<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) LARGE CAP
GROWTH FUND
SEMIANNUAL REPORT o MAY 31, 2000
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MUTUAL FUND GIFT KITS (see page 30)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 24
Trustees and Officers ..................................................... 33
MFS ORIGINAL RESEARCH(R)
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
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
I'm sure you've noticed that whenever financial markets suffer a large
decline, as they did very dramatically this past spring, there's a flurry of
information on "how to deal with market volatility" -- both in the popular
press and from those of us in the investment business. Our own thinking on
this is that, first, for long-term investors volatility is not necessarily
something to be feared; occasional volatility may in fact be healthy for the
markets.
Second, our experience has been that when markets begin to fall, it's often
too late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market
volatility in stride, here are some points you may want to consider the next
time you talk with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with very
high stock prices, relative to their earnings, or with business concepts that
looked great in the euphoria of a booming market but in the end appeared to have
no fundamental backing. It has always been our view that one of the best
protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask how
they fared in previous periods of volatility, as well as in the good times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over
nearly all long-term periods -- five, 10, 20 years, and more -- stock and bond
returns, as represented by most common indices, have been positive and
have considerably outpaced inflation. Investing is the best way we know of to
make your money work for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading.
In our view, traders who buy securities with the intention of selling them at
a profit in a matter of hours, days, or weeks are gambling. We believe this
seldom turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy,
because only in retrospect do we know when that right time really was. Periods
of volatility are probably the worst times to make an investment decision.
Faced with turmoil in the markets, many investors have opted
to simply stay on the sidelines.
On the other hand, we think one of the best techniques for investing is
through automatic monthly or quarterly deductions from a checking or savings
account. This approach has at least three major benefits. First, you can
formulate a long-term plan -- how much to invest, how often, and
into which portfolios -- in a calm, rational manner, working with your
investment professional. Second, with this approach you invest regularly
without agonizing over the decision each time you buy shares. And, third, if
you invest equal amounts of money at regular intervals, you'll be taking
advantage of a strategy called dollar-cost averaging: by investing a fixed
amount while the share cost fluctuates, you end up with an average share cost
to you that is lower than the average share price over your investment
period.(1) If all this sounds familiar, it's probably because you're already
taking advantage of dollar-cost averaging by investing regularly for
retirement through a 401(k) or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or
value; United States or international; stocks or bonds. The problem with this
approach is that by the time a particular area is generally recognized as
"hot," you may have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in seven
out of 10 years.(2) For the decade, the MSCI EAFE's average annual performance
was 23%, compared to 18% for the S&P 500. Going into the 1990s, then, an
investor looking only at recent performance might have favored international
investments over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in seven out of 10 years,
with the S&P 500 returning an average of 18% annually for the
decade and the MSCI EAFE returning a 7% annual average. Looking ahead,
however, we are optimistic about international markets because we feel that
many of the same forces that propelled the current U.S. economic boom --
deregulation, restructuring, and increased adoption of technology -- have
taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We
would suggest that one way to potentially profit from swings in the market --
to potentially be invested in various asset classes before the market shifts
in their favor -- is with a diversified portfolio covering several asset
classes.
If you haven't already done so, we encourage you to discuss these thoughts
with your investment professional and factor them into your long-range
financial planning. Hopefully, the next time the markets appear to be going
wild, you'll feel confident enough in your plan to view periods of volatility
as a time of potential opportunity -- or perhaps just a time to sit back and
do nothing.
As always, we appreciate your confidence in MFS 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 15, 2000
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(1) For a more complete explanation of dollar-cost averaging and the math
involved, see "ABCs of Investing" in the Investor Education section of our
Web site (www.mfs.com).
(2) Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89, '90s --
12/31/89- 12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization- weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
A prospectus containing more complete information on any MFS product, including
all charges and expenses, can be obtained from your investment professional.
Please read it carefully before you invest or send money. Investments in mutual
funds will fluctuate and may be worth more or less upon redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of John E. Lathrop]
John E. Lathrop
For the six months ended May 31, 2000, Class A shares of the fund provided a
total return of 14.34%, Class B shares 13.93%, and Class I shares 14.62%.
These returns, which include the reinvestment of any distributions but exclude
the effects of any sales charges, compare to a 2.88% return over the same
period for the fund's benchmark, the Standard & Poor's 500 Composite Index
(the S&P 500). The S&P 500 is a popular, unmanaged index of common stock total
return performance. During the same period, the average large-cap growth fund
tracked by Lipper Inc., an independent firm that reports mutual fund
performance, returned 7.40%.
Q. DURING A PERIOD OF DRAMATIC MARKET VOLATILITY, INCLUDING A SERIOUS CORRECTION
IN MARCH AND APRIL, THE PORTFOLIO OUTPERFORMED BOTH ITS BENCHMARK AND A
MAJORITY OF ITS PEERS. HOW DID YOU ACCOMPLISH THAT?
A. We think our outperformance is really a validation of the company-by-
company, bottom-up approach used by our research analysts. Their research
led us to become concerned about the high valuations of some technology
stocks in late 1999 and early 2000. We scaled back some of our more
expensive technology holdings because we felt their valuations no longer
made sense relative to company fundamentals. So one factor in our
outperformance was selling these highly valued stocks before the
correction, during which many of their prices tumbled. We think this
bottom-up focus on the fundamentals of each individual stock is a more
effective strategy than trying to make top-down predictions about the
direction of the overall market.
Q. WHERE DID YOU INVEST THE MONEY YOU TOOK OUT OF COMPANIES YOU FELT WERE TOO
HIGHLY VALUED?
A. We shifted money into companies, particularly in the business services and
pharmaceutical areas, whose valuations we believed offered bargains not yet
recognized by investors. The subsequent performance of some of these stocks
was a second factor in our outperformance during a period of market
volatility.
Business services was an area that suffered temporarily from the Year-2000
(Y2K) issue. From mid-1999 through about the first quarter of 2000, revenue
growth slowed dramatically because clients were reluctant to install new
services on their companies' computers. We felt the market excessively hurt
some of these stocks due to what was ultimately a short-term situation. When
we met with the managers and potential clients of these companies, it became
apparent to us that business was likely to reignite, beginning in the second
quarter of this year. In fact, that has already begun to play out. Our
research gave us the confidence that business would improve, and we bought
these stocks before the rest of the market seemed to pick up on their
positive fundamentals. Holdings in this area include BISYS Group, a
technology- outsourcing firm serving the financial services industry, and
Fiserv, a provider of information-management technology to banks and other
financial institutions.
In the pharmaceutical area, stock valuations seemed to be depressed by a
general belief that most companies had poor product portfolios, with the
patent protections expiring for many of their key products and not enough new
products in the pipeline to compensate for that. In addition, there was the
perceived threat that the government would begin regulating drug
reimbursement rates.
But our research indicated that much of the talk about regulation was
election-year rhetoric that would not seriously affect drug companies in the
long term. And as our analysts focused on individual companies, we noticed
that some less-prominent firms like American Home Products and Pharmacia had
expanding product portfolios and stocks that we believed were cheap relative
to their improving situations. During and after the March/April correction,
many investors sold off technology stocks and came back to many of the
pharmaceutical and business services stocks we had already moved into,
causing their prices to appreciate.
Q. THE STRATEGIES YOU JUST DESCRIBED ARE SOMEWHAT DEFENSIVE. HOW IS THE
PORTFOLIO POSITIONED FOR LONG-TERM GROWTH?
A. Yes, the shifts we just talked about are in part a response to relatively
short-term market conditions. The key long-term growth theme in the portfolio
is what we perceive as a global shift in technological innovation, from a
personal computer (PC)-centered model to a communications-centered model. Two
factors that have driven this are the development of the Internet as a
low-cost, shared global communications network and the development of new
devices for accessing that network, such as wireless handsets and personal
digital assistants. We believe we are in the early stages of a huge
proliferation of both the number of users of that network and the number and
variety of applications.
What we feel this means for businesses is that the most advanced forms of
communication are available to any client or vendor with Internet access, and
the cost of communicating is going down dramatically. A major health insurer,
for instance, recently announced plans to move claims processing and most
subscriber communications from paper-based forms to the Internet. From our
research, we found that they believe this will eventually cut in half their
cost of moving paper through their system -- and that paper-handling cost is
estimated to represent about 25% of all U.S. health-care spending.
Many of the portfolio's largest holdings are in companies that we believe are
recognizing this communications trend and taking advantage of it. Intel is a
PC-centric innovator that we believe is changing its stripes. Much of its new
chip design is targeted at servers, which are a big portion of the Internet
backbone, and last year it acquired Level One Communications, a
telecommunications firm. According to our research, Corning and Nortel
Networks have been and will continue to be big benefactors of a worldwide
shift from copper wire to fiber-optic cable as the transmission medium of the
Internet. Corning has a dominant market share in cable and other optical
components, and Nortel is a leader in optical systems that increase network
speed. EMC Corp., a manufacturer of storage hardware and software, is a
company that we believe will benefit from the Internet's mushrooming need for
storage, as sites attempt to store and share data about their products and
their users.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. Over the past year we have seen a resurgence in the small-cap arena, and
certainly there will always be periods when small caps or mid caps as a group
outperform large caps. But because we use a stock-by-stock, bottom-up
approach, we think we may always be able to find growth opportunities for
investors in the large-cap universe. We certainly believe that is currently
the case. Although the mega-cap end of the large-cap spectrum may be somewhat
highly valued, we expect to still find strong growth prospects below those
largest 20 or so companies. In fact, the correction this past spring offered
us opportunities to buy back into some companies we had sold earlier when we
thought they had become too highly valued.
/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.
<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 ORIGINAL
RESEARCH(R), A GLOBAL, COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your investment professional, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS TO PROVIDE GROWTH OF CAPITAL.
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: $1.1 BILLION NET ASSETS AS OF MAY 31, 2000
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PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for
the applicable time periods. Investment results reflect the percentage change
in net asset value, including reinvestment of dividends. (See Notes
to Performance Summary.)
<TABLE>
TOTAL RATES OF RETURN THROUGH MAY 31, 2000
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge +14.34% +31.00% +106.40% +216.34% +422.36%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +31.00% + 27.32% + 25.90% + 17.98%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Including
Sales Charge -- +23.47% + 24.83% + 24.42% + 17.28%
-----------------------------------------------------------------------------------------------------------
CLASS B
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding
Sales Charge +13.93% +29.97% +101.87% +204.18% +393.58%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +29.97% + 26.38% + 24.92% + 17.31%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Including
Sales Charge -- +25.97% + 25.75% + 24.75% + 17.31%
-----------------------------------------------------------------------------------------------------------
CLASS I
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
Cumulative Total Return Excluding
Sales Charge +14.62% +31.47% +108.57% +215.26% +411.56%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +31.47% + 27.77% + 25.82% + 17.73%
-----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class I shares have no sales charge and are only available to certain
institutional investors.
Class A and I share performance include the performance of the fund's Class B
shares for the periods prior to their inception (blended performance). Class A
blended performance has been adjusted to take into account the initial sales
charge applicable to Class A shares rather than the CDSC applicable to Class B
shares. Class I blended performance has been adjusted to account for the fact
that Class I shares have no sales charge. These blended performance figures
have not been adjusted to take into account differences in class-specific
operating expenses. Because operating expenses for Class A and I shares are
lower than those of Class B shares, the blended Class A and I share
performance is lower than it would have been had Class A and I shares been
offered for the entire period.
All performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE
RECENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF MAY 31, 2000
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 36.5%
UTILITIES & COMMUNICATIONS 14.7%
SPECIAL PRODUCTS & SERVICES 11.2%
FINANCIAL SERVICES 8.7%
LEISURE 7.6%
TOP 10 STOCK HOLDINGS
TYCO INTERNATIONAL LTD. 2.8% NORTEL NETWORKS CORP. 1.9%
Security systems, packaging, and electronic- Designer and developer of data
equipment conglomerate and telephony networks
CISCO SYSTEMS, INC. 2.7% SPRINT CORP. 1.7%
Computer network developer Long-distance telephone company
CORNING, INC. 2.7% EMC CORP. 1.6%
Materials and equipment supplier to Provider of electronic data
communications industries storage solutions
PHARMACIA CORP. 2.2% ANALOG DEVICES, INC. 1.6%
Pharmaceutical, health care, and agricultural Semiconductor manufacturer
products company
VIACOM, INC. 1.5%
INTEL CORP. 2.1% Entertainment, media, and
Semiconductor manufacturer publishing company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 2000
Stocks - 96.3%
<CAPTION>
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ISSUER SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 88.9%
Automotive - 0.5%
Harley-Davidson, Inc. 160,000 $ 5,960,000
------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 1.2%
Bank of New York Co., Inc. 69,800 $ 3,276,238
Chase Manhattan Corp. 59,000 4,406,562
Providian Financial Corp. 57,900 5,149,481
--------------
$ 12,832,281
------------------------------------------------------------------------------------------------------
Biotechnology - 2.1%
Pharmacia Corp. 442,265 $ 22,970,138
------------------------------------------------------------------------------------------------------
Business Machines - 2.0%
Affiliated Computer Services, Inc., "A"* 215,300 $ 7,333,656
Seagate Technology, Inc.* 35,400 2,053,200
Sun Microsystems, Inc.* 164,100 12,574,163
--------------
$ 21,961,019
------------------------------------------------------------------------------------------------------
Business Services - 7.2%
Automatic Data Processing, Inc. 247,800 $ 13,613,512
Bea Systems, Inc.* 99,400 3,590,825
BISYS Group, Inc.* 142,200 9,349,650
Computer Sciences Corp.* 162,900 15,628,219
DST Systems, Inc.* 117,900 8,849,869
First Data Corp. 239,100 13,404,544
Fiserv, Inc.* 297,600 13,912,800
S1 Corp.* 59,100 1,987,237
--------------
$ 80,336,656
------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.7%
Motorola, Inc. 169,190 $ 15,861,563
Sprint Corp. (PCS Group)* 254,400 14,119,200
--------------
$ 29,980,763
------------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 0.9%
Dell Computer Corp.* 229,900 $ 9,914,438
------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 1.3%
Microsoft Corp.* 224,500 $ 14,045,281
------------------------------------------------------------------------------------------------------
Computer Software - Services - 1.5%
EMC Corp.* 145,700 $ 16,946,731
------------------------------------------------------------------------------------------------------
Computer Software - Systems - 6.5%
BMC Software, Inc.* 252,800 $ 11,123,200
Cadence Design Systems, Inc.* 260,200 4,163,200
Computer Associates International, Inc. 240,600 12,390,900
Comverse Technology, Inc.* 46,200 4,221,525
Digex, Inc.* 61,300 2,589,925
I2 Technologies, Inc.* 27,900 2,967,863
MMC Networks, Inc.* 53,000 1,729,125
Oracle Corp.* 217,900 15,661,562
Rational Software Corp.* 84,400 6,187,575
Siebel Systems, Inc.* 56,400 6,598,800
VERITAS Software Corp.* 41,075 4,785,237
--------------
$ 72,418,912
------------------------------------------------------------------------------------------------------
Conglomerates - 2.7%
Tyco International Ltd. 640,100 $ 30,124,706
------------------------------------------------------------------------------------------------------
Electrical Equipment - 1.2%
General Electric Co. 261,900 $ 13,782,488
------------------------------------------------------------------------------------------------------
Electronics - 11.4%
Analog Devices, Inc.* 219,300 $ 16,886,100
Applied Materials, Inc.* 80,000 6,680,000
Applied Micro Circuits Corp.* 21,800 2,163,650
Atmel Corp.* 264,200 10,089,138
Fairchild Semiconductor International Co.* 153,700 6,916,500
Intel Corp. 183,000 22,817,812
Lam Research Corp.* 129,700 4,166,613
LSI Logic Corp.* 246,300 12,976,931
Micron Technology, Inc.* 195,000 13,637,812
National Semiconductor Corp.* 208,400 11,201,500
Novellus Systems, Inc.* 130,100 6,269,194
Teradyne, Inc.* 140,000 12,040,000
Vitesse Semiconductor Corp.* 8,400 425,250
--------------
$ 126,270,500
------------------------------------------------------------------------------------------------------
Energy - 0.7%
Dynegy, Inc. 98,300 $ 7,581,388
------------------------------------------------------------------------------------------------------
Entertainment - 4.4%
Emmis Broadcasting Corp., "A"* 54,600 $ 1,863,225
Entercom Communications Corp.* 68,000 3,094,000
Infinity Broadcasting Corp., "A"* 379,400 11,998,525
Univision Communications, Inc., "A"* 110,000 11,330,000
USA Networks, Inc.* 248,600 4,707,862
Viacom, Inc., "B"* 257,904 15,990,048
--------------
$ 48,983,660
------------------------------------------------------------------------------------------------------
Financial Institutions - 4.3%
Associates First Capital Corp., "A" 454,900 $ 12,481,319
Citigroup, Inc. 115,050 7,154,672
Federal National Mortgage Assn 89,000 5,351,125
Merrill Lynch & Co., Inc. 86,000 8,481,750
State Street Corp. 123,600 13,781,400
--------------
$ 47,250,266
------------------------------------------------------------------------------------------------------
Financial Services - 0.9%
AXA Financial, Inc. 248,000 $ 9,656,500
------------------------------------------------------------------------------------------------------
Insurance - 2.1%
American International Group, Inc. 103,125 $ 11,608,008
Hartford Financial Services Group, Inc. 80,300 4,747,738
Marsh & McLennan Cos., Inc. 60,600 6,669,787
--------------
$ 23,025,533
------------------------------------------------------------------------------------------------------
Machinery - 0.4%
W.W. Grainger, Inc. 122,300 $ 4,884,356
------------------------------------------------------------------------------------------------------
Medical and Health Products - 3.6%
Alza Corp.* 55,200 $ 2,804,850
American Home Products Corp. 195,000 10,505,625
Bausch & Lomb, Inc. 105,600 7,339,200
Bristol-Myers Squibb Co. 263,100 14,486,944
Warner-Lambert Co. 41,300 5,043,762
--------------
$ 40,180,381
------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.9%
Medtronic, Inc. 190,200 $ 9,819,075
------------------------------------------------------------------------------------------------------
Oil Services - 2.9%
Baker Hughes, Inc. 239,800 $ 8,692,750
Cooper Cameron Corp.* 105,100 7,330,725
Diamond Offshore Drilling, Inc. 86,500 3,535,687
Global Marine, Inc.* 103,400 2,927,512
Halliburton Co. 141,600 7,221,600
Noble Drilling Corp.* 49,500 2,147,063
--------------
$ 31,855,337
------------------------------------------------------------------------------------------------------
Oils - 1.5%
Conoco, Inc. 341,100 $ 9,721,350
Transocean Sedco Forex, Inc. 140,400 6,905,925
--------------
$ 16,627,275
------------------------------------------------------------------------------------------------------
Printing and Publishing - 0.9%
Scholastic Corp.* 60,000 $ 3,191,250
Tribune Co. 170,000 6,545,000
--------------
$ 9,736,250
------------------------------------------------------------------------------------------------------
Restaurants and Lodging - 0.3%
Wendy's International, Inc. 150,000 $ 2,934,375
------------------------------------------------------------------------------------------------------
Retail - 4.6%
BJ's Wholesale Club, Inc.* 200,000 $ 6,200,000
CVS Corp. 308,600 13,424,100
Lowe's Cos., Inc. 165,000 7,682,813
Office Depot, Inc.* 435,000 3,072,188
Tandy Corp. 195,000 8,275,312
Wal-Mart Stores, Inc. 220,500 12,706,312
--------------
$ 51,360,725
------------------------------------------------------------------------------------------------------
Supermarkets - 2.3%
Kroger Co.* 560,000 $ 11,130,000
Safeway, Inc.* 308,100 14,211,113
--------------
$ 25,341,113
------------------------------------------------------------------------------------------------------
Telecommunications - 15.5%
Allegiance Telecom, Inc.* 98,900 $ 5,229,337
Alltel Corp. 143,400 9,383,737
Amdocs Ltd.* 102,900 6,373,369
American Tower Corp., "A"* 141,100 5,238,337
AT&T Corp. 98,290 2,807,408
AT&T Corp., "A" 160,000 7,090,000
BroadWing, Inc.* 62,900 1,497,806
California Amplifier, Inc.* 90,700 2,052,088
Cisco Systems, Inc.* 513,100 29,214,631
Copper Mountain Networks, Inc.* 66,700 5,573,619
Corning, Inc. 148,400 28,706,125
GTE Corp. 122,800 7,767,100
Level 3 Communications, Inc.* 21,500 1,640,719
MGC Communications, Inc.* 33,400 1,369,400
Network Solutions, Inc.* 49,600 7,331,500
NEXTEL Communications, Inc.* 50,600 4,686,825
Nextlink Communications, Inc., "A"* 39,800 2,788,488
NTL, Inc.* 75,625 4,466,602
Sprint Corp.* 297,600 18,004,800
Time Warner Telecom, Inc.* 73,300 4,104,800
UnitedGlobalCom, Inc.* 47,100 2,260,800
Vignette Corp.* 132,200 3,643,762
Williams Communications Group, Inc.* 296,275 10,869,589
--------------
$ 172,100,842
------------------------------------------------------------------------------------------------------
Telecommunications and Cable - 0.9%
Comcast Corp., "A"* 275,600 $ 10,438,350
------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.2%
AES Corp.* 153,200 $ 13,366,700
------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.3%
Williams Cos., Inc. 82,200 $ 3,416,438
------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 986,102,477
------------------------------------------------------------------------------------------------------
Foreign Stocks - 7.4%
Bermuda - 0.8%
FLAG Telecom Holdings Ltd. (Telecommunications)* 68,250 $ 968,297
Global Crossing Ltd. (Telecommunications)* 315,300 7,902,206
--------------
$ 8,870,503
------------------------------------------------------------------------------------------------------
Canada - 2.6%
AT&T Canada, Inc. (Telecommunications)* 110,900 $ 4,325,100
Nortel Networks Corp. (Telecommunications) 377,600 20,508,400
Telesystem International Wireless, Inc.
(Telecommunications)* 185,500 3,825,937
--------------
$ 28,659,437
------------------------------------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications) 414,000 $ 3,094,865
------------------------------------------------------------------------------------------------------
Israel - 0.3%
Check Point Software Technologies Ltd. (Computer
Software - Services)* 20,700 $ 3,889,013
------------------------------------------------------------------------------------------------------
Netherlands - 0.7%
Asm International N.V. (Electronics)* 80,880 $ 2,092,770
Versatel Telecommunications N.V
(Telecommunications)* 155,600 5,616,459
--------------
$ 7,709,229
------------------------------------------------------------------------------------------------------
South Korea - 0.3%
Samsung Electronics (Electronics) 11,900 $ 3,246,413
------------------------------------------------------------------------------------------------------
Spain - 0.1%
Jazztel, ADR (Telecommunications)* 15,440 $ 603,125
------------------------------------------------------------------------------------------------------
Sweden - 1.1%
Ericsson LM, ADR (Telecommunications) 434,400 $ 8,905,200
Tele1 Europe Holdings AB (Telecommunications)* 239,050 2,888,621
--------------
$ 11,793,821
------------------------------------------------------------------------------------------------------
United Kingdom - 1.2%
BP Amoco PLC, ADR (Oils) 80,600 $ 4,382,625
Cable & Wireless Communications PLC, ADR
(Telecommunications)* 336,800 5,619,457
Vodafone AirTouch PLC (Telecommunications)* 784,229 3,579,234
--------------
$ 13,581,316
------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 81,447,722
------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $799,849,739) $1,067,550,199
------------------------------------------------------------------------------------------------------
<PAGE>
Short-Term Obligations - 5.2%
------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
------------------------------------------------------------------------------------------------------
General Electric Capital Corp., due 6/01/00 $30,000 $ 30,000,000
General Motors Acceptance Corp., due 6/01/00 27,512 27,512,000
------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 57,512,000
------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $857,361,739) $1,125,062,199
Other Assets, Less Liabilities - (1.5)% (16,192,263)
------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,108,869,936
------------------------------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------------------
MAY 31, 2000
-------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $857,361,739) $1,125,062,199
Cash 675
Foreign currency, at value (identified cost, $41) 39
Net receivable for forward foreign currency exchange
contracts subject to master netting agreements 393,793
Receivable for investments sold 3,581,703
Receivable for Fund shares sold 1,081,168
Interest and dividends receivable 521,868
Other assets 9,549
--------------
Total assets $1,130,650,994
--------------
Liabilities:
Payable for investments purchased $ 12,279,027
Payable for Fund shares reacquired 9,289,350
Payable to affiliates -
Management fee 22,290
Shareholder servicing agent fee 2,059
Distribution and service fee 17,612
Accrued expenses and other liabilities 170,720
--------------
Total liabilities $ 21,781,058
--------------
Net assets $1,108,869,936
==============
Net assets consist of:
Paid-in capital $ 685,784,369
Unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies 268,095,724
Accumulated undistributed net realized gain on investments
and foreign currency transactions 160,966,297
Accumulated net investment loss (5,976,454)
--------------
Total $1,108,869,936
==============
Shares of beneficial interest outstanding 52,213,931
=========
Class A shares:
Net asset value per share
(net assets of $613,283,685 / 28,969,758 shares of
beneficial interest outstanding) $21.17
======
Offering price per share (100 / 94.25 of net asset value per share) $22.46
======
Class B shares:
Net asset value and offering price per share
(net assets of $495,586,137 / 23,244,168 shares of
beneficial interest outstanding) $21.32
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $114 / 5 shares of beneficial interest
outstanding) $21.27
======
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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
---------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2000
---------------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Income -
Dividends $ 2,064,113
Interest 821,497
Foreign taxes withheld (11,418)
------------
Total investment income $ 2,874,192
------------
Expenses -
Management fee $ 4,157,635
Trustees' compensation 15,320
Shareholder servicing agent fee 564,083
Distribution and service fee (Class A) 737,980
Distribution and service fee (Class B) 2,679,329
Administrative fee 75,130
Custodian fee 159,492
Printing 50,765
Postage 43,990
Auditing fees 16,192
Miscellaneous 205,431
------------
Total expenses $ 8,705,347
Fees paid indirectly (35,735)
------------
Net expenses $ 8,669,612
------------
Net investment loss $ (5,795,420)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $166,937,121
Foreign currency transactions 126,415
------------
Net realized gain on investments and foriegn currency transactions $167,063,536
------------
Change in unrealized appreciation (depreciation) -
Investments $(18,687,514)
Translation of assets and liabilities in foreign currencies 287,143
------------
Net unrealized loss on investments and foreign currency translation $(18,400,371)
------------
Net realized and unrealized gain on investments and foreign currency $148,663,165
------------
Increase in net assets from operations $142,867,745
============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
<CAPTION>
------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
(UNAUDITED)
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets:
From operations -
Net investment loss $ (5,795,420) $ (9,184,306)
Net realized gain on investments and foreign currency
transactions 167,063,536 113,681,015
Net unrealized gain (loss) on investments and foreign
currency translation (18,400,371) 133,058,157
-------------- ------------
Increase in net assets from operations $ 142,867,745 $237,554,866
-------------- ------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (47,795,748) $(36,547,129)
From net realized gain on investments and foreign
currency transactions (Class B) (43,102,303) (44,583,664)
From net realized gain on investments and foreign
currency transactions (Class I) (9,898) (4,407)
-------------- ------------
Total distributions declared to shareholders $ (90,907,949) $(81,135,200)
-------------- ------------
Net increase in net assets from Fund share transactions $ 87,674,592 $ 54,028,845
-------------- ------------
Total increase in net assets $ 139,634,388 $210,448,511
Net assets:
At beginning of period 969,235,548 758,787,037
-------------- ------------
At end of period (including accumulated net investment
loss of $5,976,454 and $181,034, respectively) $1,108,869,936 $969,235,548
============== ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ----------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(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 $20.36 $17.29 $17.36 $18.02 $17.67 $13.49
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.07) $(0.12) $(0.06) $ 0.03 $ 0.08 $ 0.11
Net realized and unrealized
gain on investments and
foreign currency 2.82 5.12 2.94 3.41 2.96 4.91
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.75 $ 5.00 $ 2.88 $ 3.44 $ 3.04 $ 5.02
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.16) $(0.22)
From net realized gain on
investments and foreign
currency transactions (1.94) (1.93) (2.95) (4.10) (2.53) (0.62)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.94) $(1.93) $(2.95) $(4.10) $(2.69) $(0.84)
------ ------ ------ ------ ------ ------
Net asset value - end of period $21.17 $20.36 $17.29 $17.36 $18.02 $17.67
====== ====== ====== ====== ====== ======
Total return(+) 14.34%++ 32.12% 20.89% 24.67% 19.76% 39.51%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.19%+ 1.22% 1.24% 1.29% 1.31% 1.27%
Net investment income (loss) (0.67)%+ (0.64)% (0.35)% 0.22% 0.47% 0.67%
Portfolio turnover 51% 105% 217% 159% 112% 91%
Net assets at end of period (000 omitted) $613,284 $476,402 $323,354 $219,755 $150,261 $88,119
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ----------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(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 $20.41 $17.32 $17.34 $17.96 $17.56 $13.37
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.16) $(0.25) $(0.18) $(0.08) $(0.06) $ 0.01
Net realized and unrealized
gain on investments and
foreign currency 2.86 5.13 2.98 3.40 2.97 4.85
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.70 $ 4.88 $ 2.80 $ 3.32 $ 2.91 $ 4.86
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $ -- $(0.05)
From net realized gain on
investments and foreign
currency transactions (1.79) (1.79) (2.82) (3.94) (2.51) (0.62)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.79) $(1.79) $(2.82) $(3.94) $(2.51) $(0.67)
------ ------ ------ ------ ------ ------
Net asset value - end of period $21.32 $20.41 $17.32 $17.34 $17.96 $17.56
====== ====== ====== ====== ====== ======
Total return 13.93%++ 31.05% 20.08% 23.66% 18.84% 38.16%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.94%+ 1.97% 1.99% 2.05% 2.13% 2.14%
Net investment income (loss) (1.42)%+ (1.38)% (1.09)% (0.51)% (0.38)% 0.08%
Portfolio turnover 51% 105% 217% 159% 112% 91%
Net assets at end of period (000 omitted) $495,586 $492,677 $435,394 $432,327 $430,936 $428,445
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
Financial Highlights - continued
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
YEAR ENDED
NOVEMBER 30, PERIOD ENDED
SIX MONTHS ENDED ---------------------- NOVEMBER 30,
MAY 31, 2000 1999 1998 1997*
(UNAUDITED)
---------------------------------------------------------------------------------------------------------------------
CLASS I
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $20.44 $17.36 $17.41 $13.99
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.04) $(0.08) $(0.02) $ 0.12
Net realized and unrealized gain on investments and
foreign currency 2.85 5.13 2.96 3.30
------ ------ ------ ------
Total from investment operations $ 2.81 $ 5.05 $ 2.94 $ 3.42
------ ------ ------ ------
Less distributions declared to shareholders from net $
realized gain on investments and foreign currency
transactions $(1.98) $(1.97) $(2.99) --
------ ------ ------ ------
Net asset value - end of period $21.27 $20.44 $17.36 $17.41
====== ====== ====== ======
Total return 14.62%++ 32.35% 21.37% 24.45%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.94%+ 0.97% 0.98% 1.07%+
Net investment income (loss) (0.47)%+ (0.42)% (0.15)% 0.90%+
Portfolio turnover 51% 105% 217% 159%
Net assets at end of period (000 omitted) $ -- +++ $157 $39 $3
* For the period from the inception of Class I, January 2, 1997, through November 30, 1997.
+ Annualized.
++ Not annualized.
+++ Class I net assets were less than $500.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain 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. The Fund
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. 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 in good faith, at fair value, by the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the Fund to certain qualified
institutions (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.
On loans collateralized by U.S. Treasury securities, a fee is received from
the Borrower, and is allocated between the Fund and the lending agent. 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.
At May 31, 2000, the value of securities loaned was $15,358,063. These loans
were collateralized by U.S. Treasury securities of $16,288,200.
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 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 total 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 net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits, which results 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 daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates
are generally due to differences in separate class expenses. Class B shares
will convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual
rates:
First $1 billion of average net assets 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 who 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 $6,259
for the six months ended May 31, 2000.
Administrator - The Fund has an administrative service 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 incurs an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0050%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$91,477 for the six months ended May 31, 2000, as its portion of the sales
charge on sales of Class A shares of the Fund. The Trustees have adopted a
distribution plan for Class A 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 a date as the Trustees of
the Trust may determine. MFD retains the service fee for accounts not
attributable to a securities dealer, who amounted to $601,335 for the six
months ended May 31, 2000. Fees incurred under the distribution plan during
the six months ended May 31, 2000, 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 $485,044 for Class B shares, for the six
months ended May 31, 2000. Fees incurred under the distribution plan during the
six months ended May 31, 2000, 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 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, 2000, were
$955 and $151,067 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 annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities $ 5,470,207 $ --
------------ ------------
Investments (non-U.S. government securities) $554,980,458 $615,915,268
------------ ------------
</TABLE>
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
<TABLE>
<S> <C>
Aggregate cost $857,361,739
------------
Gross unrealized appreciation $315,975,525
Gross unrealized depreciation (48,275,065)
------------
Net unrealized appreciation $267,700,460
============
</TABLE>
(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>
Class A Shares
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 42,121,598 $896,575,848 50,730,843 $925,922,183
Shares issued to shareholders in
reinvestment of distributions 2,257,423 44,028,777 2,139,714 33,944,218
Shares reacquired (38,810,679) (830,298,046) (48,167,927) (880,138,211)
----------- ------------ ----------- ------------
Net increase 5,568,342 $110,306,579 4,702,630 $ 79,728,190
=========== ============ =========== ============
Class B Shares
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
Shares sold 3,852,328 $ 83,787,006 9,069,524 $165,735,120
Shares issued to shareholders in
reinvestment of distributions 2,016,000 39,737,280 2,635,382 42,192,558
Shares reacquired (6,759,975) (146,000,301) (12,712,811) (233,725,735)
----------- ------------ ----------- ------------
Net decrease (891,647) $(22,476,015) (1,007,905) $(25,798,057)
=========== ============ =========== ============
Class I Shares
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
Shares sold 753 $ 15,551 7,800 $ 143,422
Shares issued to shareholders in
reinvestment of distributions (247) 9,898 277 4,407
Shares reacquired (8,189) (181,421) (2,626) (49,117)
----------- ------------ ----------- ------------
Net increase (decrease) (7,683) $ (155,972) 5,451 $ 98,712
=========== ============ =========== ============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each 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 period
ended May 31, 2000, was $3,544. 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 Exchange Contracts - At May 31, 2000, forward foreign
currency purchases and sales under master netting agreements excluded above
amounted to a net receivable of $393,793 with CS First Boston Corporation. At
May 31, 2000, 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 ASSISTANT TREASURERS
Richard B. Bailey - Private Investor; Mark E. Bradley*
Former Chairman and Director (until 1991), Ellen Moynihan*
MFS Investment Management(R) James O. Yost*
Marshall N. Cohan - Private Investor SECRETARY
Stephen E. Cavan*
Lawrence H. Cohn, M.D. - Chief of Cardiac
Surgery, Brigham and Women's Hospital; ASSISTANT SECRETARY
Professor of Surgery, Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE - Chief CUSTODIAN
Executive Officer, Edmund Gibbons Ltd.; State Street Bank and Trust Company
Chairman, Colonial Insurance Company, Ltd.
INVESTOR INFORMATION
Abby M. O'Neill - Private Investor For information on MFS mutual funds, call your
investment professional or, for an information
Walter E. Robb, III - President and Treasurer, kit, call toll free: 1-800-637-2929 any
Benchmark Advisors, Inc. (corporate financial business day from 9 a.m. to 5 p.m. Eastern time
consultants); President, Benchmark Consulting (or leave a message anytime).
Group, Inc. (office services)
INVESTOR SERVICE
Arnold D. Scott* - Senior Executive MFS Service Center, Inc.
Vice President, Director, and Secretary, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman and Chief For general information, call toll free:
Executive Officer, MFS Investment Management 1-800-225-2606 any business day from 8 a.m. to
8 p.m. Eastern time.
J. Dale Sherratt - President, Insight
Resources, Inc. (acquisition planning For service to speech- or hearing-impaired,
specialists) call toll free: 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time. (To use
Ward Smith - Former Chairman (until 1994), this service, your phone must be equipped with
NACCO Industries (holding company) a Telecommunications Device for the Deaf.)
INVESTMENT ADVISER For share prices, account balances, exchanges,
Massachusetts Financial Services Company or stock and bond outlooks, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255) anytime from a
Boston, MA 02116-3741 touch-tone telephone.
DISTRIBUTOR WORLD WIDE WEB
MFS Fund Distributors, Inc. www.mfs.com
500 Boylston Street
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
John E. Lathrop*
TREASURER
W. Thomas London*
+Independent Trustee
*MFS Investment Management
</TABLE>
<PAGE>
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)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MLC-3 7/00 85.9M 83/283/383/883
