<PAGE>
MFS GROWTH OPPORTUNITIES FUND
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
February 26, 1996
VIA EDGAR
- ---------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS GROWTH OPPORTUNITIES FUND (FILE NO. 811-2032
------------------------------------------------------
Ladies and Gentlemen:
Pursuant to the requirements of Section 30(b) of the Investment Company
Act of 1940 and Rule 30b2-1 thereunder, we hereby file a copy of the Annual
Report to Shareholders dated December 31, 1995 of MFS Growth Opportunities Fund.
Very truly yours,
LORRAINE K. GRIP
Lorraine K. Grip
Editorial Project Manager
/lkg
<PAGE>
[MFS LOGO] ANNUAL REPORT FOR
YEAR ENDED
DECEMBER 31, 1995
MFS [Registration Mark] GROWTH OPPORTUNITIES FUND
Front Cover
A photo of computer disks.
<PAGE>
MFS [Registration Mark] GROWTH OPPORTUNITIES FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard University Graduate School of
Business Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management Corp. (investment advisers)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Paul M. Mcmahon*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
AUDITORS
Deloitte & Touche LLP
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll-free: 1-800-637-4458 anytime
from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free: 1-800-225-2606 any business day from 8
a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.)
- --------------------------------------------------------------------------------
TOP-RATED SERVICE
[DALBAR LOGO]
For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The firm
achieved a 3.49 overall score - on a scale of 1 to 4 - in the 1995 survey. A
total of 71 firms responded, offering input on the quality of service they
receive from 36 mutual fund companies nationwide. The survey contained questions
about service quality in 17 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm."
- --------------------------------------------------------------------------------
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
During the fiscal year ended December 31, 1995, the total return for Class A
shares of the Fund was +34.49%, while the total return for Class B shares was
+33.20%. Both of these figures assume the reinvestment of distributions but
exclude the effects of any sales charges. The Standard & Poor's 500 Composite
Index (the S&P 500), a popular, unmanaged index of common stock performance, had
a return of +37.53% over the same period. A discussion of some of the factors
which impacted the Fund's performance relative to the S&P 500 is included in the
Portfolio Performance and Strategy section of this letter.
Economic Outlook
Moderate but sustainable growth was the hallmark of the economic expansion's
fifth year. While initial estimates showed the U.S. economy growing at an annual
rate of 4.2% in the third quarter, this surprisingly strong growth was mainly
driven by a pickup in consumer spending and an increase in business and
government outlays. Although this rate of growth was impressive, it is not
expected to continue into 1996. Recent retail sales have been disappointing, in
part because of rising levels of consumer debt. An extended period of lower
mortgage rates seems to have relieved much of the pent-up dema nd for housing.
Growth is not expected to get much help from the manufacturing sector, either,
as order flows from manufacturers have moderated. Export activity, meanwhile, is
also expected to remain modest as continued weakness abroad limits demand for
many U.S. goods. However, the Federal Reserve Board's consistent and, so far,
successful efforts to fight inflation seem to be giving consumers and businesses
enough longer-term confidence to help maintain modest growth in real (adjusted
for inflation) gross domestic product into 1996.
Stock Market
After some volatility late in the third quarter, the stock market continued to
strengthen. Although many companies reported solid third-quarter results, there
was some weakness in the earnings of retail, financial services and even some
technology companies. However, a slowdown in earnings may be a positive
development if it is an indication that the economy is not overheating and
inflation is under control. While we see a deceleration of corporate earnings as
the inevitable consequence of traditional business cycles, we remain encouraged
by the high absolute level of profitability among U.S. companies. Also, many
companies' increasing emphasis on cost containment and their growing use of
technology have helped keep them highly competitive and reasonably profitable.
Looking ahead, we believe that a stabilizing interest rate environment, coupled
with reasonable earnings reports, could justify current market valuations.
1
<PAGE>
LETTER TO SHAREHOLDERS - continued
Portfolio Performance and Strategy
The Fund's performance benefited from a significant weighting in the technology
sector, which had strong performance from stocks related to the personal
computer business such as Intel and Microsoft. Stocks of lodging companies such
as HFS, Inc., a franchiser in the lodging and real estate brokerage business,
also staged a strong rally during the year. Health care holdings such as United
Healthcare helped performance in the second half as investors' confidence in the
earnings outlooks for these companies improved. The Fund's performance was
negatively impacted by underweightings in consumer staples such as food and
household products and in financial services. These sectors outperformed the S&P
500 during the second half of the year as investors became more concerned about
a moderation in economic growth.
The Fund continues to seek companies possessing five key factors: earnings
momentum, reasonable valuations, good management, a strong balance sheet, and
positive secular trends. Given that current price/earnings multiples appear to
be reasonable, the focus now is on companies with earnings momentum favorable to
achieving further stock price appreciation.
Our largest concentration remains in the technology area, which is seeing
strong spending by corporations focusing on ways to increase productivity. Other
large weightings are in entertainment and medical services, as well as a number
of agricultural-equipment holdings that we believe will benefit from a
continuing strong farm economy over the coming year. The Fund's foreign
weighting remains low, but it is likely to increase as growth accelerates
overseas during the coming year.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Signature] [Signature]
A. Keith Brodkin Paul M. McMahon
Chairman and President Portfolio Manager
January 12, 1996
2
<PAGE>
PORTFOLIO MANAGER PROFILE
Paul McMahon joined the MFS Research Department in 1981 as an industry
specialist. A graduate of Holy Cross College and the Amos Tuck School of
Business Administration of Dartmouth College, he was named Investment Officer in
1983; Assistant Vice President - Investments in 1984; Vice President -
Investments in 1986; and Senior Vice President and Portfolio Manager of MFS
Growth Opportunities Fund.
OBJECTIVE AND POLICIES
The Fund's investment objective is to seek growth of capital. Dividend income,
if any, is incidental to the Fund's objective. Generally, emphasis is placed
upon companies believed to possess above-average growth opportunities. The Fund
invests primarily in common stocks, but may seek appreciation in other types of
securities, including fixed-income securities, convertible bonds, convertible
preferred stocks and warrants.
TAX FORM SUMMARY
In January 1996, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
DIVIDENDS RECEIVED DEDUCTION
For the year ended December 31, 1995, the amount of distributions from income
eligible for the 70% dividends-received deduction for corporations came to
12.37%.
3
<PAGE>
PERFORMANCE
The information below and on the following page illustrates the historical
performance of MFSGrowth Opportunities Fund Class A shares in comparison to
various market indicators. Fund results in the graph reflect the deduction of
the 5.75% maximum sales charge; benchmark comparisons are unmanaged and do not
reflect any fees or expenses. You cannot invest in an index. All results reflect
the reinvestment of all dividends and capital gains.
Please note that effective September 7, 1993, Class B shares were offered.
Information on Class B share performance appears on the next page.
In the table on the following page, we have included the average annual total
returns of all growth funds (including the Fund) tracked by Lipper Analytical
Services, Inc. (an independent firm which rates mutual fund performance) for the
applicable time periods. Because these returns do not reflect any applicable
sales charges, we have also included the Fund's results at net asset value (no
sales charge) for comparison.
All results are historical and, therefore, are not an indication of future
results. The investment return and principal value of an investment in a mutual
fund will vary with changes in market conditions, and shares, when redeemed, may
be worth more or less than their original cost.
All Class A results reflect the applicable expense subsidy which is explained in
the Notes to Financial Statements. Had the subsidy not been in effect, the
results would have been less favorable.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-Year Period Ended December 31, 1995)
[Line graph representing the growth of a $10,000 investment for the 5-year
period ended December 31, 1995. The graph is scaled from $5,000 to $30,000 in
$5,000 to $30,000 in $5,000 segments. The years are marked from 1991 to 1995.
There are three lines drawn to scale. One is a solid line representing Growth
Opportunities Fund (Class A), a second line of short dashes represents the S&P
500, and the third line of long dashes represents the Consumer Price Index.]
Growth Opportunities (Class A) $18,607
S&P 500 $21,519
Consumer Price Index $11,472
The performance of other classes will be greater than or less than the line
shown, based on the differences in loads and fees paid by shareholders investing
in the different classes.
4
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-Year Period Ended December 31, 1995)
[Line graph representing the growth of a $10,000 investment for the 10-year
period ended December 31, 1995. The graph is scaled from $10,000 to $50,000 in
$10,000 segments. The years are marked from 1986 to 1995. There are three lines
drawn to scale. One is a solid line representing Growth Opportunities Fund
(Class A), a second line of short dashes represents the S&P 500, and a third
line of long dashes represents the Consumer Price Index.]
Growth Opportunities (Class A) $27,403
S&P 500 $39,955
Consumer Price Index $14,045
AVERAGE ANNUAL TOTAL RETURNS
1 Year 3 Years 5 Years 10 Years
================================================================================
MFS Growth Opportunities Fund (Class A)
including 5.75% sales charge +26.76% +12.18% +13.23% +10.61%
- --------------------------------------------------------------------------------
MFS Growth Opportunities Fund (Class A)
at net asset value +34.49% +14.41% +14.58% +11.26%
- --------------------------------------------------------------------------------
MFS Growth Opportunities Fund (Class B)
with CDSC+ +29.20% -- -- +11.04%*
- --------------------------------------------------------------------------------
MFS Growth Opportunities Fund (Class B)
without CDSC +33.20% -- -- +12.10%*
- --------------------------------------------------------------------------------
Average growth fund** +30.79% +12.45% +16.01% +12.95%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index** +37.53% +15.32% +16.56% +14.86%
- --------------------------------------------------------------------------------
Consumer Price Index[ss]** + 2.54% + 2.65% + 2.79% + 3.46%
- --------------------------------------------------------------------------------
+ These returns reflect the current Class B contingent deferred sales charge
(CDSC) of 4% for the 1-year period and 3% for the period commencing
September 7, 1993.
* For the period from the commencement of offering of Class B shares,
September 7, 1993 to December 31, 1995.
[ss] The Consumer Price Index is a popular measure of change in prices.
** Source: Lipper Analytical Services, Inc.
5
<PAGE>
PORTFOLIO OF INVESTMENTS - December 31, 1995
Common Stocks - 98.7%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - 93.9%
Aerospace - 3.2%
General Dynamic Corp. 58,000 $ 3,429,250
Lockheed Martin Corp. 103,500 8,176,500
McDonnell Douglas Corp. 129,800 11,941,600
------------
$ 23,547,350
- --------------------------------------------------------------------------------
Agricultural Products - 4.1%
AGCO Corp. 254,600 $ 12,984,600
Case Corp. 49,500 6,839,625
Deere & Co., Inc. 286,200 10,088,550
------------
$ 29,912,775
- --------------------------------------------------------------------------------
Airlines - 1.6%
Southwest Airlines Co. 498,600 $ 11,592,450
- --------------------------------------------------------------------------------
Apparel and Textiles - 1.0%
Nike, Inc., B 104,000 $ 7,241,000
- --------------------------------------------------------------------------------
Automotive - 3.4%
APS Holding Corp.,"A"* 251,600 $ 5,661,000
General Motors Corp. 169,500 8,962,312
Harley-Davidson, Inc. 256,300 7,368,625
Varity Corp.* 83,300 3,092,512
------------
$ 25,084,449
- --------------------------------------------------------------------------------
Broadcasting - 0.6%
Infinity Broadcasting Corp.,"A"* 125,000 $ 4,656,250
- --------------------------------------------------------------------------------
Business Services - 3.9%
ADT Ltd.* 472,700 $ 7,090,500
ALCO Standard Corp. 182,200 8,312,875
Ceridian Corp.* 225,100 9,285,375
Corestaff, Inc.* 10,700 390,550
Policy Management Systems Corp.* 64,900 3,090,862
------------
$ 28,170,162
- --------------------------------------------------------------------------------
Cellular Phones - 0.4%
AirTouch Communications, Inc.* 108,500 $ 3,065,125
- --------------------------------------------------------------------------------
Chemicals - 0.7%
Geon Co. 220,700 $ 5,379,562
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 5.0%
Acclaim Entertainment, Inc.* 52,900 $ 654,637
Arbor Software Corp.* 2,200 103,950
Autodesk, Inc. 166,700 5,709,475
Electronic Arts, Inc.* 420,900 10,996,012
Microsoft Corp.* 198,500 17,418,375
Spectrum Holobyte Industries* 178,700 1,161,550
------------
$ 36,043,999
- --------------------------------------------------------------------------------
6
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Computer Software - Systems - 12.5%
Adobe Systems, Inc. 178,900 $ 11,091,800
BMC Software, Inc.* 342,500 14,641,875
Cadence Design Systems, Inc.* 340,650 14,307,300
Compaq Computer Corp.* 16,500 792,000
Computer Associates International, Inc. 197,400 11,227,125
DST Systems, Inc.* 120,400 3,431,400
General Motors Corp.,"E" 101,800 5,293,600
Micros System, Inc.* 143,600 7,072,300
Oracle Systems Corp.* 252,100 10,682,737
Sybase, Inc.* 340,700 12,265,200
System Software Associates, Inc. 23,100 502,425
------------
$ 91,307,762
- --------------------------------------------------------------------------------
Consumer Goods and Services - 7.3%
Kimberly-Clark Corp. 91,200 $ 7,546,800
Philip Morris Cos., Inc. 225,400 20,398,700
Service Corp. International 40,800 1,795,200
Tyco International Ltd. 653,700 23,288,063
------------
$ 53,028,763
- --------------------------------------------------------------------------------
Defense Electronics - 1.2%
Loral Corp. 237,100 $ 8,387,413
- --------------------------------------------------------------------------------
Electronics - 5.4%
Altera Corp* 18,000 $ 895,500
Analog Devices, Inc.* 108,100 3,824,038
ESS Technology, Inc.* 25,600 588,800
Intel Corp. 299,500 16,996,625
LSI Logic Corp.* 323,800 10,604,450
National Semiconductor Corp.* 107,800 2,398,550
Xilinx, Inc.* 128,500 3,919,250
------------
$ 39,227,213
- --------------------------------------------------------------------------------
Entertainment - 3.9%
Argosy Gaming Corp * 75,800 $ 577,975
Harrahs Entertainment, Inc.* 751,800 18,231,150
Mirage Resorts, Inc.* 186,700 6,441,150
National Gaming Corp.* 18,800 223,250
Sky City Ltd.* 135,000 2,798,064
------------
$ 28,271,589
- --------------------------------------------------------------------------------
Financial Institutions - 4.1%
Federal Home Loan Mortgage Corp. 151,000 $ 12,608,500
Financial Federal Corp.* 95,500 2,136,813
Finova Group, Inc. 102,700 4,955,275
Schwab (Charles) Corp. 511,600 10,295,950
------------
$ 29,996,538
- --------------------------------------------------------------------------------
Food and Beverage Products - 2.1%
General Mills, Inc. 126,100 $ 7,282,275
Universal Foods Corp. 198,800 7,976,850
------------
$ 15,259,125
- --------------------------------------------------------------------------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Insurance - 1.3%
Amerin Corp.* 115,200 $ 3,081,600
Lasalle Re Holdings Ltd.* 59,000 1,349,625
Prudential Reinsurance Holdings, Inc. 209,900 4,906,413
------------
$ 9,337,638
- --------------------------------------------------------------------------------
Machinery - 0.2%
IDEX Corp. 34,500 $ 1,405,875
- --------------------------------------------------------------------------------
Medical and Health Products - 1.6%
Johnson & Johnson 109,900 $ 9,410,188
Sofamor Danek Group, Inc.* 66,900 1,898,288
------------
$ 11,308,476
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 6.8%
Community Health Systems* 47,500 $ 1,692,187
Foundation Health Corp.* 146,000 6,278,000
Genesis Health Ventures, Inc.* 106,300 3,879,950
Health Care & Retirement Corp.* 120,300 4,210,500
Living Centers of America* 103,000 3,605,000
Manor Care, Inc. 210,000 7,350,000
Schein (Henry), Inc.* 6,200 182,900
United Healthcare Corp. 343,300 22,486,150
------------
$ 49,684,687
- --------------------------------------------------------------------------------
Metals and Minerals - 3.4%
Allegheny Ludlum Corp. 192,300 $ 3,557,550
J & L Specialty Steel, Inc. 155,600 2,917,500
Minerals Technologies, Inc. 78,400 2,861,600
Nucor Corp. 178,700 10,208,238
Phelps Dodge Corp. 85,500 5,322,375
------------
$ 24,867,263
- --------------------------------------------------------------------------------
Oils - 1.6%
Enron Oil & Gas Co. 89,000 $ 2,136,000
Mobil Corp. 78,500 8,792,000
Union Pacific Resources, Inc. 32,300 819,613
------------
$ 11,747,613
- --------------------------------------------------------------------------------
Photographic Products - 1.0%
Eastman Kodak Co. 110,200 $ 7,383,400
- --------------------------------------------------------------------------------
Railroad - 1.3%
Wisconsin Central Transportation Corp.* 138,900 $ 9,132,675
- --------------------------------------------------------------------------------
Restaurants and Lodging - 4.6%
Felcor Suite Hotels, Inc. 66,500 $ 1,845,375
HFS, Inc.* 182,600 14,927,550
Promus Hotel Corp.* 553,650 12,318,713
Renaissance Hotel Group N.V 170,800 4,355,400
------------
$ 33,447,038
- --------------------------------------------------------------------------------
8
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Stores - 5.7%
Circuit City Stores, Inc. 203,000 $ 5,607,875
Corporate Express, Inc.* 80,900 2,437,113
Duty Free International, Inc. 43,700 699,200
Federated Department Store, Inc.* 366,900 10,089,750
Intelligent Electronics, Inc. 403,800 2,422,800
Micro Warehouse, Inc.* 86,300 3,732,475
Office Depot, Inc.* 516,000 10,191,000
Officemax, Inc.* 282,300 6,316,463
------------
$ 41,496,676
- --------------------------------------------------------------------------------
Telecommunications - 5.8%
3Com Corp.* 197,678 $ 9,216,737
Cabletron Systems, Inc.* 113,800 9,217,800
Novell, Inc.* 413,000 5,885,250
Tel-Save Holdings, Inc.* 99,100 1,375,013
Tellabs, Inc.* 181,700 6,722,900
U.S. Robotics Corp.* 46,700 4,097,925
Worldcom, Inc.* 163,300 5,756,325
------------
$ 42,271,950
- --------------------------------------------------------------------------------
Utilities - Telephone - 0.2%
MCI Communications Corp. 46,700 $ 1,220,038
- --------------------------------------------------------------------------------
Total U.S. Common Stocks $683,474,854
- --------------------------------------------------------------------------------
Foreign Stocks - 4.8%
Canada - 0.3%
Canadian National Railway Co. (Railroad)* 13,800 $ 207,000
Potash Corp. of Saskatchewan, Inc.
(Precious Metals and Minerals) 24,800 1,757,700
------------
$ 1,964,700
- --------------------------------------------------------------------------------
Hong Kong - 0.5%
Peregrine Investment Holdings (Finance) 2,620,000 $ 3,388,516
- --------------------------------------------------------------------------------
Italy - 1.4%
Telecom Italia Mobile (Telecommunications) 1,855,800 $ 3,268,405
Telecom Italia Mobile, Saving Shares
(Telecommunications) 6,333,000 6,664,216
------------
$ 9,932,621
- --------------------------------------------------------------------------------
Sweden - 1.4%
ASTRA AB, "B" (Medical and Health Products) 244,600 $ 9,681,807
TV 4 AB (Broadcasting) 48,400 837,697
------------
$ 10,519,504
- --------------------------------------------------------------------------------
United Kingdom - 1.2%
PowerGen PLC, ADR (Utilities - Electric) 1,095,800 $ 3,759,718
Reuters Holdings PLC, ADR
(Printing and Publishing) 97,700 5,385,712
------------
$ 9,145,430
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 34,950,771
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $566,015,389) $718,425,625
- --------------------------------------------------------------------------------
9
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Convertible Bonds - 0.1%
================================================================================
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
Spectrum Holobyte, Inc., 6.5s, 2002## $ 870 $ 635,100
(Identified Cost, $870,000)
- --------------------------------------------------------------------------------
Short-Term Obligations - 1.7%
================================================================================
Federal Home Loan Mortgage, due 1/05/96 $ 7,870 $ 7,864,972
Federal Home Loan Mortgage, due 1/11/96 2,600 2,596,064
Ford Motor Credit Corp., due 1/02/96 2,055 2,054,658
Transamerica Corp., due 1/02/96 5 4,999
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 12,520,693
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $579,406,082) $731,581,418
Other Assets, Less Liabilities - (0.5)% (3,440,811)
================================================================================
Net Assets - 100.0% $728,140,607
- --------------------------------------------------------------------------------
* Non-income producing security.
## SEC-Rule 144A restriction.
See notes to financial statements
10
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
================================================================================
December 31, 1995
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $ 579,406,082) $731,581,418
Cash 3,079
Net receivable for forward foreign currency
exchange contracts sold 54,033
Receivable for Fund shares sold 3,179,742
Receivable for investments sold 1,738,262
Dividends and interest receivable 585,187
Other assets 8,163
------------
Total assets $737,149,884
------------
Liabilities:
Distributions payable $ 3,665,913
Payable for Fund shares reacquired 920,760
Payable for investments purchased 3,868,528
Payable to affiliates -
Management fee 22,302
Shareholder servicing agent fee 7,476
Distribution fee 251,883
Accrued expenses and other liabilities 272,415
------------
Total liabilities $ 9,009,277
------------
Net assets $728,140,607
============
Net assets consist of:
Paid-in capital $576,139,588
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 152,229,784
Accumulated distributions in excess of net realized
gain on investments and foreign currency transactions (173,143)
Distributions in excess of net investment income (55,622)
------------
Total $728,140,607
============
Shares of beneficial interest outstanding 60,983,939
============
Class A shares:
Net asset value and redemption price per share
(net assets of $721,467,110 / 60,418,127 shares of
beneficial interest outstanding) $11.94
======
Offering price per share (100/94.25) $12.67
======
Class B shares:
Net asset value, and offering price per share
(net assets of $6,673,497 / 565,812 shares of
beneficial interest outstanding) $11.79
======
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A and
Class B shares.
See notes to financial statements
11
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
================================================================================
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividend $ 6,557,079
Interest 603,745
Foreign taxes withheld (13,547)
------------
Total investment income $ 7,147,277
------------
Expenses -
Management fee $ 2,892,782
Trustees' compensation 54,184
Shareholder servicing agent fee (Class A) 951,427
Shareholder servicing agent fee (Class B) 12,189
Distribution and service fee (Class A) 1,684,980
Distribution and service fee (Class B) 55,403
Custodian fee 297,829
Postage 105,334
Printing 89,253
Auditing fees 43,150
Legal fees 7,982
Miscellaneous 340,920
------------
Total expenses $ 6,535,433
Fees paid indirectly (83,252)
Reduction of expenses by distributor (665,719)
------------
Net expenses $ 5,786,462
------------
Net investment income $ 1,360,815
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 94,960,904
Foreign currency transactions (1,207,070)
------------
Net realized gain on investments $ 93,753,834
------------
Change in unrealized appreciation (depreciation) -
Investments $101,758,940
Translation of assets and liabilities in
foreign currencies (1,181,943)
------------
Net unrealized gain on investments $100,603,997
------------
Net realized and unrealized gain
on investments and foreign currency $194,357,831
------------
Increase in net assets from operations $195,718,646
============
See notes to financial statements
12
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
=============================================================================================
Year Ended December 31, 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,360,815 $ 1,335,181
Net realized gain on investments and
foreign currency transactions 93,753,834 42,060,255
Net unrealized gain (loss) on investments and
foreign currency translation 100,603,997 (70,715,857)
------------ ------------
Increase (decrease) in net assets from operations $195,718,646 $(27,320,421)
------------ ------------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (724,008)
From net realized gain on investments and foreign
currency transactions (Class A) (90,832,129) (44,286,419)
From net realized gain on investments and foreign
currency transactions (Class B) (804,857) --
In excess of net investment income (Class A) -- (985,537)
In excess of net realized gain on investment and
foreign currency transactions -- (2,720,891)
------------ ------------
Total distributions declared to shareholders $(91,636,986) $(48,716,855)
------------ ------------
Fund share (principal) transactions -
Net proceeds from sale of shares $103,860,834 $ 30,868,624
Net asset value of shares issued to shareholders
in reinvestment of distributions 87,980,013 46,865,238
Cost of shares reacquired (160,208,262) (119,914,672)
------------ ------------
Increase (decrease) in net assets from
Fund share transactions $ 31,632,585 $(42,180,810)
------------ ------------
Total increase (decrease) in net assets $135,714,245 $(118,218,086)
Net assets:
At beginning of period 592,426,362 710,644,448
------------ ------------
At end of period (including accumulated distributions
in excess of net investment income of $55,622 and
$985,537, respectively) $728,140,607 $592,426,362
------------ ------------
</TABLE>
See notes to financial statements
13
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
====================================================================================================================================
Year Ended December 31, 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.17 $ 11.56 $ 11.17 $ 10.75 $ 9.97
-------- -------- -------- -------- --------
Income from investment operations# -
Net investment income [ss] $ 0.03 $ 0.02 $ 0.07 $ 0.15 $ 0.24
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions 3.46 (0.50) 1.73 0.67 1.94
-------- -------- -------- -------- --------
Total from investment operations $ 3.49 $ (0.48) $ 1.80 $ 0.82 $ 2.18
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ -- $ (0.01) $ (0.07) $ (0.14) $ (0.18)
In excess of net investment income -- (0.02) (0.02) -- --
From net realized loss on investments
and foreign currency transactions (1.72) (0.83) (1.32) (0.26) (1.22)
In excess of net realized loss on
investments and foreign currency
transactions -- (0.05) -- -- --
-------- -------- -------- -------- --------
Total distributions declared
to shareholders $ (1.72) $ (0.91) $ (1.41) $ (0.40) $ (1.40)
-------- -------- -------- -------- --------
Net asset value - end of period $ 11.94 $ 10.17 $ 11.56 $ 11.17 $ 10.75
-------- -------- -------- -------- --------
Total return++ 34.49% (4.15)% 16.19% (8.06)% 9.29%
Ratios (to average net assets)/Supplemental data [ss]:
Expenses## 0.87% 0.86% 0.84% 0.89% 0.88%
Net investment income 0.21% 0.21% 0.60% 1.40% 2.14%
Portfolio turnover 100% 78% 79% 102% 131%
Net assets at end of period (000 omitted) $721,467 $589,260 $709,839 $694,084 $739,791
<FN>
++ Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to March 1,
1991). If the charge had been included, the results would have been lower.
# Per share data for the period subsequent to December 31, 1992 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
[ss] The distributor did not impose a portion of its distribution fee for certain of the periods indicated. If this fee had been
incurred by the Fund, the net investment income per share and ratios would have been:
Net investment income $ 0.02 $ 0.01 $ 0.07 -- --
Ratios (to average net assets):
Expenses 0.97% 0.96% 0.87% -- --
Net investment income 0.11% 0.11% 0.56% -- --
</FN>
</TABLE>
See notes to financial statements
14
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Year Ended
Year ended December 31, March 31,
------------------------------------------------------
1990 1989 1988 1987* 1987
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.93 $ 10.96 $ 10.81 $ 13.41 $ 13.51
-------- -------- -------- -------- --------
Income from investment operations -
Net investment income $ 0.30 $ 0.36 $ 0.22 $ 0.11 $ 0.17
Net realized and unrealized gain on
investments and foreign
currency transactions (0.77) 2.74 0.76 (2.13) 1.20
-------- -------- -------- -------- --------
Total from investment operation $ (0.47) $ 3.10 $ 0.98 $ (2.02) $ 1.37
-------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.33) $ (0.36) $ (0.19) $ (0.11) $ (0.17)
From net realized loss on investments
and foreign currency transactions (0.16) (2.77) (0.64) (0.47) (1.30)
-------- -------- -------- -------- --------
Total distributions declared
to shareholders $ (0.49) $ (3.13) $ (0.83) $ (0.58) $ (1.47)
-------- -------- -------- -------- --------
Net asset value - end of period $ 9.97 $ 10.93 $ 10.96 $ 10.81 $ 13.41
-------- -------- -------- -------- --------
Total return ++ (4.57)% 28.23% 8.90% (20.45)% 11.57%
Ratios (to average net assets)/Supplemental data:
Expenses 0.80% 0.77% 0.86% 0.72% 0.71%
Net investment income 2.91% 2.79% 1.90% 1.08% 1.28%
Portfolio turnover 89% 83% 68% 40% 109%
Net assets at end of period (000 omitted) $687,847 $805,702 $767,924 $834,359 $1,090,764
<FN>
* For the nine months ended December 31, 1987.
+ Annualized.
++ Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to March 1, 1991).
If the charge had been included, the results would have been lower.
++ ++ Includes a per share distributions from paid-in capital of $0.0006.
</FN>
</TABLE>
See notes to financial statements
15
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Year Ended March 31, Year Ended December 31,
-------------------- ----------------------------------------
1986 1995 1994 1993**
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.77 $ 10.08 $ 11.53 $ 12.52
-------- -------- -------- --------
Income from investment operations# -
Net investment income (loss) $ 0.22 $ (0.09) $ (0.08) $ --
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions 3.63 3.42 (0.49) 0.36
-------- -------- -------- --------
Total from investment operations $ 3.85 $ 3.33 $ (0.57) $ 0.36
-------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.22) $ -- $ -- $ --
In excess of net investment income -- -- -- (0.03)
From net realized loss on investments
and foreign currency transactions (0.89) (1.62) (0.83) (1.32)
In excess of net realized gains on investments -- -- (0.05) --
-------- -------- -------- --------
Total distributions declared to
shareholders $ (1.11) $ (1.62) $ (0.88) $ (1.35)
-------- -------- -------- --------
Net asset value - end of period $ 13.51 $ 11.79 $ 10.08 $ 11.53
-------- -------- -------- --------
Total return 35.92% 33.20% (4.96)% 9.29%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.71% 1.81% 1.81% 1.33%
Net investment income (loss) 1.85% (0.75)% (0.70)% --
Portfolio turnover 117% 100% 78% 79%
Net assets at end of period (000 omitted) $989,980 $ 6,673 $ 3,166 $ 805
<FN>
** For the period from the commencement of offering of Class B shares, September 7, 1993 to December 31, 1993.
+ Annualized.
++ Total returns for Class A shares do not include the sales charge (except for reinvested dividends prior to March 1, 1991). If the
charge had been included, the results would have been lower.
# Per share data for the period subsequent to December 31, 1992 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
</FN>
</TABLE>
See notes to financial statements
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Growth Opportunities Fund (the Fund) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end managment investment company.
(2) Significant Accounting Policies
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value.
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.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar. The Fund will enter into
forward contracts for hedging purposes as well as for non-hedging purposes. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. It may also use contracts in a manner intended to protect foreign
currency-denominated securities from declines in value due to unfavorable
exchange rate movements. For non-hedging purposes, the Fund may enter into
contracts with the intent of changing the relative exposure of the Fund's
portfolio of securities to different currencies to take advantage of anticipated
changes. The forward foreign currency exchange contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
Dividend and interest payments received in additional securities are recorded on
the ex-dividend or ex-interest date in an amount equal to the value of the
security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
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. Foreign taxes
have been provided for on interest and dividend income earned on foreign
investments in accordance with the applicable country 's tax rates and to the
extent unrecoverable are recorded as a reduction of investment income.
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 a return of
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 accumulated net realized
gains. During the year ended December 31, 1995, $430,900 was reclassified from
accumulated undistributed net investment income to accumulated net realized gain
on investments, due to differences between book and tax accounting currency
transactions. This change had no effect on the net assets or net asset value per
share. At December 31, 1995, accumulated realized gain on investments and
foreign currency transactions under book accounting were different from tax
accounting due to temporary differences in accounting for foreign currency
transactions.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
Multiple Classes of Shares of Beneficial Interest - The Fund offers Class A and
Class B shares. The two classes of shares differ in their respective shareholder
servicing agent, distribution and service fees. All shareholders bear the common
expenses of the Fund pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.43% of average daily net assets.
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 of the 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 $15,314 for the year ended
December 31, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$54,989 for the year ended December 31, 1995, as its portion of the sales charge
on sales of Class A shares of the Fund. The Trustees have adopted a separate
distribution plan for Class A and Class B shares pursuant to Rule 12b-1 of the
Investment Company Act of 1940 as follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets attributable
to Class A shares, commissions to dealers and payments to MFD wholesalers for
sales at or above a certain dollar level, and other such distribution-related
expenses that are approved by the Fund. MFD retains the service fee for accounts
not attributable to a securities dealer which amounted to $528,444 for the year
ended December 31, 1995. MFD is not imposing the 0.10% distribution fee for an
indefinite period. Fees incurred under the distribution plan during the year
ended December 31, 1995 were 0.15% of average daily net assets attributable to
Class A shares on an annualized basis.
The Class B distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B shares. MFD will pay to
securities dealers that enter into a sales agreement with MFD all or a portion
of the service fee attributable to Class B shares. The service fee is intended
to be additional consideration for services rendered by
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
the dealer with respect to Class B shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $1,082 for
Class B shares for the year ended December 31, 1995. Fees incurred under the
distribution plans during the year ended December 31, 1995 were 1.0% of average
daily net assets attributable to Class B shares on an annualized basis.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within twelve months following the share 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 year ended December 31, 1995 were $2,157 and $7,176
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 average daily net assets of each class of share at an
effective annual rate of up to 0.15% and up to 0.22% attributable to Class A and
Class B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities, and
short-term obligations, aggregated $662,086,779 and $699,765,620, respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 579,406,082
=============
Gross unrealized appreciation $ 171,335,786
Gross unrealized depreciation (19,160,450)
-------------
Net unrealized appreciation $ 152,175,336
=============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
1995 1994
---------------------------- -----------------------------
Year Ended December 31, Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 7,715,800 $ 96,726,782 2,325,560 $ 26,182,936
Shares issued to shareholders in
reinvestment of distributions 7,389,814 87,274,151 4,590,008 46,634,106
Shares reacquired (12,623,569) (155,238,811) (10,394,202) (117,718,886)
----------- ------------ ----------- ------------
Net increase (decrease) 2,482,045 $ 28,762,122 (3,478,634) $ (44,901,844)
=========== ============= =========== =============
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Class B Shares
1995 1994
---------------------------- -----------------------------
Year Ended December 31, Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 604,258 $ 7,134,052 419,077 $ 4,685,688
Shares issued to shareholders in
reinvestment of distributions 60,477 705,862 22,946 231,132
Shares reacquired (412,933) (4,969,451) (197,864) (2,195,786)
----------- ------------ ----------- ------------
Net increase 251,802 $ 2,870,463 244,159 $ 2,721,034
=========== ============= =========== =============
</TABLE>
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the year ended December
31, 1995 was $8,850.
(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
Settlement Contracts to Contracts In Exchange Net Unrealized
Date Deliver at Value for Appreciation
================================================================================
Sales 2/2/96 SEK 59,091,600 $8,872,190 $8,962,223 $54,033
---------- ---------- -------
At December 31, 1995, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts
Abbreviations have been used throughout this report to indicate amounts shown in
currencies other than the U.S. dollar. A list of abbreviations is shown below.
SEK = Swedish Kronor
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
(8) Restricted Securities
The Fund may invest not more than 10% of its total assets in securities which
are subject to legal or contractual restrictions on resale. At December 31,
1995, the Fund owned the following restricted security (constituting 0.1% of
total assets) which may not be publicly sold without registration under the
Securities Act of 1933 (the 1933 Act). The Fund does not have the right to
demand that such securities be registered. The value of this security is
determined by valuations supplied by a pricing service or brokers or, if not
available, in good faith by or at the direction of the Trustees. This security
may be offered and sold to "qualified institutional buyers'' under Rule 144A of
the 1933 Act.
Date of Par
Description Acquisition Amount Cost Value
================================================================================
Spectrum Holobyte, Inc.,
6.5s, 2002 9/27/95 $870,000 $870,000 $635,100
-------- --------
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of Mfs Growth Opportunities Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Growth Opportunities Fund as of December
31, 1995, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended December 31, 1995 and
1994, and the financial highlights for each of the years in the eleven-year
period ended December 31, 1995. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
December 31, 1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Growth
Opportunities Fund at December 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 1, 1996
------------------------------------------------------------
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.
23
<PAGE>
A WORD ABOUT MFS PRODUCTS AND SERVICES
MAKING ADDITIONAL INVESTMENTS AT YOUR CONVENIENCE
There are several easy ways to make additional single investments of at least
$50:
o send a check with the lower portion of your account statement
o contact your financial adviser to purchase shares on your behalf
o wire additional investments through your bank; call us first for
instructions.
MAKING ADDITIONAL INVESTMENTS AUTOMATICALLY
By investing a set amount at regular intervals, over time you will buy more
shares when prices are low, and fewer shares when prices are high. Because
dollar cost averaging involves periodic purchases regardless of fluctuating
share prices, you should consider your financial ability to continue investing
in periods of low prices. MFS offers two dollar-cost-averaging programs. See the
prospectus for further details. Dollar cost averaging does not assure a profit
or avoid a loss.
THE AUTOMATIC INVESTMENT PLAN offers a simple way to make regular investments of
at least $50 through automatic withdrawals from your checking account.
THE AUTOMATIC EXCHANGE PLAN automatically exchanges shares from any MFS fund
with $5,000 or more into the same class of shares in up to four other MFS funds.
You choose the amounts of the exchanges (as little as $50) and their frequency.
- --------------------------------------------------------------------------------
A HYPOTHETICAL EXAMPLE OF AUTOMATIC MONTHLY INVESTING
COMPOUNDING AT 8% YEAR
Amount 5 Years 10 15 20 25
----------------------------------------------------------------
$50 3,671 9,064 16,989 28,633 45,742
$75 5,506 13,596 25,483 42,950 68,613
$100 7,341 18,128 33,978 57,266 91,484
$200 14,683 36,257 67,956 114,532 182,968
- --------------------------------------------------------------------------------
For applications or further information call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
If you are a participant in a retirement plan, check with your plan sponsor
regarding the availability of these options.
24
<PAGE>
A FINANCIAL ADVISER CAN HELP YOU BE A BETTER INVESTOR
Financial advisers can be valuable resources for their clients, providing
ongoing education and guidance about investments, as well as a wide range of
services. Here are just some of the ways your financial adviser may be able to
help you be a better investor:
# Day-to-day monitoring of your portfolio
# Tax recordkeeping
# In-depth information on fund managers, their track records and their tenure
# Risk/reward analyses of current or potential holdings
# Asset allocation advice
# Construction of a detailed personal financial profile
# Order and confirmation processing
# Information on a fund group's range of shareholder services
# Portfolio adjustments based on lifestyle changes
# Assistance with business retirement planning
# Evaluation of lump-sum distribution options
# Recommendations on a selection of fund groups
# Specialized research and investment information not readily available
to individuals
# In-depth knowledge of markets and products, kept current by
ongoing tracking
# Estate, tax, insurance, and business planning
# Help with possible savings on sales charges through breakpoints, rights of
accumulation, and letters of intent
25
<PAGE>
MFS INVESTMENT OPPORTUNITIES
MUTUAL FUNDS
The MFS Family of Funds, shown on the facing page, falls into the eight general
categories below. All offer full-time professional management, a diversified
portfolio, and a wide array of shareholder services.
STOCK FUNDS seek growth of capital rather than income through investments in
stocks.
STOCK AND BOND FUNDS seek current income and growth of capital through
investments in both stocks and bonds.
BOND FUNDS seek current income through investments in debt securities.
WORLD FUNDS seek stock, balanced, and bond fund objectives through investments
in U.S. and foreign stocks and bonds.
LIMITED-MATURITY FUNDS seek current income and preservation of capital through
investments in debt securities with remaining maturities of five years or less.
NATIONAL TAX-FREE BOND FUNDS seek current income exempt from federal income tax
through investments in debt securities issued by states and municipalities.[1]
STATE TAX-FREE BOND FUNDS seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state and
its municipalities.[1]
MONEY MARKET FUNDS seek preservation of capital and current income through
investments in short-term debt securities.[2]
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call MFS Investor Information for
literature[3] on MFS products and services: 1-800-637-2929, from 9 a.m. to 5
p.m. Eastern time any business day (leave a message anytime).
[1] A small portion of the income may be subject to federal, state and/or
alternative minimum tax.
[2] Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain
a stable net asset value.
[3] Including a prospectus containing more complete information including
charges and expenses. Read the prospectus carefully before investing.
26
<PAGE>
THE MFS FAMILY OF FUNDS [Registration Mark]
AMERICA'S OLDEST MUTUAL FUND GROUP
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message
anytime). This material should be read carefully before investing or sending
money.
STOCK
================================================================================
Massachusetts Investors Trust
- --------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Capital Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Emerging Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Gold & Natural Resources Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Growth Opportunities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Managed Sectors Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] OTC Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Research Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Value Fund
- --------------------------------------------------------------------------------
STOCK AND BOND
================================================================================
MFS [Registration Mark] Total Return Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Utilities Fund
- --------------------------------------------------------------------------------
BOND
================================================================================
MFS [Registration Mark] Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Mortgage Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Securities Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] High Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Intermediate Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Strategic Income Fund
- --------------------------------------------------------------------------------
LIMITED MATURITY BOND
================================================================================
MFS [Registration Mark] Government Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Limited Maturity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Limited Maturity Fund
- --------------------------------------------------------------------------------
WORLD
================================================================================
MFS [Registration Mark]/Foreign & Colonial Emerging Market Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark]/Foreign & Colonial International Growth and Income Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Asset Allocation Fund [Service Mark]
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Equity Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Governments Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Growth Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] World Total Return Fund
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE BOND
================================================================================
MFS [Registration Mark] Municipal Bond Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal High Income Fund
(closed to new investors)
- --------------------------------------------------------------------------------
MFS [Registration Mark] Municipal Income Fund
- --------------------------------------------------------------------------------
STATE TAX-FREE BOND
================================================================================
Alabama, Arkansas, California, Florida, Georgia, Louisiana, Maryland,
Massachusetts, Mississippi, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia
- --------------------------------------------------------------------------------
MONEY MARKET
================================================================================
MFS [Registration Mark] Cash Reserve Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Government Money Market Fund
- --------------------------------------------------------------------------------
MFS [Registration Mark] Money Market Fund
- --------------------------------------------------------------------------------
27
<PAGE>
IT'S EASY TO CONTACT US
[GRAPHIC OMITTED]
MFS AUTOMATED INFORMATION
ACCOUNT INFORMATION:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.
MARKET OUTLOOK:
Call 1-800-637-4458 anytime for the MFS outlook
on the bond and stock markets.
[GRAPHIC OMITTED]
MFS PERSONAL SERVICE
ACCOUNT SERVICE:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
PRODUCT INFORMATION:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
IRA SERVICE:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.
SERVICE FOR THE HEARING-IMPAIRED:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).
[GRAPHIC OMITTED]
MFS MAILING ADDRESSES
FOR PERSONAL ACCOUNTS:
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
FOR IRA ACCOUNTS:
MFS Service Center, Inc.
J.W. McCormack Station
P.O. Box 4501
Boston, MA 02101-9817
28
<PAGE>
MFS [Registration Mark] Growth Bulk Rate
Opportunities Fund U.S. Postage
PAID
500 Boylston Street Permit #55638
Boston, MA 02116 Boston, MA
[MFS LOGO]
MGO-2 2/96/52M 16/216
