[cover]
[logo] MFS(SM)
INVESTMENT MANAGEMENT
Annual Report
for Year Ended
December 31, 1996
MFS(R) Growth Opportunities Fund
[graphic photo of microchip]
<PAGE>
Table of Contents
Letter from the Chairman 1
A Discussion with the Portfolio Manager 2
Portfolio Manager's Profile 4
Performance Summary 5
Fund Facts 7
Portfolio of Investments 8
Financial Statements 12
Notes to Financial Statements 18
Independent Auditors' Report 24
Trustees and Officers 25
[graphic box]
Highlights
(bullet) For the year ended December 31, 1996, Class A shares of the Fund
provided a total return at net asset value of 21.87%, while Class B
shares returned 20.72%.
(bullet) The Fund benefited from a significant weighting in
large-capitalization technology stocks, such as Intel Corp. and
Microsoft Corp. Other important technology holdings included Oracle
Systems, Corp. and Cisco Systems, Inc.
(bullet) Holdings in the leisure area, such as Hospitality Franchise Systems
and Promus Hotels Corp., also contributed to performance.
(bullet) We believe the economy's moderate growth rate, combined with low
inflation, should continue to provide a favorable backdrop for
companies that can deliver good earnings growth.
<PAGE>
Letter from the Chairman
[photo of A. Keith Brodkin]
Dear Shareholders:
After more than six years of expansion, the U.S. economy appears to be headed
toward another year of moderate growth in 1997, although a few signs point to
the possibility of a modest rise in inflation during the year. On the
positive side, the pattern of moderate growth and inflation set over the past
few years now seems fairly well entrenched in the economy and, short of a
major international or domestic crisis, appears to have enough momentum to
remain on track for some time. Also, recent gains in important sectors such
as housing, automobiles, industrial production, and exports indicate a fair
amount of underlying strength in the economy. However, some reason for
caution can be seen in the continuing high levels of consumer debt and the
attendant rise in personal bankruptcies, as well as the modestly
disappointing levels of holiday sales. Also, the ongoing tightness in labor
markets, and price rises in such important sectors as energy, could add some
inflationary pressures to the economy. Given these somewhat conflicting
indicators, we expect real (inflation-adjusted) growth to revolve around 2%
in 1997, which would represent a modest decline from 1996.
We continue to urge U.S. equity investors to lower their expectations for
1997 and to point out that the impressive gains of the past two years are not
sustainable. Just as the slowdown in corporate earnings growth and increases
in interest rates in 1996 raised some near-term concerns, further interest
rate increases and an acceleration of inflation could negatively affect the
stock market in 1997. However, to the extent that some slowdown in earnings
means that the economy is not overheating, this may be beneficial for the
equity market in the long run. We also believe many of the technology-driven
productivity gains that U.S. companies have made in recent years will
continue to enhance corporate America's competitiveness and profitability.
Therefore, while we have some near-term concerns, we remain reasonably
positive about the long-term viability of the equity market.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
January 13, 1997
1
<PAGE>
A Discussion with the Portfolio Manager
[photo]
Paul M. McMahon
For the year ended December 31, 1996, Class A shares of the Fund provided a
total return of 21.87%, while Class B shares returned 20.72%. These returns,
which include the reinvestment of distributions but exclude the effects of
any sales charges, compare to a 22.64% return for the Standard & Poor's 500
Composite Index (the S&P 500) for the same period. The S&P 500 is a popular,
unmanaged index of common stock performance.
Q. What do you see as some of the reasons for this performance, Paul?
A. The Fund benefited from a significant weighting in large-capitalization
technology stocks, such as Intel Corp. and Microsoft Corp., which were
leading performers due to the continued strong demand for personal computers.
Other significant technology holdings, such as Oracle Systems Corp. and Cisco
Systems, Inc., also benefited from continued strong demand for their
products. Holdings in the leisure area, such as Hospitality Franchise Systems
(HFS) and Promus Hotels Corp., were significant contributors to performance.
Other names such as Tyco International, a fire control and health care
products manufacturer, and Wisconsin Central Transportation, a railroad, also
contributed significantly to the current year's results.
Q. How would you describe the overall business and economic environment you
faced over the past year, particularly as it relates to the Fund?
A. The economy continues to grow at a moderate rate with real (gross domestic
product) growth of around 2.5% while inflation remains at a moderate level of
2.5% a year. This period of both moderate economic growth and inflation has
provided a positive backdrop for further growth in corporate earnings and
continued appreciation of the stock market.
Q. We noticed that technology stocks make up the largest sector in the Fund.
What is it you like about this sector, and could you discuss any sub-groups
within technology that you find particularly attractive?
A. The technology weighting is high and added to performance in 1996 because
of the strong results that specific holdings delivered during the year. Due
to a low inflationary environment and an inability to raise prices,
corporations must rely on continued improvement in productivity to improve
their operation and generate higher earnings. One of the driving forces in
2
<PAGE>
A Discussion with the Portfolio Manager -- continued
improving productivity is the use of the advancements in technology to drive
costs lower or to improve product features and competitive position. The Fund
has a large weighting in semiconductor companies and software applications
companies, which are part of this broader trend of improving productivity.
Companies that are focused on the personal computer, such as Intel, which
makes microprocessor semiconductors, and Microsoft, which develops the
operating system and application software, continue to increase functionality
to the personal computer. This expands its uses and adds to further
productivity throughout the economy, from small entrepreneurial firms to
large corporations. This sector can be volatile at times, but we believe its
high long-term past performance results make it attractive. It is important
to emphasize that the names in the sector are selected individually and the
large weightings represent the number of well-positioned companies that we
have identified in this area.
Q. Your second-largest sector is leisure. What do you like about this sector?
A. The large weighting in the leisure sector is concentrated in specific
names within hospitality such as HFS and Promus. HFS has strong brand
positions in a number of businesses which generate significant cash flow such
as hotel franchising where it controls the Days' Inn, Super 8 Motel, and
Ramada Inn brands; real estate agency franchising, with brands such as
Century 21; and car rental agency franchising with Avis. The strong cash flow
generated from these businesses allows for additional acquisitions and share
buybacks to help increase earnings further into the future. Promus Hotel is
one of the fastest growing hotel franchises with brands such as Embassy
Suite, Hampton Inn, and Homewood Suites. The rapid development of new units
under these three brands is leading to continued strong earnings growth.
Q. In general, what characteristics or qualities do you look for when
selecting stocks for the Fund?
A. I look for five key characteristics in selecting stocks to add to the
Fund. These are good earnings momentum, good management, the ability to
benefit from positive secular trends in the economy, a good balance sheet
with positive cash flow generation, and reasonable valuation. Earnings
momentum is important because ultimately earnings drive stock prices over the
long term. Good management adds significantly to an enterprise's value by
making the right strategic and competitive decisions over time. This is why
we feel it is important to visit with corporate managements to understand
3
<PAGE>
A Discussion with the Portfolio Manager -- continued
their strategies and evaluate their abilities to execute them. A good
financial position and strong cash flow from the operations provide a company
with the ability to take advantage of competitive opportunities as they
present themselves in the marketplace. Trying to buy stocks at a reasonable
valuation is accomplished by comparing earnings growth to a company's price-
to-earnings ratio (P/E), which helps determine whether it is reasonable
relative to the market as a whole. Sell ideas are generated when a holding
violates one or more of these same characteristics, for example, if earnings
begin to slow significantly or the P/E relative to the growth rate makes a
stock overvalued.
Q. As you look ahead, what changes do you see in the overall market or
economic environment, particularly as it relates to the Fund, and how are you
positioning the Fund to try and take advantage of those changes?
A. The most important factor is that the economy remains at a moderate growth
level with inflation also at a moderate pace. This environment provides a
good backdrop for companies that can deliver good earnings growth. We believe
this combination should help result in stock price appreciation under the
current economic conditions. We remain committed to finding the best earnings
growth available, at the most reasonable valuations in trying to shape the
Fund for the future.
Respectfully,
/s/ Paul M. McMahon
Paul M. McMahon
Portfolio Manager
[graphic box]
Portfolio Manager's Profile
Paul M. 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 in 1992.
4
<PAGE>
Performance Summary
The information below and on the following page illustrates the historical
performance of MFS Growth Opportunities Fund Class A shares in comparison to
various market indicators. Class A share performance results reflect the
deduction of the 5.75% maximum sales charge; benchmark comparisons are
unmanaged and do not reflect any fees or expenses. The performance of other
share 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. You cannot invest in an index. All results are historical and assume
the reinvestment of dividends and capital gains.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past
performance is no guarantee of future results.
Growth of a Hypothetical $10,000 Investment
(For the 5-Year Period Ended December 31, 1996)
[line chart]
MFS Growth
Opportunities Consumer S&P 500 Composite
Fund (Class A) Price Index--U.S. Index
12/91 9,422 10,000 10,000
12/92 10,147 10,287 10,760
12/93 11,791 10,573 11,843
12/94 11,301 10,856 11,992
12/95 15,198 11,124 16,483
12/96 18,521 11,523 20,249
Growth of a Hypothetical $10,000 Investment
(For the 10-Year Period Ended December 31, 1996)
[line chart]
MFS Growth
Opportunities Consumer S&P 500 Composite
Fund (Class A) Price Index--U.S. Index
12/86 9,428 10,000 10,000
9,799 10,441 10,522
12/88 10,684 10,899 12,255
13,727 11,406 16,127
12/90 13,128 12,102 15,622
16,070 12,473 20,374
12/92 17,308 12,831 21,922
20,111 13,188 24,128
12/94 19,276 13,541 24,432
25,923 13,875 33,582
12/96 31,591 14,373 41,254
5
<PAGE>
Performance Summary - continued
<TABLE>
<CAPTION>
Average Annual Total Returns 1 Year 3 Years 5 Years 10 Years
----------------------------------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C>
MFS Growth Opportunities Fund (Class A)
including 5.75% sales charge +14.84% +13.96% +13.13% +12.19%
----------------------------------------- --------- --------- --------- -----------
MFS Growth Opportunities Fund (Class A)
at net asset value +21.87% +16.25% +14.47% +12.85%
----------------------------------------- --------- --------- --------- -----------
MFS Growth Opportunities Fund (Class B)
with CDSC +16.72% +14.42% +13.53% +12.51%
----------------------------------------- --------- --------- --------- -----------
MFS Growth Opportunities Fund (Class B)
without CDSC +20.72% +15.18% +13.77% +12.51%
----------------------------------------- --------- --------- --------- -----------
Average growth fund+ +19.24% +15.23% +13.04% +13.47%
----------------------------------------- --------- --------- --------- -----------
Standard & Poor's 500 Composite Index+ +22.64% +19.58% +15.15% +15.23%
----------------------------------------- --------- --------- --------- -----------
Consumer Price Index* + 3.56% + 2.91% + 2.88% + 3.69%
----------------------------------------- --------- --------- --------- -----------
</TABLE>
*The Consumer Price Index is a popular measure of change in prices.
+Source: Lipper Analytical Services.
Class B results including the contingent deferred sales charge (CDSC),
reflect the applicable CDSC, which declines over six years as follows: 4%,
4%, 3%, 3%, 2%, 1%, 0%. Class B shares have no initial sales charge but have
higher annual fees and expenses than Class A shares.
Class B share performance includes the performance of the Fund's Class A
shares for periods prior to the commencement of offering of Class B shares on
September 7, 1993. Sales charges and operating expenses for Class A and Class
B shares differ. The Class A share performance, which is included within the
Class B share performance, including CDSC, has been adjusted to reflect the
CDSC generally applicable to Class B shares rather than the initial sales
charge generally applicable to Class A shares. Class B share performance has
not been adjusted, however, to reflect differences in operating expenses
(e.g., Rule 12b-1 fees), which generally are lower for Class A shares.
Fund results reflect any applicable expense subsidies and waivers, without
which the performance results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details.
[graphic box]
Tax Form Summary
In January 1997, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1996.
The Trust has designated $59,654,925 as a long-term capital gain distribution
for tax purposes. This distribution was made to shareholders of record as of
December 23, 1996, payable January 2, 1997.
Dividends-Received Deduction
For the year ended December 31, 1996, the amount of distributions from income
eligible for the 70% dividends-received deduction for corporations came to
13.76%.
6
<PAGE>
Performance Summary - continued
[graphic box]
Fund Facts
Strategy: 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.
Commencement of
investment operations: September 9, 1970
Size: $822.8 million net assets as of December 31, 1996
Portfolio Concentration
Top Ten Equity Holdings as of December 31, 1996
Intel Corp.
Semiconductor manufacturer
HFS, Inc.
Franchiser of hotels and real estate companies
Tyco International Ltd.
Manufacturer of fire protection, packaging, and electronic equipment
Philip Morris Cos., Inc.
Tobacco, food, and beverage conglomerate
Microsoft Corp.
Computer software and systems company
Cadence Design Systems, Inc.
Computer software and systems company
Wisconsin Central Transportation Corp.
Midwestern railroad company
Oracle Systems Corp.
Database software developer and manufacturer
Cisco Systems, Inc.
Computer network developer
Promus Hotel Corp.
Hotel operator
Largest Sectors
[pie chart]
Other 41.2%*
Technology 27.8%
Leisure 12.7%
Industrial Goods & Services 10.6%
Financial Services 7.7%
*For a more complete breakdown, refer to the Portfolio of Investments.
7
<PAGE>
Portfolio of Investments - December 31, 1996
Stocks - 99.6%
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issuer Shares Value
--------------------------------------------------------------------- -------------
<S> <C> <C>
U.S. Common Stocks - 93.1%
Advertising - 0.2%
Tmp Worldwide, Inc. 27,600 $ 351,900
Universal Outdoor Holdings, Inc.* 54,500 1,280,750
-------------
$ 1,632,650
--------------------------------------------------------------------- -------------
Aerospace - 3.6%
Lockheed Martin Corp. 85,372 $ 7,811,538
McDonnell-Douglas Corp. 215,500 13,792,000
United Technologies Corp. 122,200 8,065,200
-------------
$29,668,738
--------------------------------------------------------------------- -------------
Agricultural Products - 2.3%
AGCO Corp. 223,000 $ 6,383,375
Case Corp. 234,300 12,769,350
-------------
$19,152,725
--------------------------------------------------------------------- -------------
Airlines - 0.9%
America West Airlines, "B"* 146,400 $ 2,324,100
Southwest Airlines Co. 241,200 5,336,550
-------------
$ 7,660,650
--------------------------------------------------------------------- -------------
Automotive - 0.6%
APS Holding Corp., "A"* 85,600 $ 1,326,80
Goodrich (B.F.) Co. 95,200 3,855,600
-------------
$ 5,182,400
--------------------------------------------------------------------- -------------
Banks and Credit Companies - 0.7%
Fleet/Norstar Financial Group, Inc. 116,500 $ 5,810,438
--------------------------------------------------------------------- -------------
Business Machines - 0.8%
Sun Microsystems, Inc.* 246,200 $ 6,324,263
--------------------------------------------------------------------- -------------
Business Services - 6.0%
AccuStaff, Inc.* 99,800 $ 2,108,275
ADT Ltd.* 504,700 11,545,013
ALCO Standard Corp. 244,100 12,601,662
Ceridian Corp.* 150,800 6,107,400
Corestaff, Inc.* 88,725 2,101,673
DST Systems, Inc.* 250,300 7,853,163
Loewen Group, Inc. 122,200 4,781,075
Sabre Group Holding, Inc., "A"* 75,400 2,101,775
-------------
$49,200,036
--------------------------------------------------------------------- -------------
Chemicals - 0.6%
Betzdearborn, Inc. 22,300 $ 1,304,550
Praxair, Inc. 84,100 3,879,113
-------------
$ 5,183,663
--------------------------------------------------------------------- -------------
Computer Software - Personal Computers - 4.1%
Electronic Arts, Inc.* 128,400 $ 3,843,975
First Data Corp. 149,800 5,467,700
Microsoft Corp.* 297,600 24,589,200
-------------
$33,900,875
--------------------------------------------------------------------- -------------
Computer Software - Systems - 8.9%
Adobe Systems, Inc. 293,800 $10,980,775
BMC Software, Inc.* 37,200 1,539,150
Cadence Design Systems, Inc.* 561,175 22,306,706
Computer Associates International, Inc. 177,650 8,838,088
8
<PAGE>
Portfolio of Investments - continued
Stocks - continued
- --------------------------------------------------------------------------------
Issuer Shares Value
--------------------------------------------------------------------- -------------
U.S. Common Stocks - continued
Computer Software - Systems - continued
Micros Systems, Inc.* 156,400 $ 4,809,300
Oracle Systems Corp.* 442,650 18,480,637
Sybase, Inc.* 181,900 3,035,456
Synopsys, Inc.* 70,000 3,237,500
-------------
$73,227,612
--------------------------------------------------------------------- -------------
Consumer Goods and Services - 7.6%
Colgate-Palmolive Co. 79,900 $ 7,370,775
Gillette Co. 28,900 2,246,975
Philip Morris Cos., Inc. 235,300 26,500,662
Tyco International Ltd. 503,000 26,596,125
-------------
$62,714,537
--------------------------------------------------------------------- -------------
Defense Electronics - 1.7%
Loral Space & Communications Corp.* 759,100 $13,948,463
--------------------------------------------------------------------- -------------
Electrical Equipment - 1.0%
General Electric Co. 86,800 $ 8,582,350
--------------------------------------------------------------------- -------------
Electronics - 8.8%
Altera Corp.* 176,700 $12,843,881
Analog Devices, Inc.* 284,050 9,622,194
Intel Corp. 286,800 37,552,875
LSI Logic Corp.* 230,300 6,160,525
Maxim Integrated Products, Inc.* 53,500 2,313,875
Xilinx, Inc.* 97,000 3,570,812
-------------
$72,064,162
--------------------------------------------------------------------- -------------
Entertainment - 4.3%
Clear Channel Communications, Inc.* 84,700 $ 3,059,787
Cox Radio, Inc., "A"* 7,400 129,500
Harrah's Entertainment, Inc.* 590,100 11,728,237
Infinity Broadcasting Corp., "A"* 40,900 1,375,263
Jacor Communications, Inc., "A"* 229,200 6,274,350
LIN Television Corp.* 132,500 5,598,125
Mirage Resorts, Inc.* 320,600 6,932,975
Univision Communications, Inc., "A"* 5,000 185,000
-------------
$35,283,237
--------------------------------------------------------------------- -------------
Financial Institutions - 5.9%
Associates First Capital Corp., "A" 36,400 $ 1,606,150
Federal Home Loan Mortgage Corp. 95,000 10,461,875
Financial Federal Corp.* 137,650 2,305,638
Finova Group, Inc. 118,300 7,600,775
Franklin ReSources, Inc. 59,900 4,095,662
Green Tree Financial Corp. 204,500 7,898,812
Schwab (Charles) Corp. 464,800 14,873,600
-------------
$48,842,512
--------------------------------------------------------------------- -------------
Food and Beverage Products - 0.8%
PepsiCo, Inc. 214,700 $ 6,279,975
--------------------------------------------------------------------- -------------
Insurance - 0.7%
Amerin Corp.* 55,800 $ 1,436,850
Chubb Corp. 77,800 4,181,750
-------------
$ 5,618,600
--------------------------------------------------------------------- -------------
9
<PAGE>
Portfolio of Investments - continued
Stocks - continued
- --------------------------------------------------------------------------------
Issuer Shares Value
--------------------------------------------------------------------- -------------
U.S. Common Stocks - continued
Machinery - 1.4%
Deere & Co., Inc. 170,600 $ 6,930,625
IDEX Corp. 120,900 4,820,888
-------------
$11,751,513
--------------------------------------------------------------------- -------------
Medical and Health Products - 1.7%
Johnson & Johnson 238,300 $11,855,425
Omnicare, Inc. 57,600 1,850,400
-------------
$13,705,825
--------------------------------------------------------------------- -------------
Medical and Health Technology and Services - 4.3%
HealthSource, Inc.* 468,400 $ 6,147,750
HealthSouth Corp.* 212,600 8,211,675
Oxford Health Plans, Inc.* 111,400 6,523,863
United Healthcare Corp. 313,500 14,107,500
-------------
$34,990,788
--------------------------------------------------------------------- -------------
Metals and Minerals - 0.5%
Minerals Technologies, Inc. 101,100 $ 4,145,100
--------------------------------------------------------------------- -------------
Oils - 1.1%
Mobil Corp. 73,500 $ 8,985,375
Titan Exploration, Inc.* 22,900 274,800
-------------
$ 9,260,175
--------------------------------------------------------------------- -------------
Photographic Products - 1.5%
Eastman Kodak Co. 149,800 $12,021,450
--------------------------------------------------------------------- -------------
Railroads - 3.1%
Burlington Northern Santa Fe Railway Co. 42,900 $ 3,705,488
Wisconsin Central Transportation Corp.* 541,300 21,449,012
-------------
$25,154,500
--------------------------------------------------------------------- -------------
Restaurants and Lodging - 6.3%
HFS, Inc.* 550,700 $32,904,325
Promus Hotel Corp.* 533,750 15,812,344
Renaissance Hotel Group N.V.* 148,900 3,499,150
-------------
$52,215,819
--------------------------------------------------------------------- -------------
Stores - 5.1%
Ann Taylor Stores Corp.* 173,400 $ 3,034,500
Corporate Express, Inc.* 57,200 1,683,825
Duty Free International, Inc. 26,900 390,050
Federated Department Stores, Inc.* 228,500 7,797,562
General Nutrition Cos., Inc.* 393,300 6,636,937
Linens "N" Things, Inc.* 31,700 622,113
Micro Warehouse, Inc.* 233,800 2,747,150
Office Depot, Inc.* 467,900 8,305,225
Officemax, Inc.* 222,100 2,359,813
Sears, Roebuck & Co. 107,400 4,953,825
Staples, Inc.* 193,400 3,493,287
-------------
$42,024,287
--------------------------------------------------------------------- -------------
Supermarkets - 1.5%
Safeway, Inc.* 278,900 $11,922,975
--------------------------------------------------------------------- -------------
Telecommunications - 7.1%
Ascend Communications, Inc.* 62,400 $ 3,876,600
Cisco Systems, Inc.* 262,600 16,707,925
10
<PAGE>
Portfolio of Investments - continued
Stocks - continued
- --------------------------------------------------------------------------------
Issuer Shares Value
--------------------------------------------------------------------- -------------
U.S. Common Stocks - continued
Telecommunications - continued
Glenayre Technologies, Inc.* 532,600 $ 11,484,187
Lucent Technologies, Inc. 47,100 2,178,375
MFS Communications Co., Inc.* 55,300 3,013,850
Tel-Save Holdings, Inc.* 60,050 1,741,450
Telco Communications Group* 40,000 700,000
Teleport Communications Group, Inc., "A"* 108,600 3,312,300
Tellabs, Inc.* 106,200 3,995,775
WorldCom, Inc.* 445,900 11,621,269
-------------
$ 58,631,731
--------------------------------------------------------------------- -------------
Total U.S. Common Stocks $766,102,049
---------------------------------------------------------------------- -------------
Foreign Stocks - 6.5%
Canada - 0.7%
Loewen Group, Inc. (Business Services)## 75,000 $ 2,928,191
Canadian National Railway Co. (Railroads)* 74,600 2,834,800
-------------
$ 5,762,991
--------------------------------------------------------------------- -------------
Finland - 0.5%
Nokia Corp., ADR (Telecommunications) 74,700 $ 4,304,588
--------------------------------------------------------------------- -------------
Germany - 0.7%
Sap AG, Preferred (Computer Software - Systems) 43,400 $ 6,064,998
--------------------------------------------------------------------- -------------
Hong Kong - 0.4%
Peregrine Investment Holdings (Finance) 1,662,000 $ 2,847,362
--------------------------------------------------------------------- -------------
Italy - 1.5%
Gucci Group Designs N.V. (Apparel and Textiles) 37,600 $ 2,401,700
Telecom Italia S.p.A. (Telecommunications) 4,846,200 6,910,603
Telecom Italia S.p.A., Saving Shares
(Telecommunications) 1,201,600 3,035,163
-------------
$ 12,347,466
--------------------------------------------------------------------- -------------
Singapore - 0.3%
Mandarin Oriental International, Ltd. (Restaurants
and Lodging) 1,953,429 $ 2,754,335
--------------------------------------------------------------------- -------------
South Korea - 0.7%
Korea Mobile Telecom (Telecommunications) 468,032 $ 6,025,912
--------------------------------------------------------------------- -------------
Sweden - 1.7%
Astra AB, "B" (Pharmaceuticals) 245,500 $ 11,851,724
Nobel Biocare AB (Medical and Health Products) 93,600 1,648,129
-------------
$ 13,499,853
--------------------------------------------------------------------- -------------
Total Foreign Stocks $ 53,607,505
---------------------------------------------------------------------- -------------
Total Stocks (Identified Cost, $602,692,690) $819,709,554
---------------------------------------------------------------------- -------------
Warrants
Peregrine Investment Holdings
(Identified Cost, $32,793) 264,400 $ 84,612
--------------------------------------------------------------------- -------------
Total Investments (Identified Cost, $602,725,483) $819,794,166
Other Assets, Less Liabilities - 0.4% 3,033,051
---------------------------------------------------------------------- -------------
Net Assets - 100.0% $822,827,217
---------------------------------------------------------------------- -------------
</TABLE>
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
11
<PAGE>
Financial Statements
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
- ------------------------------------------------------------------------------------ -----
<S> <C>
Assets:
Investments, at value (identified cost, $602,725,483) $819,794,166
Cash 11,147,009
Receivable for Fund shares sold 1,133,576
Dividends receivable 719,341
Other assets 7,832
-------------
Total assets $832,801,924
-------------
Liabilities:
Distributions payable $ 3,736,515
Payable for investments purchased 250,387
Payable for Fund shares reacquired 5,394,717
Payable to affiliates -
Management fee 28,857
Shareholder servicing agent fee 9,516
Distribution fee 312,076
Accrued expenses and other liabilities 242,639
-------------
Total liabilities $ 9,974,707
-------------
Net assets $822,827,217
-------------
Net assets consist of:
Paid-in capital $607,325,371
Unrealized appreciation on investments 217,068,683
Accumulated distributions in excess of net realized gain on
investments and foreign currency transactions (1,498,157)
Accumulated net investment loss (68,680)
-------------
Total $822,827,217
-------------
Shares of beneficial interest outstanding 63,480,991
-------------
Class A shares:
Net asset value per share
(net assets of $807,657,296 / 62,289,208 shares of beneficial
interest outstanding) $12.97
-------------
Offering price per share (100 / 94.25) $13.76
-------------
Class B shares:
Net asset value and offering price per share
(net assets of $15,169,921 / 1,191,783 shares of beneficial interest
outstanding) $12.73
-------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A
and Class B shares.
See notes to financial statements
12
<PAGE>
Financial Statements - continued
Statement of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1996
------------------------------------------------------------------------- -------------
<S> <C>
Net investment income:
Income -
Dividends $ 5,034,859
Interest 245,422
Foreign taxes withheld (41,521)
-------------
Total investment income $ 5,238,760
-------------
Expenses -
Management fee $ 3,318,022
Trustees' compensation 53,020
Shareholder servicing agent fee (Class A) 1,073,238
Shareholder servicing agent fee (Class B) 22,306
Distribution and service fee (Class A) 1,221,225
Distribution and service fee (Class B) 101,393
Custodian fee 297,117
Postage 125,836
Printing 66,634
Auditing fees 35,290
Legal fees 4,882
Miscellaneous 309,608
-------------
Total expenses $ 6,628,571
Fees paid indirectly (157,578)
-------------
Net expenses $ 6,470,993
-------------
Net investment loss $ (1,232,233)
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 89,740,771
Foreign currency transactions 20,931
-------------
Net realized gain on investments and foreign currency transactions $ 89,761,702
-------------
Change in unrealized appreciation (depreciation) -
Investments $ 64,893,347
Translation of assets and liabilities in foreign currencies (54,448)
-------------
Net unrealized gain on investments and foreign currency translation $ 64,838,899
-------------
Net realized and unrealized gain on investments and foreign
currency $154,600,601
-------------
Increase in net assets from operations $153,368,368
-------------
</TABLE>
See notes to financial statements
13
<PAGE>
Financial Statements - continued
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995
----------------------------------------------- ---------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (1,232,233) $ 1,360,815
Net realized gain on investments and foreign
currency transactions 89,761,702 93,753,834
Net unrealized gain on investments and foreign
currency translation 64,838,899 100,603,997
---------------- ----------------
Increase in net assets from operations $ 153,368,368 $ 195,718,646
---------------- ----------------
Distributions declared to shareholders -
From net realized gain on investments and
foreign currency transactions (Class A) $ (88,077,143) $ (90,832,129)
From net realized gain on investments and
foreign currency transactions (Class B) (1,583,683) (804,857)
---------------- ----------------
Total distributions declared to shareholders $ (89,660,826) $ (91,636,986)
---------------- ----------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 277,719,578 $ 103,860,834
Net asset value of shares issued to
shareholders in reinvestment of
distributions 85,916,601 87,980,013
Cost of shares reacquired (332,657,111) (160,208,262)
---------------- ----------------
Increase in net assets from Fund share
transactions $ 30,979,068 $ 31,632,585
---------------- ----------------
Total increase in net assets $ 94,686,610 $ 135,714,245
Net assets:
At beginning of period 728,140,607 592,426,362
---------------- ----------------
At end of period (including accumulated net
investment loss and accumulated
distributions in excess of net investment
income of $68,680 and $55,622, respectively) $ 822,827,217 $ 728,140,607
---------------- ----------------
</TABLE>
See notes to financial statements
14
<PAGE>
Financial Statements - continued
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994 1993 1992
- --------------------------------------------------- -------------- -------------- -------------- -------------- --------------
Class A
- --------------------------------------------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.94 $ 10.17 $ 11.56 $ 11.17 $ 10.75
-------------- -------------- -------------- -------------- --------------
Income from investment operations# -
Net investment income (loss)(sec.sign) $ (0.02) $ 0.03 $ 0.02 $ 0.07 $ 0.15
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 2.62 3.46 (0.50) 1.73 0.67
-------------- -------------- -------------- -------------- --------------
Total from investment operations $ 2.60 $ 3.49 $ (0.48) $ 1.80 $ 0.82
-------------- -------------- -------------- -------------- --------------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ (0.01) $ (0.07) $ (0.14)
From net realized gain on investments and foreign
currency transactions (1.57) (1.72) (0.83) (1.32) (0.26)
In excess of net investment income -- -- (0.02) (0.02) --
In excess of net realized gain on investments and
foreign currency transactions -- -- (0.05) -- --
-------------- -------------- -------------- -------------- --------------
Total distributions declared to shareholders $ (1.57) $ (1.72) $ (0.91) $ (1.41) $ (0.40)
-------------- -------------- -------------- -------------- --------------
Net asset value - end of period $ 12.97 $ 11.94 $ 10.17 $ 11.56 $ 11.17
-------------- -------------- -------------- -------------- --------------
Total return++ 21.87% 34.49% (4.15)% 16.19% (8.06)%
Ratios (to average net assets)/
Supplemental data(sec.sign):
Expenses## 0.84% 0.87% 0.86% 0.84% 0.89%
Net investment income (loss) (0.15)% 0.21% 0.21% 0.60% 1.40%
Portfolio turnover 65% 100% 78% 79% 102%
Average commission rate### $ 0.0438 -- -- -- --
Net assets at end of period (000 omitted) $807,657 $721,467 $589,260 $709,839 $694,084
#Per share data for the periods 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.
###Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
++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.
(sec.sign)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% --
</TABLE>
15
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1991 1990 1989 1988 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 $ 9.97 $ 10.93 $ 10.96 $ 10.81 $ 13.41
-------------- -------------- -------------- ----------------------------
Income from investment operations -
Net investment income $ 0.24 $ 0.30 $ 0.36 $ 0.22 $ 0.11
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.94 (0.77) 2.74 0.76 (2.13)
-------------- -------------- -------------- ----------------------------
Total from investment operations $ 2.18 $ (0.47) $ 3.10 $ 0.98 $ (2.02)
-------------- -------------- -------------- ----------------------------
Less distributions declared to shareholders -
From net investment income $ (0.18) $ (0.33) $ (0.36) $ (0.19) $ (0.11)
From net realized gain on investments and foreign
currency transactions (1.22) (0.16)++++ (2.77) (0.64) (0.47)
-------------- -------------- -------------- ----------------------------
Total distributions declared to shareholders $ (1.40) $ (0.49) $ (3.13) $ (0.83) $ (0.58)
-------------- -------------- -------------- ----------------------------
Net asset value - end of period $ 10.75 $ 9.97 $ 10.93 $ 10.96 $ 10.81
-------------- -------------- -------------- ----------------------------
Total return++ 9.29% (4.57)% 28.23% 8.90% (20.45)%+
Ratios (to average net assets)/Supplemental data:
Expenses 0.88% 0.80% 0.77% 0.86% 0.72%+
Net investment income 2.14% 2.91% 2.79% 1.90% 1.08%+
Portfolio turnover 131% 89% 83% 68% 40%
Net assets at end of period (000 omitted) $739,791 $687,847 $805,712 $767,924 $834,359
*For the nine months ended December 31, 1987.
+Annualized
++Total returns for Class A shares do not include the applicable 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 distribution from paid-in capital of $0.0006.
</TABLE>
See notes to financial statements
16
<PAGE>
Financial Statements - continued
Financial Highlights - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
March 31, Year Ended December 31,
--------------- -------------------------------------------------------------
1987 1996 1995 1994 1993**
--------------- ----------------------------- --------------- ---------------
Class A Class B
--------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 13.51 $ 11.79 $10.08 $11.53 $12.52
--------------- ------------------------------ --------------- ---------------
Income from investment operations# -
Net investment income (loss) $ 0.17 $ (0.14) $(0.09) $(0.08) $ --
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.20 2.57 3.42 (0.49) 0.36
--------------- ------------------------------ --------------- ---------------
Total from investment operations $ 1.37 $ 2.43 $ 3.33 $(0.57) $ 0.36
--------------- ------------------------------ --------------- ---------------
Less distributions declared to shareholders -
From net investment income $ (0.17) $ -- $ -- $ -- $ --
From net realized gain on investments and
foreign currency transactions (1.30) (1.49) (1.62) (0.83) (1.32)
In excess of net investment income -- -- -- -- (0.03)
In excess of net realized gain on investments
and foreign currency transactions -- -- -- (0.05) --
--------------- ------------------------------ --------------- ---------------
Total distributions declared to shareholders $ (1.47) $ (1.49) $(1.62) $(0.88) $(1.35)
--------------- ------------------------------ --------------- ---------------
Net asset value - end of period $ 13.41 $ 12.73 $11.79 $10.08 $11.53
--------------- ------------------------------ --------------- ---------------
Total return++ 11.57% 20.72% 33.20% (4.96)% 9.29%+
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.71% 1.75% 1.81% 1.81% 1.33%+
Net investment income (loss) 1.28% (1.06)% (0.75)% (0.70)% --
Portfolio turnover 109% 65% 100% 78% 79%
Average commission rate### -- $0.0438 -- -- --
Net assets at end of period (000 omitted) $1,090,764 $15,170 $6,673 $3,166 $ 805
**For the period from the commencement of offering of Class B shares, September 7, 1993, to December 31, 1993.
+Annualized
#Per share data for the periods 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.
###Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
++Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to March
1, 1991). If the charge had been included, the results would have been lower.
</TABLE>
See notes to financial statements
17
<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 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.
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.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the
Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that result from fluctuations in foreign currency
exchange rates is not separately disclosed.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering into
18
<PAGE>
Notes to Financial Statements - continued
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The Fund will enter into
forward contracts for hedging purposes as well as for non-hedging purposes.
For hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. The Fund may also use contracts in a manner intended to protect
foreign currency- denominated securities from declines in value due to
unfavorable exchange rate movements. For non-hedging purposes, the Fund may
enter into contracts with the intent of changing the relative exposure of the
Fund's portfolio of securities to different currencies to take advantage of
anticipated changes. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains
or losses are recorded for financial statement purposes as unrealized until
the contract settlement date.
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 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 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
19
<PAGE>
Notes to Financial Statements - continued
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 tax 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, 1996, $1,425,890 was
reclassified from accumulated net realized gain on investments and $1,219,175
and $206,715 were reclassified to accumulated undistributed net investment
income and paid-in-capital, respectively, due to differences between book and
tax accounting for currency transactions and operating losses. This change
had no effect on the net assets or net asset value per share.
Multiple Classes of Shares of Beneficial Interest - The Fund offers both
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 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 0.42% 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 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
$17,410 for the year ended December 31, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$66,024 for the year ended December 31, 1996, as its portion of the sales
charge on sales of Class A shares of the Fund.
20
<PAGE>
Notes to Financial Statements - continued
The Trustees have adopted separate distribution plans 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 who enters into a sales agreement with MFD of
up to 0.25% per annum (reduced to 0.15% per annum for assets sold prior to
March 1, 1991) 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 $647,559 for the year ended December 31, 1996. Payment of the
0.10% per annum Class A distribution fee will commence on such date as the
Trustees of the Trust may determine. Fees incurred under the distribution
plan during the year ended December 31, 1996 were 0.16% 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 the dealer with respect to Class B shares. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $2,946
for Class B shares for the year ended December 31, 1996. Fees incurred under
the distribution plan during the year ended December 31, 1996 were 1.00% of
average daily net assets attributable to Class B shares on an annualized
basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following such purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the year ended December 31, 1996 were
$651 and $14,022 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
21
<PAGE>
Notes to Financial Statements - continued
percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15% and up to 0.22% attributable to Class A
and Class B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities and
short-term obligations, aggregated $505,648,600 and $562,613,685,
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 $604,223,639
---------------
Gross unrealized appreciation $242,343,505
Gross unrealized depreciation (26,772,978)
---------------
Net unrealized appreciation $215,570,527
---------------
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
-------------------------------- --------------------------------
Shares Amount Shares Amount
------------------ --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 20,081,505 $ 265,741,600 7,715,800 $ 96,726,782
Shares issued to
shareholders in
reinvestment of
distributions 6,559,488 84,484,449 7,389,814 87,274,151
Shares reacquired (24,769,912) (327,523,302) (12,623,569) (155,238,811)
--------------- ---------------- --------------- ----------------
Net increase 1,871,081 $ 22,702,747 2,482,045 $ 28,762,122
--------------- ---------------- --------------- ----------------
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
-------------------------------- --------------------------------
Shares Amount Shares Amount
------------------ --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 901,449 $ 11,977,978 604,258 $ 7,134,052
Shares issued to
shareholders in
reinvestment of
distributions 113,216 1,432,152 60,477 705,862
Shares reacquired (388,694) (5,133,809) (412,933) (4,969,451)
--------------- ---------------- --------------- ----------------
Net increase 625,971 $ 8,276,321 251,802 $ 2,870,463
--------------- ---------------- --------------- ----------------
</TABLE>
22
<PAGE>
Notes to Financial Statements - continued
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $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, 1996 was $8,137.
23
<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, 1996, the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December
31, 1996 and 1995, and the financial highlights for each of the years in the
eleven- year period ended December 31, 1996. 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, 1996 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 statement and financial highlights present
fairly, in all material respects, the financial position of MFS Growth
Opportunities Fund at December 31, 1996, 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 7, 1997
- --------------------------------------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
24
<PAGE>
MFS(r) 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
*Affiliated with the Investment Adviser
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.)
For share prices, account balances and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
World Wide Web
www.mfs.com
[graphic box]
[dalbar logo]
For the third year in a row, MFS earned a #1 ranking in the DALBAR, Inc.
Broker/Dealer Survey, Main Office Operations Service Quality Category. The
firm achieved a 3.48 overall score on a scale of 1 to 4 in the 1996 survey. A
total of 110 firms responded, offering input on the quality of service they
received from 29 mutual fund companies nationwide. The survey contained
questions about service quality in 15 categories, including "knowledge of
phone service contacts," "accuracy of transaction processing," and "overall
ease of doing business with the firm."
25
<PAGE>
[back cover]
MFS(R) Growth
Opportunities
Fund
500 Boylston Street
Boston, MA 02116
[dalbar logo]
[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #55638
Boston, MA
[logo] MFS(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116
MGO-2/97 60M 16/216
