,212,831 9,831,237 42,256,320
</TABLE>
40
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
<TABLE>
<CAPTION>
Research
New Growth and Research Strategic
Discovery Income International Growth
Series Series Series Series
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value of securities loaned ......... $24,106,720 $2,396,631 $5,486,159 $2,643,433
Collateralized by:
U.S. Treasury securities .......... -- 9,717 162,907 --
Cash .............................. 24,978,722 2,452,802 5,546,058 2,724,898
</TABLE>
Cash collateral listed above was invested in the following short-term
obligations:
<TABLE>
<CAPTION>
Identified Identified
Cost and Cost and
Issuer Shares Value Shares Value
--------------------------------------------------------------------------------------------------
Capital Opportunities Series Equity Income Series
---------------------------- -------------------------
<S> <C> <C> <C> <C>
Navigator Securities Lending
Prime Portfolio ................. 48,826,198 $48,826,198 5,212,831 $5,212,831
</TABLE>
<TABLE>
<CAPTION>
International Massachusetts Investors
Growth Series Growth Stock Series
--------------------------- -----------------------------
<S> <C> <C> <C> <C>
Navigator Securities Lending
Prime Portfolio ................. 9,831,237 $9,831,237 42,256,320 $42,256,320
</TABLE>
<TABLE>
<CAPTION>
New Discovery Research Growth and
Series Income Series
--------------------------- --------------------------
<S> <C> <C> <C> <C>
Navigator Securities Lending
Prime Portfolio ................. 24,978,722 $24,978,722 2,452,802 $2,452,802
</TABLE>
<TABLE>
<CAPTION>
Research International
Series Strategic Growth Series
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Navigator Securities Lending
Prime Portfolio ................. 5,546,058 $5,546,058 2,724,898 $2,724,898
</TABLE>
Short Sales - Certain series of the trust may enter into short sales. A short
sale transaction involves selling a security that the series does not own with
the intent of purchasing it later at a lower price. The series will realize a
gain if the security price decreases and a loss if the security price increases
between the date of the short sale and the date on which the series must
replace the borrowed security. Losses can exceed the proceeds from short sales
and can be greater than losses from the actual purchase of a security. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of the premium, dividends, or interest the series may be required to
pay in connection with a short sale. Whenever the series engages in short
sales, its custodian segregates cash or marketable securities in an amount
that, when combined with the amount of proceeds from the short sale deposited
with the broker, at least equals the current market value of the security sold
short.
Forward Foreign Currency Exchange Contracts - Certain series of the trust may
enter into forward foreign currency exchange contracts for the purchase or sale
of a specific foreign currency at a fixed price on a future date. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. The
series may enter into forward contracts for hedging purposes as well as for
non-hedging purposes. For hedging purposes, the series may enter into contracts
to deliver or receive foreign currency it will receive from or require for its
normal investment activities. The series may also use contracts in a manner
intended to protect foreign currency-denominated securities from declines in
value due to unfavorable exchange rate movements. For non-hedging purposes, the
series may enter into contracts with the intent of changing the relative
exposure of the series' portfolio of securities to different currencies to take
advantage of anticipated changes. The forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded as unrealized until the contract
settlement date. On contract settlement date, the gains or losses are recorded
as realized gains or losses on foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date. The series uses the effective
interest method for reporting interest income on payment-in-kind (PIK) bonds.
Fees Paid Indirectly - Each series' custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
series. During the period, the series' custodian fees were reduced under this
arrangement as noted below. Certain series have entered into a directed
brokerage agreement, under which the broker will credit the series a portion of
the commissions generated, to offset certain expenses of the series. During the
period, the series' custodian fees were reduced under this agreement as noted
below. These amounts are shown as a reduction of expenses on the Statement of
Operations.
41
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
<TABLE>
<CAPTION>
Massachusetts
Capital Equity International Investors
Opportunities Income Growth Growth Stock New Discovery
Series Series Series Series Series
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance credits .................... $ -- $1,586 $3,935 $31,217 $3,997
Directed brokerage credits ......... 4,208 469 468 3,885 --
------ ------ ------ ------- ------
Total .............................. $4,208 $2,055 $4,403 $35,102 $3,997
------ ------ ------ ------- ------
</TABLE>
<TABLE>
<CAPTION>
Research
Growth and Research Strategic
Income International Growth Technology
Series Series Series Series
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance credits .................... $2,587 $1,253 $2,400 $--
Directed brokerage credits ......... 88 -- -- --
------ ------ ------ ---
Total .............................. $2,675 $1,253 $2,400 $--
------ ------ ------ ---
</TABLE>
Tax Matters and Distributions - Each series' policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. Each series
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits that result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or net realized gains.
3) Transactions with Affiliates
Investment Adviser - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS), an indirect subsidiary of Sun
Life Assurance Company of Canada, to provide overall investment advisory and
administrative services, and general office facilities. The management fee is
computed daily and paid monthly at an annual rate based on a percentage of each
series' average daily net assets. The agreement also provides that each series
will be reimbursed for expenses in excess of the expense limitation indicated
below, based on average net assets of each series. Management fees and expense
limitations are as follows:
<TABLE>
<CAPTION>
Management Expense
Fees Limitations
---------- -----------
<S> <C> <C>
Capital Opportunities Series ........................ 0.75%* N/A
Equity Income Series ................................ 0.75% N/A
International Growth Series ......................... 0.975%* N/A
Massachusetts Investors Growth Stock Series ......... 0.75% N/A
New Discovery Series ................................ 0.90% N/A
Research Growth and Income Series ................... 0.75% N/A
Research International Series ....................... 1.00% N/A
Strategic Growth Series ............................. 0.75% 0.25%
Technology Series ................................... 0.75% 0.25%
</TABLE>
*The management fee for Capital Opportunities Series is 0.75% of the first $300
million of average net assets and 0.675% of the average net assets in excess
of $300 million. The management fee for the International Growth Series is
0.975% of the first $500 million of average net assets and 0.925% of the
average net assets in excess of $500 million.
The trust pays no compensation directly to its Trustees or officers who are
affiliated with MFS or Sun Life Assurance Company of Canada (U.S.), all of whom
receive remuneration for their services to the series to the trust from MFS or
Sun Life Assurance Company of Canada. Certain officers and Trustees of the
Trust are officers or directors of MFS or Sun Life Assurance Company of Canada.
Administrator - The trust has an administrative services agreement with MFS to
provide each series with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, each series incurs an administrative fee
at the following annual percentages of the series' average daily net assets:
<TABLE>
<S> <C>
First $2 billion ................ 0.0175%
Next $2.5 billion ............... 0.0130%
Next $2.5 billion ............... 0.0005%
In excess of $7 billion ......... 0.0000%
</TABLE>
42
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
<TABLE>
<CAPTION>
Massachusetts
Capital Equity International Investors
Opportunities Income Growth Growth Stock
Series Series Series Series
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases
U.S. government securities ........................... $ -- $ -- $ -- $ 11,151,089
============ =========== =========== ==============
Investments (non-U.S. government securities) ......... $452,903,395 $36,264,802 $53,226,109 $1,021,696,575
============ =========== =========== ==============
Sales ................................................
U.S. government securities ........................... $ -- $ -- $ -- $ 3,427,644
============ =========== =========== ==============
Investments (non-U.S. government securities) ......... $347,063,679 $21,849,592 $30,042,000 $ 784,521,588
============ =========== =========== ==============
</TABLE>
<TABLE>
<CAPTION>
New Research Research Strategic
Discovery Growth and International Growth Technology
Series Income Series Series Series Series
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases
U.S. government securities ........................... $ -- $ 317,041 $ -- $ -- $ --
============ =========== =========== =========== ========
Investments (non-U.S. government securities) ......... $119,672,340 $32,672,540 $43,437,831 $49,616,673 $218,280
============ =========== =========== =========== ========
Sales ................................................
Investments (non-U.S. government securities) ......... $ 42,901,825 $27,425,690 $25,556,973 $12,162,582 $ 14,642
============ =========== =========== =========== ========
</TABLE>
The cost and unrealized appreciation and depreciation in the value of the
investments owned by each series, as computed on a federal income tax basis,
are as follows:
<TABLE>
<CAPTION>
Massachusetts
Capital Equity International Investors
Opportunities Income Growth Growth Stock
Series Series Series Series
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate cost ........................ $ 538,235,609 $ 54,114,628 $ 84,240,158 $ 754,175,610
============= ============ ============ =============
Gross unrealized appreciation ......... $ 104,148,994 $ 5,922,993 $ 12,537,574 $ 76,509,551
Gross unrealized depreciation ......... (40,934,748) (1,588,028) (3,598,716) (22,171,087)
------------- ------------ ------------ -------------
Net unrealized appreciation ........... $ 63,214,246 $ 4,334,965 $ 8,938,858 $ 54,338,464
============= ============ ============ =============
</TABLE>
<TABLE>
<CAPTION>
Research
New Growth and Research Strategic
Discovery Income International Growth Technology
Series Series Series Series Series
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate cost ........................ $ 142,907,593 $ 75,310,959 $ 46,113,746 $ 48,604,052 $216,901
============= ============ ============ ============ ========
Gross unrealized appreciation ......... $ 26,216,860 $ 13,961,925 $ 5,405,447 $ 4,427,157 $ 16,711
Gross unrealized depreciation ......... (14,425,491) (4,563,107) (3,626,045) (2,888,264) (6,409)
------------- ------------ ------------ ------------ --------
Net unrealized appreciation ........... $ 11,791,369 $ 9,398,818 $ 1,779,402 $ 1,538,893 $ 10,302
============= ============ ============ ============ ========
</TABLE>
(5) Shares of Beneficial Interest
The trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
series shares were as follows:
<TABLE>
<CAPTION>
Capital Opportunities Series
----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
-------------------------- ---------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 6,135,819 $ 154,371,017 7,880,633 $ 154,624,103
Shares issued to shareholders in reinvestment of distributions 2,690,872 60,732,979 286,899 5,367,872
Shares reacquired ............................................. (847,618) (21,420,708) (1,558,291) (30,392,518)
--------- ------------- ---------- -------------
Net increase .................................................. 7,979,073 $ 193,683,288 6,609,241 $ 129,599,457
========= ============= ========== =============
<CAPTION>
Equity Income Series
----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
-------------------------- --------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 1,786,205 $ 19,753,987 3,705,490 $ 40,811,323
Shares issued to shareholders in reinvestment of distributions 47,305 549,687 4,213 47,860
Shares reacquired ............................................. (565,386) (6,146,853) (845,949) (9,352,556)
--------- ------------ --------- ------------
Net increase .................................................. 1,268,124 $ 14,156,821 2,863,754 $ 31,506,627
========= ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
International Growth Series
-----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
--------------------------- ---------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 4,058,377 $ 51,867,402 4,280,043 $ 45,560,086
Shares issued to shareholders in reinvestment of distributions 127,884 1,579,369 21,752 218,603
Shares reacquired ............................................. (2,106,244) (27,148,223) (2,861,060) (31,046,990)
---------- ------------- ---------- -------------
Net increase .................................................. 2,080,017 $ 26,298,548 1,440,735 $ 14,731,699
========== ============= ========== =============
<CAPTION>
Massachusetts Investors Growth Stock Series
-----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
--------------------------- ----------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 15,416,500 $ 249,898,516 28,962,490 $ 377,343,618
Shares issued to shareholders in reinvestment of distributions 1,907,213 29,161,287 245,891 3,090,851
Shares reacquired ............................................. (976,609) (15,753,996) (2,209,996) (29,209,708)
---------- ------------- ---------- -------------
Net increase .................................................. 16,347,104 $ 263,305,807 26,998,385 $ 351,224,761
========== ============= ========== =============
</TABLE>
43
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
<TABLE>
<CAPTION>
New Discovery Series
-------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
-------------------------- -------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 5,633,808 $ 101,856,538 3,310,272 $ 38,474,804
Shares issued to shareholders in reinvestment of distributions 445,079 7,196,933 12,893 135,762
Shares reacquired ............................................. (980,120) (17,331,856) (679,470) (7,955,799)
--------- ------------- --------- ------------
Net increase .................................................. 5,098,767 $ 91,721,615 2,643,695 $ 30,654,767
========= ============= ========= ============
<CAPTION>
Research Growth and Income Series
----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------- ----------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................................... 1,020,983 $ 14,344,494 3,595,521 $ 50,159,454
Shares issued to shareholders in reinvestment of distributions 104,205 1,466,165 13,736 197,936
Shares reacquired ............................................. (698,192) (9,838,752) (1,054,978) (14,733,161)
--------- ------------ ---------- -------------
Net increase .................................................. 426,996 $ 5,971,907 2,554,279 $ 35,624,229
========= ============ ========== =============
</TABLE>
<TABLE>
<CAPTION>
Research International Series
----------------------------------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------- ----------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ........................ 1,644,954 $ 23,546,807 2,813,160 $ 32,554,747
Shares issued to shareholders in
reinvestment of distributions ..... 163,480 2,216,789 186 1,910
Shares reacquired .................. (438,852) (6,461,662) (1,120,448) (13,414,006)
--------- ------------ ---------- -------------
Net increase ....................... 1,369,582 $ 19,301,934 1,692,898 $ 19,142,651
========= ============ ========== =============
<CAPTION>
Strategic Growth Series Technology Series
--------------------------------------------------- ------------------
Six Months Ended Period Ended Period Ended
June 30, 2000 December 31, 1999* June 30, 2000**
------------------------- --------------------- ------------------
Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ........................ 3,191,897 $ 40,294,359 795,126 $8,806,441 22,500 $225,000
Shares issued to shareholders in
reinvestment of distributions ..... 2,203 27,121 -- -- -- --
Shares reacquired .................. (99,119) (1,224,424) (40,000) (384,227) -- --
--------- ------------ ------- ---------- ------ --------
Net increase ....................... 3,094,981 $ 39,097,056 755,126 $8,422,214 22,500 $225,000
========= ============ ======= ========== ====== ========
</TABLE>
*For the period from the commencement of the series' investment operations,
October 29, 1999, through December 31, 1999.
**For the period from the commencement of the series' investment operations,
June 16, 2000, through June 30, 2000.
(6) Line of Credit
Each series and other affiliated funds participate in a $1.1 billion unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made for temporary financing needs. Interest is
charged to each series, based on its borrowings, at a rate equal to the bank's
base rate. In addition, a commitment fee, based on the average daily unused
portion of the line of credit, is allocated among the participating funds at
the end of each quarter. The commitment fees allocated to each series for the
six months ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Commitment
Fee
----------
<S> <C>
Capital Opportunities Series ........................ $2,058
Equity Income Series ................................ 181
International Growth Series ......................... 302
Massachusetts Investors Growth Stock Series ......... 2,995
New Discovery Series ................................ 362
Research Growth and Income Series ................... 311
Research International Series ....................... 158
Strategic Growth Series ............................. 6
Technology Series ................................... --
</TABLE>
Each series had no significant borrowings during the period.
----------------------------------------------
This MFS [RegTM]/Sun Life Series Trust Semiannual Report is prepared for
the general information of contract owners. It is authorized for
distribution to prospective investors only when preceded or
accompanied by the current prospectus.
44
<PAGE>
MFS[RegTM]/Sun Life Series Trust
500 Boylston Street, Boston, MA 02116-3741
Trustees
Samuel Adams, Trustee
Counsel, Kirkpatrick & Lockhart LLP
Boston, Massachusetts
David D. Horn, Trustee
Former Senior Vice President and General Manager,
Sun Life Assurance Company of Canada,
New Vineyard, Maine
Garth Marston, Trustee Emeritus
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
Private investor and real estate consultant;
Vice Chairman, Capitol Entertainment Management Company
Dallas, Texas
J. Kermit Birchfield,+ Trustee
Consultant; Chairman, Display Technology, Inc.;
Managing Director, Century Partners, Inc.,
Gloucester, Massachusetts
Officers
C. James Prieur,# President
Stephen E. Cavan,* Secretary and Clerk
James R. Bordewick, Jr.,* Assistant Secretary
James O. Yost,* Treasurer
Mark E. Bradley,* Assistant Treasurer
Ellen Moynihan,* 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
Stephen C. Bryant
David M. Calabro
Mitchell D. Dynan
Joseph C. Flaherty, Jr.
Geoffrey L. Kurinsky
John D. Laupheimer, Jr.
David R. Mannheim
Paul M. McMahon
Stephen E. Nothern
Lisa B. Nurme
Stephen Pesek
Bernard Scozzafava
David Sette-Ducati
Maura A. Shaughnessy
Toni Y. Shimura
Frederick J. Simmons
Brian E. Stack
+Independent Trustee
#Sun Life Assurance Company of Canada
*MFS Investment Management[RegTM]
SUN-3C 08/00 280.6M
