Table of Contents
Letter from the Chairman ............ 1
Portfolio Manager's Overview ...... 2
Portfolio Manager's Profile ......... 3
Fund Facts ........................ 4
Performance Summary ............... 4
Portfolio Concentration ............ 6
Portfolio of Investments ............ 7
Financial Statements ............... 11
Notes to Financial Statements ...... 18
Trustees and Officers ............ 25
[shaded box]
Highlights
[bullet] For the six months ended May 31, 1997, Class A shares of the Fund
provided a total return at net asset value of 10.31%, Class B shares
9.83%, and Class I shares 9.54%.
[bullet] While the Fund was overweighted in technology, which was one of the
best-performing sectors of the Standard & Poor's 500 Composite Index,
it was underweighted in consumer staples and health care, which were
also top-performing sectors.
[bullet] Leisure, our largest sector, is focused on lodging, in which room
prices reflect the tight supply outlook. While we see some signs of a
possible end to this cycle, we believe near-term fundamentals are
positive.
[bullet] Technology, our second-largest sector, is focused on franchise
software companies trading at what we view as reasonable prices
relative to their expected growth rates.
<PAGE>
Letter from the Chairman
[Photo of A. Keith Brodkin]
Dear Shareholders:
After more than six years of expansion, the U.S. economy is experiencing another
year of growth in 1997, although a few signs point to the possibility of a
modest rise in inflation during the year. On the positive side, the pattern of
moderate growth and inflation set over the past few years now seems fairly well
entrenched in the economy and, short of a major international or domestic
crisis, appears to have enough momentum to remain on track for some time. The
U.S. economy exhibited a great deal of strength in the first quarter of 1997,
growing at an annualized rate of 5.8%. This pace would clearly lead to
inflationary pressures were it to continue, as could the ongoing tightness in
the labor market. Moreover, there is reason for caution as a result of the
continuing high level of consumer debt and rising personal bankruptcies. Given
these somewhat conflicting indicators, we expect real (inflation-adjusted)
growth to revolve around 2% to 2-1/2% in 1997, with the strength of the first
quarter moderating as we move through the balance of the year.
We continue to urge U.S. equity investors to remain cautious for 1997. Just as
the slowdown in corporate earnings growth and the increases in interest rates in
1996 raised some near-term concerns, further interest-rate increases and the
fear of an acceleration of inflation have added some volatility to the stock
market in 1997. However, while the U.S. equity market enjoyed several years
without a major correction, we would like to point out that such downturns are a
natural part of the investment environment and, when they end, they often result
in more attractive valuations for stocks.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
June 12, 1997
1
<PAGE>
Portfolio Manager's Overview
[Photo of John F. Brennan, Jr.]
Dear Shareholders:
For the six months ended May 31, 1997, Class A shares of the Fund provided a
total return of 10.31%, Class B shares 9.83%, and Class I shares 9.54%. These
returns, which include the reinvestment of distributions but exclude the effects
of any sales charges, compare to a 13.18% return for the Standard & Poor's 500
Composite Index (the S&P 500), a popular, unmanaged index of common stock total
return performance.
Over the past six months, the three best-performing sectors of the S&P 500
were consumer staples, which gained 19.5%; technology, which advanced 18.6%;
and health care, which was up 15.9%. The worst-performing sector was basic
materials, which gained 6.5%. The Fund was significantly underweighted in
consumer staples, with 4.9% of equities invested versus 12.6% for the S&P 500;
overweighted in technology (14.6% versus 12.9%); and underweighted in health
care (9.9% versus 11.2%).
Leisure, our largest sector, is focused on the lodging industry, in which room
prices continue to react favorably to the tight supply outlook. While we are
beginning to see several warning signs that may be indicating the end of this
cycle, we believe near-term fundamentals continue to be positive.
Technology, our second-largest sector, is primarily focused on franchise
software companies trading at what we view as reasonable prices relative to
their respective growth rates. We try to take advantage of periods of
uncertainty and establish positions at what we see as attractive valuations
relative to long-term prospects. Two recent examples include Synopsys and
Computer Associates. Both of these software companies have significant
leadership positions in attractive markets, but their stock prices have been
depressed by short-term earnings concerns. In each case we were able to
establish significant holdings at what we believe are excellent long-term
valuations.
Our largest holding, ADT Ltd., has recently agreed to merge in a pooling
transaction with Tyco International. The surviving entity will be Tyco
International, and we expect significant earnings leverage going forward as
cost savings are realized.
2
<PAGE>
Portfolio Manager's Overview - continued
Our outlook for the balance of the year is cautious. With stock market
valuations at record levels and with the recent uptick in interest rates, we
believe the market is vulnerable to any negative news. We are, therefore,
positioned conservatively.
Respectfully,
/s/ John F. Brennan, Jr.
John F. Brennan, Jr.
Portfolio Manager
[shaded box]
Portfolio Manager's Profile
John F. Brennan, Jr., has been a member of the MFS investment staff since 1985.
A graduate of the University of Rhode Island and the Stanford University
Graduate School of Business Administration, he began his career at MFS as an
industry specialist and was promoted to Assistant Vice President - Investments
in 1987, Vice President - Investments in 1988, and Senior Vice President in
1995. Mr. Brennan became Portfolio Manager of MFS(R) Capital Growth Fund in
1995.
3
<PAGE>
[shaded box]
Fund Facts
Strategy: The Fund seeks to provide growth of capital by
investing generally in companies believed to possess
above-average growth opportunities.
Commencement of
investment operations: Class A: September 7, 1993
Class B: December 29, 1986
Class I: January 2, 1997
Size: $603.6 million net assets as of May 31, 1997
Performance Summary
Because mutual funds like MFS Capital Growth Fund are designed for investors
with long-term goals, we have provided cumulative results as well as the
average annual total returns for Class A, Class B, and Class I shares for the
applicable time periods.
Average Annual and Cumulative Total Rates of Return
as of May 31, 1997
Class A Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
-------- ------- -------- --------
Cumulative Total Return +10.31% +15.23% +107.96% +221.28%
- ---------------------------- -------- ------- -------- --------
Average Annual Total Return -- +15.23% + 15.77% + 12.38%
- ---------------------------- -------- ------- -------- --------
SEC Results -- + 8.62% + 14.41% + 11.72%
- ---------------------------- -------- ------- -------- --------
Class B Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
-------- ------- -------- ---------
Cumulative Total Return +9.83% +14.28% +100.96% +210.58%
- ---------------------------- ------- ------- -------- --------
Average Annual Total Return -- +14.28% + 14.98% + 12.00%
- ---------------------------- ------- ------- -------- --------
SEC Results -- +10.71% + 14.75% + 12.00%
- ---------------------------- ------- ------- -------- --------
Class I Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
-------- ------- -------- ---------
Cumulative Total Return +9.54% +13.98% +100.44% +209.75%
- ---------------------------- ------- ------- -------- --------
Average Annual Total Return -- +13.98% + 14.92% + 11.97%
- ---------------------------- ------- ------- -------- --------
4
<PAGE>
Performance Summary - continued
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 5.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class I
shares, which became available on January 2, 1997, have no sales charge or Rule
12b-1 fees and are only available to certain institutional investors.
Class A share results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of the Fund's Class B shares for periods prior to the
commencement of offering of Class A shares. Because operating expenses
attributable to Class B shares are greater than those of Class A shares, Class
A share performance generally would have been higher than Class B share
performance. The Class B share performance included within the Class A share
SEC performance has been adjusted to reflect the maximum sales charge generally
applicable to Class A shares rather than the CDSC generally applicable to Class
B shares.
Class I share results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of the Fund's Class B shares for periods prior to the
commencement of offering of Class I shares. Because operating expenses
attributable to Class B shares are greater than those of Class I shares, Class
I share performance generally would have been higher than Class B share
performance. The Class B share performance included in the Class I share
performance has been adjusted to reflect the fact that Class I shares have no
CDSC.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
5
<PAGE>
Portfolio Concentration as of May 31, 1997
Top 10 Holdings
ADT Ltd.
Commercial and residential security company
Promus Hotel Corp.
Hotel operator
Rite Aid Corp.
U.S. drug store chain
Harrah's Entertainment, Inc.
Gaming operator in several states
Tyco International Ltd.
Manufacturer of fire protection, packaging, and electronic equipment
Bristol-Myers Squibb Co.
Pharmaceutical products company
Computer Associates International, Inc.
Computer software company
Sybase, Inc.
Online software and services company
Hilton Hotels Corp.
U.S. hotel company
McDonnell Douglas Corp.
Commercial and defense aircraft manufacturer
Largest Sectors
<GRAPHIC OMITTED>
For a more complete breakdown, refer to the Portfolio of Investments.
6
<PAGE>
Portfolio of Investments (Unaudited) - May 31, 1997
Stocks - 85.8%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 76.9%
Aerospace - 4.3%
AlliedSignal, Inc. 37,200 $ 2,855,100
Lockheed-Martin Corp. 121,000 11,328,625
McDonnell Douglas Corp. 180,000 11,587,500
------------
$25,771,225
- --------------------------------------------------------------------------------
Automotive - 0.1%
Autoliv Inc.* 15,788 $ 588,103
- --------------------------------------------------------------------------------
Banks and Credit Companies - 0.4%
Wells Fargo & Co. 9,733 $ 2,564,646
- --------------------------------------------------------------------------------
Building - 1.0%
Newport News Shipbuilding, Inc. 355,400 $ 5,908,525
- --------------------------------------------------------------------------------
Business Services - 6.4%
ADT Ltd.* 951,200 $27,703,700
Computer Sciences Corp.* 63,900 4,944,262
First Data Corp. 146,200 5,848,000
------------
$38,495,962
- --------------------------------------------------------------------------------
Cellular Telephones - 1.2%
Telephone & Data Systems, Inc. 187,300 $ 7,269,581
- --------------------------------------------------------------------------------
Chemicals - 1.8%
du Pont (E.I.) de Nemours & Co., Inc. 79,300 $ 8,633,787
Morton International, Inc. 64,000 2,064,000
------------
$10,697,787
- --------------------------------------------------------------------------------
Computer Software - Systems - 6.9%
BMC Software, Inc.* 68,100 $ 3,685,913
Compaq Computer Corp.* 56,000 6,062,000
Computer Associates International, Inc. 245,200 13,424,700
Compuware Corp.* 127,700 5,922,087
Sybase, Inc.* 770,900 12,286,219
------------
$41,380,919
- --------------------------------------------------------------------------------
Consumer Goods and Services - 6.5%
Colgate-Palmolive Co. 69,200 $ 4,290,400
Gillette Co. 47,800 4,248,225
Hertz Corp., "A"* 6,200 212,350
Philip Morris Cos., Inc. 233,300 10,265,200
Tyco International Ltd. 282,000 17,907,000
UST, Inc. 91,300 2,602,050
------------
$39,525,225
- --------------------------------------------------------------------------------
Containers - 0.6%
Stone Container Corp. 254,600 $ 3,500,750
- --------------------------------------------------------------------------------
Electronics - 4.0%
Analog Devices, Inc.* 73,900 $ 1,976,825
Atmel Corp.* 54,000 1,552,500
Intel Corp. 46,600 7,059,900
Kulicke & Soffa Industries, Inc.* 128,800 4,347,000
Sony Corp. 28,400 2,421,100
</TABLE>
7
<PAGE>
Portfolio of Investments (Unaudited) - continued
Stocks - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - continued
Electronics - continued
Teradyne, Inc.* 101,900 $ 4,177,900
Texas Instruments, Inc. 25,900 2,327,762
------------
$23,862,987
- --------------------------------------------------------------------------------
Entertainment - 4.6%
Clear Channel Communications, Inc.* 169,000 $ 8,935,875
Harrah's Entertainment, Inc.* 1,002,200 18,665,975
------------
$27,601,850
- --------------------------------------------------------------------------------
Financial Institutions - 3.4%
American Express Co. 65,100 $ 4,524,450
Federal Home Loan Mortgage Corp. 198,700 6,557,100
Union Planters Corp. 197,000 9,308,250
------------
$20,389,800
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.0%
Kimberly-Clark Corp. 77,400 $ 3,879,675
Unisource Worldwide, Inc. 109,800 1,907,775
------------
$ 5,787,450
- --------------------------------------------------------------------------------
Insurance - 6.3%
Chubb Corp. 97,600 $ 5,953,600
CIGNA Corp. 34,800 6,046,500
Conseco, Inc. 44,400 1,776,000
Hartford Financial Services Group 79,900 6,232,200
Hartford Life, Inc.* 5,600 187,600
PennCorp Financial Group, Inc. 243,100 8,295,788
Progressive Corp. 122,900 9,724,462
------------
$38,216,150
- --------------------------------------------------------------------------------
Machinery - 1.0%
Stewart & Stevenson Services, Inc. 216,000 $ 5,778,000
- --------------------------------------------------------------------------------
Medical and Health Products - 4.0%
American Home Products Corp. 69,700 $ 5,314,625
Boston Scientific Corp.* 36,600 1,953,525
Bristol-Myers Squibb Co. 205,420 15,072,692
McKesson Corp. 27,400 2,058,425
------------
$24,399,267
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.1%
St. Jude Medical, Inc.* 163,400 $ 5,535,175
United Healthcare Corp. 129,800 7,333,700
------------
$12,868,875
- --------------------------------------------------------------------------------
Oils - 1.0%
Mobil Corp. 200 $ 27,975
Texaco, Inc. 57,900 6,318,338
------------
$ 6,346,313
- --------------------------------------------------------------------------------
Photographic Products - 1.2%
Eastman Kodak Co. 84,900 $ 7,036,088
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Portfolio of Investments (Unaudited) - continued
Stocks - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - continued
Railroads - 1.2%
Burlington Northern Santa Fe Railway Co. 36,100 $ 2,996,300
Wisconsin Central Transportation Corp.* 115,100 4,157,988
-------------
$ 7,154,288
- --------------------------------------------------------------------------------
Restaurants and Lodging - 7.7%
Hilton Hotels Corp. 417,600 $ 11,797,200
Host Marriott Corp.* 486,800 8,579,850
Promus Hotel Corp.* 721,550 26,065,994
-------------
$ 46,443,044
- --------------------------------------------------------------------------------
Stores - 5.0%
CVS Corp. 174,800 $ 8,368,550
Rite Aid Corp. 429,600 19,976,400
Staples, Inc.* 85,600 1,883,200
-------------
$ 30,228,150
- --------------------------------------------------------------------------------
Supermarkets - 0.3%
Safeway, Inc.* 36,500 $ 1,642,500
- --------------------------------------------------------------------------------
Telecommunications - 1.2%
3Com Corp.* 93,700 $ 4,544,450
Ascend Communications, Inc.* 53,000 2,954,750
-------------
$ 7,499,200
- --------------------------------------------------------------------------------
Utilities - Electric - 1.2%
CMS Energy Corp. 85,200 $ 2,864,850
Illinova Corp. 214,400 4,690,000
-------------
$ 7,554,850
- --------------------------------------------------------------------------------
Utilities - Telephone - 2.5%
MCI Communications Corp. 236,900 $ 9,091,037
Sprint Corp. 124,500 6,084,938
-------------
$ 15,175,975
- --------------------------------------------------------------------------------
Total U.S. Stocks $463,687,510
- --------------------------------------------------------------------------------
Foreign Stocks - 8.9%
France - 0.9%
Union des Assurances Federales S.A. (Insurance) 46,400 $ 5,641,827
- --------------------------------------------------------------------------------
Ireland - 0.7%
Elan Corp., PLC, ADR (Health Products)* 95,200 $ 3,879,400
- --------------------------------------------------------------------------------
Netherlands - 0.5%
Asm Lithography Holdings (Machinery)* 60,000 $ 3,033,304
- --------------------------------------------------------------------------------
Portugal - 0.5%
Banco Totta E Acores (Banks and Credit Cos.)## 195,100 $ 2,784,722
- --------------------------------------------------------------------------------
South Korea - 0.5%
Korea Mobile Telecommunications
(Utilities - Telephone) 5,233 $ 3,228,782
- --------------------------------------------------------------------------------
Switzerland - 1.2%
Novartis AG (Pharmaceuticals) 5,400 $ 7,340,177
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Portfolio of Investments (Unaudited) - continued
Stocks - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issuer Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - continued
United Kingdom - 4.6%
ASDA Group PLC (Retail) 3,158,000 $ 6,211,909
British Petroleum PLC, ADR (Oils) 62,415 9,042,373
Danka Business Systems, ADR (Business Services) 117,400 4,710,675
PowerGen PLC (Utilities - Electric)* 259,010 2,959,246
Smithkline Beecham PLC, ADR (Health Products) 29,500 2,581,250
Storehouse PLC (Retail) 688,700 2,455,393
-------------
$ 27,960,846
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 53,869,058
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $430,080,522) $517,556,568
- --------------------------------------------------------------------------------
Short-Term Obligations - 13.0%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Federal Farm Credit Bank, due 06/03/97 $ 9,315 $ 9,312,216
Federal Farm Credit Bank, due 06/11/97 3,540 3,534,739
Federal Home Loan Bank, due 06/19/97 5,270 5,255,811
Federal Home Loan Mortgage Corp., due 06/04/97 7,620 7,616,539
Federal Home Loan Mortgage Corp., due 06/05/97 3,840 3,837,679
Federal Home Loan Mortgage Corp., due 06/19/97 2,330 2,323,738
Federal Home Loan Mortgage Corp., due 06/24/97 7,600 7,573,829
Federal National Mortgage Assn., due 06/06/97 6,300 6,295,266
Federal National Mortgage Assn., due 06/16/97 865 863,039
Federal National Mortgage Assn., due 06/20/97 3,510 3,499,904
Federal National Mortgage Assn., due 06/27/97 13,880 13,826,169
General Electric Capital Corp., due 06/02/97 6,675 6,673,961
General Electric Capital Corp., due 06/13/97 7,895 7,880,526
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 78,493,416
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $508,573,938) $596,049,984
Other Assets, Less Liabilities - 1.2% 7,510,736
- --------------------------------------------------------------------------------
Net Assets - 100.0% $603,560,720
- --------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
10
<PAGE>
Financial Statements
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 31, 1997
- -------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $508,573,938) $596,049,984
Cash 5,586
Receivable for investments sold 6,087,651
Receivable for Fund shares sold 2,419,261
Dividends and interest receivable 388,765
Other assets 6,128
-------------
Total assets $604,957,375
=============
Liabilities:
Payable for investments purchased $ 351,568
Payable for Fund shares reacquired 448,561
Net payable for forward currency exchange contracts 68,843
Payable to affiliates -
Management fee 24,650
Administrative fee 495
Shareholder servicing agent fee 4,263
Distribution fee 271,649
Accrued expenses and other liabilities 226,626
-------------
Total liabilities $ 1,396,655
-------------
Net assets $603,560,720
=============
Net assets consist of:
Paid-in capital $480,755,320
Unrealized appreciation on investments and translation of assets and liabilities
in foreign currencies 87,407,923
Accumulated undistributed net realized gain on investments and foreign
currency transactions 35,555,939
Accumulated net investment loss (158,462)
-------------
Total $603,560,720
=============
Shares of beneficial interest outstanding 39,238,514
=============
Class A shares:
Net asset value per share
(net assets of $184,232,426 [divided by] 12,001,455 shares of beneficial interest
outstanding) $15.35
=============
Offering price per share (100 [divided by] 94.25) $16.29
=============
Class B shares:
Net asset value and offering price per share
(net assets $419,327,790 [divided by] 27,237,026 shares of beneficial interest
outstanding) $15.40
=============
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $503.75 [divided by] 32.80 shares of beneficial interest $15.36
outstanding) =============
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A and
Class B shares.
See notes to financial statements
11
<PAGE>
Financial Statements - continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended May 31, 1997
- --------------------------------------------------------------------------
<S> <C>
Net investment income:
Income -
Dividends $ 2,991,999
Interest 2,217,664
-----------
Total investment income $ 5,209,663
-----------
Expenses -
Management fee $ 2,179,038
Trustees' compensation 26,335
Administrative fee 22,060
Shareholder servicing agent fee 313,997
Shareholder servicing agent fee (Class A) 19,079
Shareholder servicing agent fee (Class B) 79,824
Distribution and service fee (Class A) 204,252
Distribution and service fee (Class B) 2,087,899
Custodian fee 145,018
Postage 61,914
Printing 29,423
Auditing fees 15,097
Legal fees 1,835
Miscellaneous 207,090
-----------
Total expenses $ 5,392,861
Fees paid indirectly (68,797)
-----------
Net expenses $ 5,324,064
-----------
Net investment loss $ (114,401)
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $35,844,471
Foreign currency transactions (40,626)
-----------
Net realized gain on investments and foreign currency transactions $35,803,845
-----------
Change in unrealized appreciation (depreciation) -
Investments $19,091,867
Translation of assets and liabilities in foreign currencies (70,544)
-----------
Net unrealized gain on investments and foreign currency translation $19,021,323
-----------
Net realized and unrealized gain on investments and foreign currency $54,825,168
-----------
Increase in net assets from operations $54,710,767
===========
</TABLE>
See notes to financial statements
12
<PAGE>
Financial Statements - continued
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1997 Year Ended
(Unaudited) November 30, 1996
===========================================================================================
<S> <C> <C>
Increase in net assets:
From operations -
Net investment loss $ (114,401) $ (1,034,280)
Net realized gain on investments and foreign
currency transactions 35,803,845 129,835,775
Net unrealized gain (loss) on investments and
foreign currency translation 19,021,323 (34,841,347)
-------------- --------------
Increase in net assets from operations $ 54,710,767 $ 93,960,148
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (300,226)
From net realized gain on investments and
foreign currency transactions (Class A) (35,176,024) (13,120,408)
From net realized gain on investments and
foreign currency transactions (Class B) (93,850,492) (60,999,950)
In excess of net investment income (Class A) -- (535,376)
-------------- --------------
Total distributions declared to shareholders $ (129,026,516) $ (74,955,960)
-------------- --------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 103,805,182 $ 178,620,223
Net asset value of shares issued to
shareholders in reinvestment of
distributions 119,836,430 69,743,534
Cost of shares reacquired (126,962,462) (202,733,785)
-------------- --------------
Increase in net assets from Fund share
transactions $ 96,679,150 $ 45,629,972
-------------- --------------
Total increase in net assets $ 22,363,401 $ 64,634,160
Net assets:
At beginning of period 581,197,319 516,563,159
-------------- --------------
At end of period (including accumulated
distributions in excess of net investment
income of $158,462 and $44,061
respectively) $ 603,560,720 $ 581,197,319
============== ==============
</TABLE>
See notes to financial statements
13
<PAGE>
Financial Statements - continued
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 30,
Six Months Ended --------------------------------------------------------
May 31, 1997
(Unaudited) 1996 1995 1994 1993*
----------------- ------------ ------------ ----------- ------------
Class A
-----------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value -
beginning of period $ 18.02 $ 17.67 $ 13.49 $ 14.75 $ 14.58
---------- -------- -------- ---------- ----------
Income from investment
operations# -
Net investment income $ 0.04 $ 0.08 $ 0.11 $ 0.21 $ 0.03
Net realized and unrealized
gain (loss) on investments 1.39 2.96 4.91 (0.25) 0.14
---------- -------- -------- ---------- ----------
Total from investment
operations $ 1.43 $ 3.04 $ 5.02 $ (0.04) $ 0.17
---------- -------- -------- ---------- ----------
Less distributions declared to
shareholders -
From net investment
income $ -- $ (0.16) $ (0.22) $ (0.06) $ --
From net realized gain on
investments (4.10) (2.53) (0.62) (1.16) --
---------- -------- -------- ---------- ----------
Total distributions
declared to shareholders $ (4.10) $ (2.69) $ (0.84) $ (1.22) $ --
---------- -------- -------- ---------- ----------
Net asset value - end of
period $ 15.35 $ 18.02 $ 17.67 $ 13.49 $ 14.75
========== ======== ======== ========== ==========
Total return[dbldag] 10.31%++ 19.76% 39.51% (0.47)% 5.01%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.30%+ 1.31% 1.27% 1.12% 0.91%+
Net investment income 0.50%+ 0.47% 0.67% 1.59% 1.67%
Portfolio turnover 63% 112% 91% 50% 70%+
Average commission rate### $ 0.0255 $ 0.0387 $ -- $ -- $ --
Net assets at end of period
(000 omitted) $ 184,232 $150,261 $ 88,119 $ 2,608 $ 196
</TABLE>
*For the period from the commencement of offering of Class A shares,
September 7, 1993, to November 30, 1993.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to November 30, 1992, are based on
average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
dbldag]Total returns for Class A shares do not include the applicable sales
charge. If the sales charge had been included, the results would have been
lower.
See notes to financial statements
14
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 30,
Six Months Ended --------------------------------------------------------
May 31, 1997
(Unaudited) 1996 1995 1994 1993
----------------- ------------ ------------ ----------- ------------
Class B
-----------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning
of period $ 17.96 $ 17.56 $ 13.37 $ 14.72 $ 14.83
---------- ---------- -------- ---------- --------
Income from investment
operations# -
Net investment income
(loss) $ (0.02) $ (0.06) $ 0.01 $ 0.04 $ 0.03
Net realized and unrealized
gain (loss) on investments 1.40 2.97 4.85 (0.23) 0.50
---------- ---------- -------- ---------- --------
Total from investment
operations $ 1.38 $ 2.91 $ 4.86 $ (0.19) $ 0.53
---------- ---------- -------- ---------- --------
Less distributions declared to
shareholders -
From net investment
income $ -- $ -- $ (0.05) $ --** $ (0.02)
From net realized gain on
investments (3.94) (2.51) (0.62) (1.16) (0.62)
---------- ---------- -------- ---------- --------
Total distributions
declared to shareholders $ (3.94) $ (2.51) $ (0.67) $ (1.16) $ (0.64)
---------- ---------- -------- ---------- --------
Net asset value - end of
period $ 15.40 $ 17.96 $ 17.56 $ 13.37 $ 14.72
========== ========== ======== ========== ========
Total return 9.83%++ 18.84% 38.16% (1.52)% 3.70%
Ratios (to average net assets)/Supplemental data:
Expenses## 2.04%+ 2.13% 2.14% 2.18% 2.15%
Net investment income
(loss) (0.25)%+ (0.38)% 0.08% 0.32% 0.10%
Portfolio turnover 63% 112% 91% 50% 70%
Average commission rate### $ 0.0255 $ 0.0387 $ -- $ -- $ --
Net assets at end of period
(000 omitted) $ 419,328 $430,936 $428,445 $384,504 $454,089
</TABLE>
**The per share distribution from net investment income on Class B shares was
$0.00312.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to November 30, 1992, are based on
average shares outstanding.
##For the fiscal years ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
See notes to financial statements
15
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 30, 1992 1991 1990 1989 1988 1987**
- --------------------------------- ---------- ------------ ----------- ------------ ------------ ------------
Class B
----------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning
of period $ 13.27 $ 11.29 $ 12.05 $ 9.38 $ 7.59 $ 7.50
-------- -------- -------- -------- -------- ----------
Income from investment
operations -
Net investment income $ 0.02 $ 0.10 $ 0.18 $ 0.17 $ 0.12 $ 0.04
Net realized and unrealized
gain (loss) on investments 2.61 2.15 (0.75) 2.63 1.76 0.06
-------- -------- -------- -------- -------- ----------
Total from investment
operations $ 2.63 $ 2.25 $ (0.57) $ 2.80 $ 1.88 $ 0.10
-------- -------- -------- -------- -------- ----------
Less distributions declared to
shareholders -
From net investment income $ -- $ (0.14) $ (0.19) $ (0.13) $ (0.09) $ (0.01)
From net realized gain on
investments (1.07) (0.13) -- -- -- --
-------- -------- -------- -------- -------- ----------
Total distributions declared
to shareholders $ (1.07) $ (0.27) $ (0.19) $ (0.13) $ (0.09) $ (0.01)
-------- -------- -------- -------- -------- ----------
Net asset value - end of period $ 14.83 $ 13.27 $ 11.29 $ 12.05 $ 9.38 $ 7.59
======== ======== ======== ======== ======== ==========
Total return 20.61% 20.22% (4.80)% 30.11% 24.79% 1.41%+
Ratios (to average net assets)/Supplemental data:
Expenses 2.24% 2.28% 2.38% 2.46% 2.17% 2.26%+
Net investment income 0.18% 0.75% 1.56% 1.56% 1.34% 0.36%+
Portfolio turnover 65% 86% 68% 58% 93% 139%
Net assets at end of period
(000 omitted) $436,561 $317,375 $226,245 $202,861 $130,961 $ 88,471
</TABLE>
**For the period from the commencement of investment operations, December 29,
1986, to November 30, 1987.
+Annualized.
See notes to financial statements
16
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
May 31, 1997***
(Unaudited)
----------------
Class I
----------------
<S> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 13.99
----------
Income from investment operations# -
Net investment income $ 0.06
Net realized and unrealized gain (loss) on investments 1.31
----------
Total from investment operations $ 1.37
----------
Less distributions declared to shareholders -
From net investment income $ --
From net realized gain on investments --
----------
Total distributions declared to shareholders $ --
----------
Net asset value - end of period $ 15.36
==========
Total return 9.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.08%+
Net investment income 0.91%+
Portfolio turnover 63%
Average commission rate### 0.0255
Net assets at end of period (000 omitted) $ 1
</TABLE>
***For the period from the commencement of offering of Class I shares, January
2, 1997, to May 31, 1997.
+Annualized.
++Not annualized.
#Per share data for the periods subsequent to November 30, 1992, is based on
average shares outstanding.
##For the periods ending after September 1, 1995, the Fund's expenses are
calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning
on or after September 1, 1995.
See notes to financial statements
17
<PAGE>
Notes to Financial Statements (Unaudited)
(1) Business and Organization
MFS Capital Growth Fund (the Fund) is a diversified series of MFS Series Trust
II (the Trust). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are
not available are valued at last quoted bid prices. Securities for which there
are no such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Trustees. 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 base
currency and translated into U.S. dollars at the closing daily exchange rate.
Futures contracts, options, and options on futures contracts listed on
commodities exchanges are valued at closing settlement prices. Over-the-counter
options are valued by brokers through the use of a pricing model which takes
into account closing bond valuations, implied volatility, and short-term
repurchase rates. Securities for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such
18
<PAGE>
Notes to Financial Statements (Unaudited) - continued
transactions. Gains and losses attributable to foreign currency exchange rates
on sales of securities are recorded for financial statement purposes as net
realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that result from fluctuations in foreign currency exchange rates is not
separately disclosed.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Fund 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 Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
contract settlement date. On contract settlement date the gains or losses are
recorded as realized foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend and interest payments received in additional securities are
recorded on the ex-dividend or ex-interest date in an amount equal to the value
of the security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
19
<PAGE>
Notes to Financial Statements (Unaudited) - continued
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of
net investment income and net realized gain reported on these financial
statements may differ from that reported on the Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares. The classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of the
Fund pro rata based on average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee was computed daily and paid monthly at an annual rate of 0.75%
of average daily net assets.
Administrator - Effective March 1, 1997, the Fund has an administrative
services agreement with MFS to provide the Fund with certain financial, legal,
compliance, shareholder communications, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Fund pays
MFS an administrative fee up to 0.015% per annum of the Fund's average daily
net assets, provided that the administrative fee is not assessed on Fund assets
that exceed $3 billion.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees'
20
<PAGE>
Notes to Financial Statements (Unaudited) - continued
compensation is a net periodic pension expense of $5,878 for the six months
ended May 31, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$18,296 for the six months ended May 31, 1997, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A and Class B shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets
attributable to Class A shares, commissions to dealers, and payments to MFD
wholesalers for sales at or above a certain dollar level, and other such
distribution-related expenses that are approved by the Fund. MFD retains the
service fee for accounts not attributable to a securities dealer, which
amounted to $32,588 for the six months ended May 31, 1997. Payment of the 0.10%
per annum Class A distribution fee will commence on such date as the Trustees
of the Trust may determine. Fees incurred under the distribution plan during
the six months ended May 31, 1997, were 0.25% of average daily net assets
attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B shares. MFD will pay to
securities dealers that enter into a sales agreement with MFD all or a portion
of the service fee attributable to Class B shares. The service fee is intended
to be additional consideration for services rendered by the dealer with respect
to Class B shares. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $46,525 for Class B shares, for the six
months ended May 31, 1997. Fees incurred under the distribution plans during
the six months ended May 31, 1997, were 1.00% of average daily net assets
attributable to Class B shares on an annualized basis.
Purchases over $1 million of Class A shares and certain purchases by retirement
plans are subject to a contingent deferred sales charge in the event of a
shareholder redemption within 12 months following such purchase. A contingent
deferred sales charge is imposed on shareholder redemptions of Class B shares
in the event of a shareholder redemption within six years of purchase. MFD
receives all contingent deferred sales charges. Contingent
21
<PAGE>
Notes to Financial Statements (Unaudited) - continued
deferred sales charges imposed during the six months ended May 31, 1997, were
$467 and $120,085 for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate
of 0.13%. Prior to January 1, 1997, the fee was calculated as a percentage of
the average daily net assets of each class of shares at an effective annual
rate of up to 0.15% and up to 0.22% attributable to Class A and Class B shares,
respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, aggregated $309,732,905 and $326,279,561,
respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
<TABLE>
<S> <C>
Aggregate cost $ 508,573,938
==============
Gross unrealized appreciation $ 108,302,038
Gross unrealized depreciation $ (20,825,992)
--------------
Net unrealized appreciation $ 87,476,046
==============
</TABLE>
22
<PAGE>
Notes to Financial Statements (Unaudited) - continued
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
Six Months Ended May 31, 1997 Year Ended November 30, 1996
------------------------------- ----------------------------------
Shares Amount Shares Amount
-------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Shares sold 4,522,229 $ 67,119,816 5,081,001 $ 84,871,838
Shares issued to
shareholders in
reinvestment of
distributions 2,243,772 31,300,586 808,554 12,468,050
Shares transferred to
Class I (14) (202) -- --
Shares reacquired (3,101,660) (45,448,434) (2,540,176) (42,196,319)
----------- ------------- ------------ --------------
Net increase 3,664,327 52,971,766 3,349,379 55,143,569
----------- ------------- ------------ --------------
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
Six Months Ended May 31, 1997 Year Ended November 30, 1996
---------------------------------- -----------------------------------
Shares Amount Shares Amount
---------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Shares sold 2,447,415 $ 36,469,310 5,593,976 $ 93,748,385
Shares issued to
shareholders in
reinvestment of
distributions 6,305,963 88,535,844 3,699,918 57,275,484
Shares reacquired (5,511,484) (81,295,221) (9,692,478) (160,537,466)
------------ -------------- ------------ ---------------
Net increase (decrease) 3,241,894 43,709,933 (398,584) (9,513,597)
------------ -------------- ------------ ---------------
</TABLE>
Class I Shares
<TABLE>
<CAPTION>
Period Ended May 31, 1997*
----------------------------------
Shares Amount
---------------- -----------------
<S> <C> <C>
Shares sold 14,566 215,854
Shares transferred from
Class A 14 202
Shares reacquired (14,547) (218,605)
------------ -------------
Net increase (decrease) 33 (2,549)
------------ -------------
</TABLE>
*For the period from the commencement of offering of Class I shares, January 2,
1997, to May 31, 1997.
23
<PAGE>
Notes to Financial Statements (Unaudited) - continued
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $400 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended May
31, 1997, was $2,154.
(7) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments include forward foreign currency exchange contracts. The notional
or contractual amounts of these instruments represent the investment the Fund
has in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under these
financial instruments at May 31, 1997, is as follows:
Forward Foreign Currency Exchange Contracts -
<TABLE>
<CAPTION>
Settlement Contracts to In Exchange Contracts Net Unrealized
Date Deliver/Receive for At Value Depreciation
------------ ----------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Sales GBP 9/30/97 9,252,406 15,133,401 15,069,855 (63,546)
Purchases GBP 8/26/97 4,626,203 7,574,713 7,569,416 (5,297)
--------
(68,843)
========
</TABLE>
At May 31, 1997, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
24
