<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) LARGE CAP
GROWTH FUND
SEMIANNUAL REPORT o MAY 31, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 21
MFS' Year 2000 Readiness Disclosure ....................................... 27
Trustees and Officers ..................................................... 29
MFS(R) ORIGINAL RESEARCH(SM)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
It has been almost two years since financial turmoil began to rock markets in
Asia, Russia, and Latin America. Even developed markets such as Europe and the
United States were not immune. In the U.S. equity market, for example,
investors focused on a narrow group of 50 of the largest-company growth stocks
because they seemed to offer less volatility in uncertain times. Fixed-income
investors also became more concerned about risk, moving money into U.S.
Treasury securities and out of corporate and municipal bonds and mortgage-
backed securities.
The narrowness of the market was just one of three broad issues that dominated
the U.S. equity market until recently. The other two were a slowdown in
corporate earnings growth and high valuations, with stocks of many companies
selling at extremely high prices relative to their earnings.
Although these have been challenging issues, we now see signs that we feel
demonstrate each one is changing for the better. Today, we believe the markets
are presenting more opportunities for investors to diversify, for our
portfolio managers to find good values, and for us to show the benefits of
staying with our long-term objectives and strategies. Investors seem to be
regaining confidence in a wider range of companies. Stocks of some small and
mid-sized companies, as well as some large industrial companies, have begun to
perform better in the past few months than they had for the previous year or
so. These companies appear to have benefited from early signs of stability in
emerging markets and a continuation of economic growth in the United States.
U.S. companies also have produced better earnings. Corporate earnings were, on
average, relatively flat in 1998. However, we expect earnings to grow 12% to
14% this year because more companies have benefited from the strong economy
and from aggressive consolidation and cost-cutting measures they have taken
over the past several years.
Based on their earnings projections, our analysts estimate that the U.S. stock
market is still about 30% overvalued. While there has been some shift to a
wider group of stocks, many investors are still focusing on the large-company
stocks. As a result, most of the overvaluation is in the 50 largest stocks in
the Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged
index of common stock total return performance. That means about 450 stocks
are selling at more attractive prices, particularly given what we see as the
improved earnings outlooks for these and many small and mid-sized companies
not in the S&P 500. These companies also benefit from consolidation, cost
cutting, and global growth. Because they are smaller, they may be able to
respond to changes more quickly, and thus they have the potential to grow
faster than the big companies.
The fixed-income markets, meanwhile, seem to be approaching the level of
relative stability they enjoyed before the Asian turmoil. Some credit for this
stability goes to the Federal Reserve Board (the Fed), which has reassured
investors that it will act to prevent rapid economic growth from causing
higher inflation and reduced purchasing power. Also, once investors saw that
the overseas turmoil had little, if any, effect on the financial strength of
most domestic bond issuers, the major non-Treasury markets -- corporate,
municipal, and mortgage -- began to rebound. Our portfolio managers are now
finding more opportunities to buy bonds with relatively stable prices and
attractive yields.
The past two years have challenged investors. However, we believe we are well
positioned for the current environment because our analysts and portfolio
managers continue to rely on MFS(R) Original Research(SM) to help evaluate the
long-term investment potential of each holding being considered for our
portfolios. Also, we believe our discipline of maintaining diversified
portfolios and of staying with our funds' clearly defined investment
strategies can help us offer investment products with the potential to sustain
returns over a variety of market cycles.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
June 17, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of John E. Lathrop]
John E. Lathrop
For the six months ended May 31, 1999, Class A shares of the Fund provided a
total return of 15.31%, Class B shares 14.87%, and Class I shares 15.39%. These
returns include the reinvestment of distributions but exclude the effects of any
sales charges.
During the same period, the average growth fund tracked by Lipper Analytical
Services, Inc., an independent firm that reports mutual fund performance,
returned 13.68%. The Fund's returns also compare to a 12.60% return over the
same period for the Standard & Poor's 500 Composite Index (the S&P 500), a
popular, unmanaged index of common stock total return performance.
Q. YOU RECENTLY BECAME THE PORTFOLIO MANAGER OF THE FUND. DO YOU PLAN TO
CHANGE THE STRATEGY?
A. No. We will continue to look for good growth companies that we believe are
reasonably priced. Our research analysts help us find companies that we
think are undergoing positive fundamental change or that can benefit from a
new development. It could be a new product, a new service, or a good
acquisition. For example, when we look at a pharmaceutical company
introducing a new drug, we research the company's -- and its competitors'
-- products and talk to doctors about clinical trials.
Q. WHAT FACTORS HELPED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. Several sectors have performed very well, especially technology, leisure,
and telecommunications. The tremendous growth in global data transmission
and Internet traffic has helped computer software and services holdings,
such as EMC and Sun Microsystems. Performance also has been helped by our
leisure holdings, specifically cable companies. MediaOne, for example, has
been a big beneficiary of the growth of cable, both for entertainment and
for Internet access. In telecommunications, MCI WorldCom also has done
well. The company is realizing cost savings from its MCI acquisition and
has seen strong growth in its business services and international
divisions.
Motorola is another telecommunications holding that has helped the Fund. The
company's cellular phone product line has improved, making it a major player
in the rapidly expanding global cellular market. The company's semiconductor
business also has done well. This is a cyclical industry that performs well
when global economies are strong. For the past couple of years, the
semiconductor industry had too many manufacturing plants due to the slowdown
in Asia and emerging markets. Now, with those markets showing signs of
recovery, demand is increasing, and companies such as Motorola appear to be
well positioned to benefit.
Q. WHAT ARE YOUR BIGGEST RETAIL HOLDINGS?
A. Drug stores and supermarkets. Both industries have benefited from
consolidation and strong consumer spending. Our largest holdings are CVS
and Kroger. CVS, a drug store chain, is a direct beneficiary of the same
demographic trends that we saw helping the pharmaceutical companies, that
is, an aging population that needs more prescriptions. Also, people buy
other things, such as magazines and batteries, when they go into a drug
store. Kroger was added to the portfolio when the supermarket chain bought
Fred Meyer, another supermarket chain we owned. As Kroger integrates Fred
Meyer into its operations and purchasing, we think the merger will result
in cost cutting and we may see Kroger's earnings accelerate.
Q. HAVE YOU MADE ANY MAJOR CHANGES IN THE PORTFOLIO RECENTLY?
A. We increased the weighting in telecommunications services and data
transmission companies. As I said, we think the outlook for both of these
industries is excellent. On the other hand, we reduced our financial
services holdings. As long as the stock market performed well, these
companies did well. While our long-term outlook for the stock market is
positive, we think current prices of financial services stocks may not be
sustainable. Therefore, we sold Merrill Lynch and trimmed our position in
Kansas City Southern, which is predominately a financial services company
that owns a couple of large mutual fund companies.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. We expect to see continued robust economic growth in the United States,
which should be a good environment for growth stocks. At the same time, the
stock market has begun to broaden, and a more varied group of industries
has shown strong performance. This is in contrast to the past year or so,
when a small group of big-company stocks was responsible for almost all the
gains in the market. Although this broadening may cause the market to
fluctuate among sectors, we will stick to our long-term strategy of looking
for companies with competitive positions in their markets, strong
management teams, and good earnings growth.
/s/ John E. Lathrop
John E. Lathrop
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
Note to Shareholders: On February 24, 1999, John E. Lathrop succeeded Stephen
Pesek as portfolio manager of the Fund.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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JOHN E. LATHROP IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF MFS(R) LARGE CAP GROWTH FUND. MR. LATHROP JOINED
MFS IN 1994 FROM ANOTHER MAJOR INVESTMENT MANAGEMENT FIRM, WHERE HE HAD
WORKED AS AN EQUITY ANALYST, STATISTICAL ANALYST, AND INSTITUTIONAL
ACCOUNT CONTROLLER SINCE 1988. HE WAS NAMED ASSISTANT VICE PRESIDENT IN
1995, VICE PRESIDENT IN 1996, AND PORTFOLIO MANAGER IN 1999.
HE IS A GRADUATE OF NORTHWESTERN UNIVERSITY, WHERE HE WAS ELECTED TO PHI
BETA KAPPA WITH HONORS IN ECONOMICS, AND HE EARNED AN M.B.A. DEGREE FROM
CORNELL UNIVERSITY'S JOHNSON GRADUATE SCHOOL OF MANAGEMENT. MR. LATHROP
IS A CHARTERED FINANCIAL ANALYST.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED
BY AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R)
ORIGINAL RESEARCH(SM), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF
SELECTING SECURITIES.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS TO PROVIDE GROWTH OF CAPITAL. DIVIDEND INCOME,
IF ANY, IS INCIDENTAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: DECEMBER 29, 1986
CLASS INCEPTION: CLASS A SEPTEMBER 7, 1993
CLASS B DECEMBER 29, 1986
CLASS I JANUARY 2, 1997
SIZE: $864.6 MILLION NET ASSETS AS OF MAY 31, 1999
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes to
Performance Summary for more information.)
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH MAY 31, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +15.31% +21.13% +81.54% +181.19% +359.35%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +21.13% +21.99% + 22.97% + 16.47%
- ------------------------------------------------------------------------------------------------------------
SEC Results -- +14.16% +19.61% + 21.52% + 15.78%
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +14.87% +20.29% +77.51% +169.61% +337.36%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +20.29% +21.08% + 21.94% + 15.90%
- ------------------------------------------------------------------------------------------------------------
SEC Results -- +16.29% +20.39% + 21.76% + 15.90%
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return +15.39% +21.47% +81.85% +176.19% +348.04%
- ------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +21.47% +22.06% + 22.53% + 16.18%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class I shares
("I") have no sales charge or Rule 12b-1 fees and are only available to
certain institutional investors.
A results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of B for periods prior to the inception of A. Because operating expenses
of B are greater than those of A, A performance generally would have been
higher than B performance. The B performance included within the A SEC
performance has been adjusted to reflect the maximum initial sales charge
generally applicable to A rather than the CDSC generally applicable to B.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of B for periods prior to the inception of I. Because operating expenses
of B are greater than those of I, I performance generally would have been
higher than A performance. The B performance included in the I performance has
been adjusted to reflect the fact that I have no initial
sales charge.
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 SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF MAY 31, 1999
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 21.7%
FINANCIAL SERVICES 15.2%
LEISURE 13.3%
RETAILING 11.2%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 10.7%
TOP 10 STOCK HOLDINGS
TYCO INTERNATIONAL LTD. 4.8% CITIGROUP, INC. 1.8%
Security systems, packaging, and Diversified financial services company
electronic equipment conglomerate
ASSOCIATES FIRST CAPITAL CORP. 1.7%
MICROSOFT CORP. 4.2% Consumer finance company
Computer software and systems company
BMC SOFTWARE, INC. 1.7%
MCI WORLDCOM, INC. 2.4% Computer software company
Telecommunications company
UNITED HEALTHCARE CORP. 1.6%
TIME WARNER, INC. 2.1% Health maintenance organization
Publishing and entertainment company
CVS CORP. 1.6%
KROGER CO. 2.0% Drug store chain
Supermarket company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 1999
<TABLE>
<CAPTION>
Stocks - 97.2%
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ISSUER SHARES VALUE
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<S> <C> <C>
U.S. Stocks - 94.5%
Advertising - 0.2%
Interpublic Group of Cos, Inc. 18,200 $ 1,378,650
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Aerospace - 1.6%
Raytheon Co., "B" 42,500 $ 2,892,656
United Technologies Corp. 176,600 10,960,238
------------
$ 13,852,894
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Automotive - 0.5%
Harley-Davidson, Inc. 80,000 $ 4,085,000
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Banks and Credit Companies - 2.4%
Bank of New York Co., Inc. 116,100 $ 4,150,575
Capital One Financial Corp. 56,600 8,528,913
Wells Fargo Co. 202,600 8,104,000
------------
$ 20,783,488
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Beverages - 0.4%
Coca-Cola Enterprises, Inc. 90,000 $ 3,262,500
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Broadcasting - 1.0%
AT&T Corp. - Liberty Media Group* 80,000 $ 5,315,000
Infinity Broadcasting Corp.* 131,200 3,353,800
------------
$ 8,668,800
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Business Machines - 2.2%
Affiliated Computer Services, Inc., "A"* 215,300 $ 9,338,637
Kulicke & Soffa Industries, Inc.* 135,100 2,853,988
Texas Instruments, Inc. 60,000 6,562,500
------------
$ 18,755,125
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Business Services - 3.1%
Ceridian Corp.* 240,000 $ 7,920,000
Computer Sciences Corp.* 110,400 7,141,500
DST Systems, Inc.* 117,900 6,366,600
First Data Corp. 112,900 5,073,444
------------
$ 26,501,544
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Computer Software - Personal Computers - 4.5%
America Online, Inc.* 30,000 $ 3,581,250
Microsoft Corp.* 442,200 35,680,013
------------
$ 39,261,263
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Computer Software - Services - 1.6%
EMC Corp.* 70,000 $ 6,973,750
Informatica Corp.* 900 21,600
Sun Microsystems, Inc.* 108,000 6,453,000
------------
$ 13,448,350
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Computer Software - Systems - 6.2%
BMC Software, Inc.* 281,700 $ 13,926,544
Cadence Design Systems, Inc.* 200,000 2,575,000
Computer Associates International, Inc. 124,800 5,904,600
Compuware Corp.* 270,000 8,386,875
Oracle Corp.* 454,600 11,279,762
Redback Networks, Inc.* 600 65,700
SunGard Data Systems, Inc.* 155,400 5,439,000
Synopsys, Inc.* 140,000 6,212,500
------------
$ 53,789,981
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Conglomerates - 0.5%
Kansas City Southern Industries, Inc. 78,200 $ 4,398,750
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Consumer Goods and Services - 8.0%
Clorox Co. 11,100 $ 1,120,406
Dial Corp. 170,000 5,312,500
Galileo International, Inc. 114,400 5,148,000
Gillette Co. 60,000 3,060,000
Newell Rubbermaid, Inc. 200,000 8,100,000
Procter & Gamble Co. 62,400 5,826,600
Tyco International Ltd. 460,000 40,192,500
------------
$ 68,760,006
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Electrical Equipment - 1.3%
General Electric Co. 110,000 $ 11,185,625
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Electronics - 3.8%
Altera Corp.* 160,000 $ 5,570,000
Analog Devices, Inc.* 190,000 7,303,125
Applied Materials, Inc.* 40,000 2,197,500
Lattice Semiconductor Corp.* 19,100 938,288
LSI Logic Corp.* 236,500 8,765,281
Teradyne, Inc.* 70,000 3,696,875
Xilinx, Inc.* 95,800 4,257,112
------------
$ 32,728,181
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Entertainment - 9.1%
CBS Corp.* 245,000 $ 10,228,750
Clear Channel Communications, Inc.* 168,470 11,129,549
Comcast Corp., "A" 289,600 11,149,600
Disney (Walt) Co. 237,700 6,923,013
Gemstar International Group Ltd.* 100,000 6,181,250
MediaOne Group, Inc.* 115,300 8,517,788
Time Warner, Inc. 255,700 17,403,581
Univision Communications, Inc., "A"* 120,000 7,117,500
------------
$ 78,651,031
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Financial Institutions - 7.0%
American Express Co. 35,800 $ 4,338,512
Associates First Capital Corp., "A" 340,000 13,940,000
Citigroup, Inc. 223,300 14,793,625
Donaldson, Lufkin & Jenrette, Inc. 40,000 2,680,000
Federal Home Loan Mortgage Corp. 190,000 11,079,375
Goldman Sachs Group, Inc.* 8,500 577,469
Morgan Stanley Dean Witter & Co. 129,500 12,496,750
Providian Financial Corp. 6,900 661,969
------------
$ 60,567,700
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Food and Beverage Products - 1.0%
Anheuser-Busch Cos., Inc. 80,000 $ 5,845,000
Bestfoods Co. 44,300 2,215,000
Nabisco Holdings Corp., "A" 15,800 661,625
------------
$ 8,721,625
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Insurance - 4.9%
American International Group, Inc. 73,600 $ 8,413,400
CIGNA Corp. 65,500 6,107,875
Equitable Cos., Inc. 140,000 9,826,250
Hartford Financial Services Group, Inc. 30,400 1,922,800
Lincoln National Corp. 63,500 6,461,125
Progressive Corp. 43,600 6,120,350
ReliaStar Financial Corp. 76,700 3,187,844
------------
$ 42,039,644
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Manufacturing - 0.9%
Danaher Corp. 131,600 $ 7,953,575
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Medical and Health Products - 5.7%
American Home Products Corp. 180,100 $ 10,378,262
Bristol-Myers Squibb Co. 190,200 13,052,475
Pfizer, Inc. 98,000 10,486,000
Pharmacia & Upjohn, Inc. 187,600 10,400,075
Schering Plough Corp. 105,000 4,731,563
------------
$ 49,048,375
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Medical and Health Technology and Services - 3.6%
Cardinal Health, Inc. 75,000 $ 4,528,125
Guidant Corp. 78,700 3,935,000
HealthSouth Corp.* 350,000 4,681,250
Medtronic, Inc. 64,800 4,600,800
United Healthcare Corp. 235,500 13,717,875
------------
$ 31,463,050
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Oils - 1.1%
Chevron Corp. 32,300 $ 2,993,806
Conoco, Inc., "A" 80,000 2,170,000
Exxon Corp. 60,000 4,792,500
------------
$ 9,956,306
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Printing and Publishing - 0.6%
Scholastic Corp.* 60,000 $ 2,910,000
Tribune Co. 28,900 2,281,294
Ziff-Davis, Inc. - ZDNet* 1,500 31,312
------------
$ 5,222,606
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Restaurants and Lodging - 1.9%
CKE Restaurants, Inc. 88,800 $ 1,631,700
McDonald's Corp. 254,000 9,779,000
Tricon Global Restaurants, Inc.* 21,200 1,234,900
Wendy's International, Inc. 150,000 4,087,500
------------
$ 16,733,100
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Retail - 0.2%
Tandy Corp. 25,000 $ 2,062,500
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Special Products and Services
Royal Caribbean Cruises Ltd. 10,700 $ 418,638
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Stores - 8.3%
BJ's Wholesale Club, Inc.* 200,000 $ 5,200,000
CVS Corp. 287,600 13,229,600
Dayton Hudson Corp. 130,000 8,190,000
Linens 'n Things, Inc.* 48,800 1,945,900
Lowe's Cos., Inc. 165,000 8,569,687
Office Depot, Inc.* 435,000 9,080,625
Rite Aid Corp. 316,300 7,907,500
TJX Cos., Inc. 240,000 7,200,000
Wal-Mart Stores, Inc. 240,000 10,230,000
------------
$ 71,553,312
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Supermarkets - 2.4%
Kroger Co.* 280,000 $ 16,397,500
Safeway, Inc.* 90,800 4,222,200
------------
$ 20,619,700
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Telecommunications - 9.9%
Adelphia Communications Corp. "A"* 4,600 $ 347,300
Alltel Corp. 61,400 4,401,612
CenturyTel, Inc.* 184,400 7,064,825
Cisco Systems, Inc.* 105,000 11,445,000
Copper Mountain Networks, Inc.* 1,100 70,400
Global TeleSystems Group, Inc.* 50,000 3,800,000
MCI WorldCom, Inc.* 234,500 20,254,937
Motorola, Inc. 132,500 10,972,656
Net Perceptions, Inc.* 1,100 18,700
Nextlink Communications, Inc., "A"* 40,000 3,060,000
Nortel Networks Corp. 100,000 7,500,000
PSINet, Inc.* 87,700 3,902,650
Qwest Communications International, Inc.* 140,000 5,967,500
Tellabs, Inc.* 120,000 7,020,000
Time Warner Telecom, Inc.* 4,100 105,063
------------
$ 85,930,643
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Utilities - Telephone - 0.6%
Frontier Corp. 99,200 $ 5,220,400
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Total U.S. Stocks $817,022,362
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Foreign Stocks - 2.7%
Germany - 0.5%
Mannesmann AG (Conglomerate) 30,600 $ 4,178,563
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Ireland - 0.6%
Elan Corp. PLC, ADR (Health Products)* 95,000 $ 5,130,000
- --------------------------------------------------------------------------------------------------------
Netherlands - 0.2%
Equant N.V. (Computer Software - Services)* 22,600 $ 1,874,388
- --------------------------------------------------------------------------------------------------------
Sweden - 0.2%
Ericsson LM, ADR (Telecommunication Equipment) 81,100 $ 2,184,631
- --------------------------------------------------------------------------------------------------------
United Kingdom - 1.2%
BP Amoco PLC, ADR (Oils) 80,752 $ 8,650,558
Colt Telecom Group PLC (Telecommunications)* 17,200 1,479,200
------------
$ 10,129,758
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Total Foreign Stocks $ 23,497,340
- --------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $656,325,182) $840,519,702
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.0%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 6/09/99 $ 10,000 $ 9,989,555
General Electric Capital Corp., due 6/01/99 16,210 16,210,000
- --------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 26,199,555
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $682,524,737) $866,719,257
Other Assets, Less Liabilities - (0.2)% (2,122,527)
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $864,596,730
- --------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
MAY 31, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $682,524,737) $866,719,257
Cash 61,228
Net receivable for forward foreign currency exchange
contracts subject to master netting agreements 40,595
Receivable for Fund shares sold 3,981,828
Receivable for investments sold 11,179,614
Interest and dividends receivable 451,855
Other assets 9,549
------------
Total assets $882,443,926
------------
Liabilities:
Payable for Fund shares reacquired $ 394,634
Payable for investments purchased 16,827,282
Payable to affiliates -
Management fee 70,270
Shareholder servicing agent fee 9,369
Distribution and service fee 412,189
Administrative fee 1,405
Accrued expenses and other liabilities 132,047
------------
Total liabilities $ 17,847,196
------------
Net assets $864,596,730
============
Net assets consist of:
Paid-in capital $618,242,657
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 184,234,284
Accumulated undistributed net realized gain on
investments and foreign currency transactions 66,366,820
Accumulated net investment loss (4,247,031)
------------
Total $864,596,730
============
Shares of beneficial interest outstanding 48,477,735
==========
Class A shares:
Net asset value per share
(net assets of $395,268,921 / 22,240,712 shares of
beneficial interest outstanding) $17.77
======
Offering price per share (100 / 94.25) $18.86
======
Class B shares:
Net asset value and offering price per share
(net assets of $469,248,965 / 26,232,599 shares of
beneficial interest outstanding) $17.89
======
Class I shares:
Net asset value, offering price, and redemption price per
share (net assets of $78,844 / 4,424 shares of
beneficial interest outstanding) $17.82
======
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
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 1999
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 1,994,116
Interest 841,412
Foreign taxes withheld (13,852)
------------
Total investment income $ 2,821,676
------------
Expenses -
Management fee $ 3,173,016
Trustees' compensation 14,814
Shareholder servicing agent fee 457,539
Distribution and service fee (Class A) 466,466
Distribution and service fee (Class B) 2,364,535
Administrative fee 53,490
Custodian fee 124,909
Printing 47,066
Postage 68,073
Auditing fees 16,000
Legal fees 2,893
Miscellaneous 147,689
------------
Total expenses $ 6,936,490
Fees paid indirectly (48,253)
------------
Net expenses $ 6,888,237
------------
Net investment loss $ (4,066,561)
------------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) -
Investment transactions $ 85,793,314
Foreign currency transactions 260,069
------------
Net realized gain on investments and foriegn currency
transactions $ 86,053,383
------------
Change in unrealized appreciation (depreciation) -
Investments $ 30,876,893
Translation of assets and liabilities in foreign currencies (80,547)
------------
Net unrealized gain on investments and foreign currency
translation $ 30,796,346
------------
Net realized and unrealized gain on investments and
foreign currency $116,849,729
------------
Increase in net assets from operations $112,783,168
============
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1999 NOVEMBER 30, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment loss $ (4,066,561) $ (5,686,410)
Net realized gain on investments and foreign currency
transactions 86,053,383 76,216,071
Net unrealized gain on investments and foreign currency
translation 30,796,346 59,780,431
------------ -------------
Increase in net assets from operations $112,783,168 $ 130,310,092
------------ -------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $(36,547,129) $ (37,987,394)
From net realized gain on investments and foreign
currency transactions (Class B) (44,583,664) (69,353,928)
From net realized gain on investments and foreign
currency transactions (Class I) (4,407) (435)
------------ -------------
Total distributions declared to shareholders $(81,135,200) $(107,341,757)
------------ -------------
Net increase in net assets from Fund share transactions $ 74,161,725 $ 83,734,417
------------ -------------
Total increase in net assets $105,809,693 $ 106,702,752
Net assets:
At beginning of period 758,787,037 652,084,285
------------ -------------
At end of period (including accumulated net investment
loss of $4,247,031 and $180,470, respectively) $864,596,730 $ 758,787,037
============ =============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ------------------------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $17.29 $17.36 $18.02 $17.67 $13.49 $14.75
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.05) $(0.06) $ 0.03 $ 0.08 $ 0.11 $ 0.21
Net realized and unrealized
gain (loss) on investments
and foreign currency 2.46 2.94 3.41 2.96 4.91 (0.25)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 2.41 $ 2.88 $ 3.44 $ 3.04 $ 5.02 $(0.04)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $(0.16) $(0.22) $(0.06)
From net realized gain on
investments and foreign
currency transactions (1.93) (2.95) (4.10) (2.53) (0.62) (1.16)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.93) $(2.95) $(4.10) $(2.69) $(0.84) $(1.22)
------ ------ ------ ------ ------ ------
Net asset value - end of period $17.77 $17.29 $17.36 $18.02 $17.67 $13.49
====== ====== ====== ====== ====== ======
Total return(+) 15.31%++ 20.89% 24.67% 19.76% 39.51% (0.47)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.22%+ 1.24% 1.29% 1.31% 1.27% 1.12%
Net investment income (loss) (0.55)%+ (0.35)% 0.22% 0.47% 0.67% 1.59%
Portfolio turnover 69% 217% 159% 112% 91% 50%
Net assets at end of period (000
omitted) $395,269 $323,354 $219,755 $150,261 $88,119 $2,608
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ------------------------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $17.32 $17.34 $17.96 $17.56 $13.37 $14.72
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.11) $(0.18) $(0.08) $(0.06) $ 0.01 $ 0.04
Net realized and unrealized
gain (loss) on investments
and foreign currency 2.47 2.98 3.40 2.97 4.85 (0.23)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 2.36 $ 2.80 $ 3.32 $ 2.91 $ 4.86 $(0.19)
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.05) $ -- +++
From net realized gain on
investments and foreign
currency transactions (1.79) (2.82) (3.94) (2.51) (0.62) (1.16)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.79) $(2.82) $(3.94) $(2.51) $(0.67) $(1.16)
------ ------ ------ ------ ------ ------
Net asset value - end of period $17.89 $17.32 $17.34 $17.96 $17.56 $13.37
====== ====== ====== ====== ====== ======
Total return 14.87%++ 20.08% 23.66% 18.84% 38.16% (1.52)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.97%+ 1.99% 2.05% 2.13% 2.14% 2.18%
Net investment income (loss) (1.30)%+ (1.09)% (0.51)% (0.38)% 0.08% 0.32%
Portfolio turnover 69% 217% 159% 112% 91% 50%
Net assets at end of period (000
omitted) $469,249 $435,394 $432,327 $430,936 $428,445 $384,504
+ Annualized.
++ Not annualized.
+++ The per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SIX MONTHS ENDED NOVEMBER 30, NOVEMBER 30,
MAY 31, 1999 1998 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $17.36 $17.41 $13.99
------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.03) $(0.02) $ 0.12
Net realized and unrealized gain on investments and
foreign currency 2.46 2.96 3.30
------ ------ ------
Total from investment operations $ 2.43 $ 2.94 $ 3.42
------ ------ ------
Less distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions $(1.97) $(2.99) $ --
------ ------ ------
Net asset value - end of period $17.82 $17.36 $17.41
====== ====== ======
Total return 15.39%++ 21.37% 24.45%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.97%+ 0.98% 1.07%+
Net investment income (loss) (0.30)%+ (0.15)% 0.90%+
Portfolio turnover 69% 217% 159%
Net assets at end of period (000 omitted) $79 $39 $3
* For the period from the inception of Class I, January 2, 1997, through November 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash
maintained by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Large Cap 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 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 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. 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 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 - The Fund may lend its securities to member banks of the
Federal Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. State Street Bank and Trust Company ("State Street"), as
agent, loans the securities to certain brokers (the "Borrowers") approved by
the Fund. The loans are collateralized at all times by U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street provides the Fund with indemnification against Borrower
default.
At May 31, 1999, the value of securities loaned was $6,681,313. These loans
were collateralized by U.S. Treasury securities of $6,965,107. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and State Street. Income from
securities lending is included in interest income on the Statement 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.
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 may 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 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 payments received in additional securities are
recorded on the ex-dividend date in an amount equal to the value of the
security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. 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.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on 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. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual
rates:
First $1 billion 0.75%
Average net assets in excess of $1 billion 0.65%
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' compensation is a net periodic pension expense of $6,080
for the six months ended May 31, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$63,434 for the six months ended May 31, 1999, 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
paid to each securities dealer that enters into a sales agreement with MFD of
up to 0.25% per annum of the Fund's average daily net assets attributable to
Class A shares which are attributable to that securities dealer and a
distribution fee to MFD of up to 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares. Payment of the 0.10% per annum
Class A distribution fee will be implemented on such date as the Trustees of
the Trust may determine. MFD retains the service fee for accounts not
attributable to a securities dealer, which amounted to $41,461 for the six
months ended May 31, 1999. Fees incurred under the distribution plan during
the six months ended May 31, 1999, 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 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 $29,633
for Class B shares, for the six months ended May 31, 1999. Fees
incurred under the distribution plan during the six months ended May 31, 1999,
were 1.00% of average daily net assets attributable to Class B shares on an
annualized basis.
Certain Class A shares are subject to a contingent deferred sales charge in
the event of a shareholder redemption within 12 months following purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the six months ended May 31, 1999, were
$920 and $115,631 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 0.10%. Prior to April 1, 1999, the fee was calculated as a percentage
of the Fund's average daily net assets at an effective annual rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $ 204,204 $ 2,597,456
------------ ------------
Investments (non-U.S. government securities) $557,087,695 $560,974,187
------------ ------------
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:
Aggregate cost $682,524,737
------------
Gross unrealized appreciation $199,179,082
Gross unrealized depreciation (14,984,562)
------------
Net unrealized appreciation $184,194,520
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 24,202,434 $ 425,438,922 14,417,676 $ 234,120,550
Shares issued to shareholders
in reinvestment of
distributions 2,139,199 33,934,936 2,499,612 34,544,727
Shares reacquired (22,799,707) (399,989,491) (10,879,547) (178,012,460)
--------- ------------- ---------- -------------
Net increase 3,541,926 $ 59,384,367 6,037,741 $ 90,652,817
========= ============= ========== =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,371,016 $ 77,393,883 4,216,923 $ 68,886,908
Shares issued to shareholders
in reinvestment of
distributions 2,635,929 42,201,167 4,732,456 65,923,866
Shares reacquired (5,918,066) (104,857,079) (8,733,786) (141,767,243)
--------- ------------- ---------- -------------
Net increase (decrease) 1,088,879 $ 14,737,971 215,593 $ (6,956,469)
========= ============= ========== =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,495 $ 62,784 3,950 $ 65,998
Shares issued to shareholders
in reinvestment of
distributions 277 4,407 32 434
Shares reacquired (1,585) (27,804) (1,890) (28,363)
--------- ------------- ---------- -------------
Net increase 2,187 $ 39,387 2,092 $ 38,069
========= ============= ========== =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $720 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the six months ended May 31, 1999, was $3,219. The Fund had no
significant borrowings during the period.
(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.
Forward foreign currency purchases and sales under master netting agreements
amounted to a net receivable of $40,595 with CS First Boston Corp. at
May 31, 1999.
At May 31, 1999, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
<PAGE>
<TABLE>
MFS(R) LARGE CAP GROWTH FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Former Stephen E. Cavan*
Chairman and Director (until 1991), MFS Investment
Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Marshall N. Cohan - Private Investor
CUSTODIAN
Lawrence H. Cohn, M.D. - Chief of Cardiac Surgery, State Street Bank and Trust Company
Brigham and Women's Hospital; Professor of
Surgery, Harvard Medical School INVESTOR INFORMATION
For MFS stock and bond market outlooks,
The Hon. Sir J. David Gibbons, KBE - Chief call toll free: 1-800-637-4458 anytime from
Executive Officer, Edmund Gibbons Ltd.; Chairman, a touch-tone telephone.
Colonial Insurance Company, Ltd.
For information on MFS mutual funds, call your
Abby M. O'Neill - Private Investor financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
Walter E. Robb, III - President and Treasurer, a.m. to 5 p.m. Eastern time (or leave a message
Benchmark Advisors, Inc. (corporate financial anytime).
consultants); President, Benchmark Consulting
Group, Inc. (office services) INVESTOR SERVICE
MFSService Center, Inc.
Arnold D. Scott* - Senior Executive P.O. Box 2281
Vice President, Director, and Secretary, Boston, MA 02107-9906
MFS Investment Management
For general information, call toll free:
Jeffrey L. Shames* - Chairman, Chief 1-800-225-2606 any business day from
Executive Officer, and Director, 8 a.m. to 8 p.m. Eastern time.
MFS Investment Management
For service to speech- or hearing-impaired, call
J. Dale Sherratt - President, Insight Resources, toll free: 1-800-637-6576 any business day from 9
Inc. (acquisition planning specialists) a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a
Ward Smith - Former Chairman (until 1994), NACCO Telecommunications Device for the Deaf.)
Industries (holding company)
For share prices, account balances, and exchanges,
INVESTMENT ADVISER call toll free: 1-800-MFS-TALK (1-800-637-8255)
Massachusetts Financial Services Company anytime from a touch-tone telephone.
500 Boylston Street
Boston, MA 02116-3741 WORLD WIDE WEB
www.mfs.com
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
John E. Lathrop*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
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MFS(R) LARGE CAP GROWTH FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MLC-3 7/99 59M 03/203/803
