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[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
MFS(R) GROWTH
OPPORTUNITIES FUND
Semiannual Report o June 30, 1998
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LEARNING FINANCIAL BASICS THE EASY WAY (see page 27)
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TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 22
Trustees and Officers ..................................................... 29
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HIGHLIGHTS
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o FOR THE SIX MONTHS ENDED JUNE 30, 1998, CLASS A SHARES OF THE FUND PROVIDED A
TOTAL RETURN AT NET ASSET VALUE OF 20.39%, CLASS B SHARES 19.88%, AND CLASS I
SHARES 20.50%. (SEE PERFORMANCE SUMMARY FOR MORE INFORMATION. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.)
o THE FUND OUTPERFORMED THE STANDARD & POOR'S 500 COMPOSITE INDEX FOR THE
PERIOD THANKS TO STRONG PERFORMANCE FROM STOCKS IN THE TECHNOLOGY, LEISURE
(PREDOMINANTLY BROADCAST STOCKS), AND CONGLOMERATES, SPECIAL PRODUCTS/
SERVICES (TYCO) SECTORS.
o THE PORTFOLIO'S INVESTMENT DISCIPLINE IS KEYED TO COMPANIES' EARNINGS GROWTH,
MANAGEMENT STRENGTH, ABILITY TO LEVERAGE POSITIVE TRENDS, AND CASH FLOW. THE
FUND FREQUENTLY BUYS DURING PERIODS OF PRICE CORRECTIONS IF UNDERLYING
FUNDAMENTAL DATA ARE SOLID.
o THE FUND HAS REDUCED ITS HOLDINGS IN COMPANIES THAT COULD BE DIRECTLY
AFFECTED BY TROUBLED ASIAN ECONOMIES.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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LETTER FROM THE CHAIRMAN
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[Photo of Jeffrey L. Shames]
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Jeffrey L. Shames
Dear Shareholders:
With the U.S. stock market well into its fourth year of record-breaking
advances, it is necessary to take a cautious outlook. By most commonly accepted
measures, equity valuations appear to have risen to a point at which the stock
market has become more vulnerable to changes in the investment environment such
as rising inflation and interest rates or a slowing economy. As a result, while
we continue to hold a favorable long-term outlook for the equity markets, we
also believe that a significant market correction is possible and that such a
correction would be a healthy near-term event.
Currently, equity investors seem to be primarily focused on interest rates,
which have been relatively stable for several months as inflation has remained
low. In an environment of low interest rates, stocks become more attractive than
most fixed-income investments, while low inflation helps control companies'
costs, such as for raw materials, wages, and benefits. The near-term outlook for
a continuation of this environment appears relatively favorable. However, this
year has seen a marked slowdown in corporate earnings. This means that as equity
prices continue to rise, price-to-earnings (P/E) ratios, or the amount an
investor pays for a stock in relation to the company's earnings per share, also
go up. A year ago, the average P/E ratio for stocks in the unmanaged Standard &
Poor's 500 Composite Index stood at approximately 22; this summer, the average
P/E ratio was 32% higher, at about 29. In some cases, such as with some of the
newer companies associated with the Internet, P/E ratios have soared to levels
that are unlikely to be sustained.
As long as interest rates remain low and the economy continues to grow, it is
possible that some of these valuations can be supported. We expect corporate
earnings to grow 4% to 6% this year. However, just as no one can predict market
cycles, so too no one can predict economic cycles -- except to say that these
cycles do exist and that an economic slowdown at some point is inevitable.
We believe it is prudent to remind investors of the need to take a long-term
view and to diversify their investments across a range of asset classes. This
includes portfolios that focus on bonds and international investments as well
as on the U.S. stock market. The likelihood of an eventual market correction
also makes it important for us to use original, bottom-up research to find
companies that we think can keep growing or gain market share in the face of the
occasional downturn. To help achieve this, and to provide the broadest possible
coverage of industry sectors and individual companies, MFS continues to increase
its number of full-time research analysts. These analysts thoroughly investigate
each company's earnings potential and position in its industry as well as the
overall prospects for that industry.
MFS also uses active portfolio management on the fixed-income side, taking
advantage of our extensive research and credit analysis to help reduce the
potential for price declines and enhance the opportunity for appreciation. Every
year, both fixed-income and equity managers meet with thousands of credit
issuers and companies. They also attend many presentations, closely follow
sources of industry research, and keep track of competitors.
We believe that applying this discipline of thorough, bottom-up research to both
the equity and fixed-income markets is the best way to provide favorable
long-term performance for our shareholders -- regardless of changes in the
overall market environment.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS(R) Investment Management(SM)
July 13, 1998
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MANAGEMENT REVIEW AND OUTLOOK
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[Photo of Paul M. McMahon]
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Paul M. McMahon
For the six months ended June 30, 1998, Class A shares of the Fund provided a
total return of 20.39%, Class B shares 19.88%, and Class I shares 20.50%. These
returns, which include the reinvestment of distributions but exclude the effects
of any sales charges, compare to a 17.71% 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 total return performance.
Q. WHAT IS YOUR CORE INVESTMENT PHILOSOPHY FOR THE FUND?
A. The Fund's investment philosophy is based on five elements. We seek steady
earnings growth because we believe that earnings drive stock prices. We take
a close look at the quality of a company's management because we feel that
management adds value to a company's prospects. In addition, we focus on
companies that take advantage of positive business trends that can lead to
high growth and expanded margins. We also like to see strong cash flow in our
companies, which can be used for stock buy-backs or acquisitions that can
enhance stock valuations. Finally, we often buy when we believe the price of
a stock is low and that its underlying fundamentals are solid enough to make
that low price short term. We sell stocks when any of these elements are
missing or change substantially for the worse.
Q. THE FUND OUTPERFORMED THE S&P 500 OVER THE PAST SIX MONTHS. TO WHAT DO YOU
ATTRIBUTE THIS PERFORMANCE?
A. The portfolio was heavily invested in companies that were strong individual
performers in sectors that did quite well during the first half of the year.
For example, computer software, an area in which we are heavily invested in
comparison to the S&P 500 (18.2% versus 3.7%), was up strongly in the first
half. Holdings such as Microsoft, and BMC Software performed quite well. Our
investments in broadcast media stocks such as CBS and Clear Channel also
boosted the Fund's returns thanks to consolidation in the industry and strong
advertising rates. The conglomerates, special products/services sector is
essentially comprised of Tyco International stock, which had a very strong
year. Tyco has all but perfected the art of buying and integrating companies
effectively. The stock was up about 40% for the first half of the year.
Looking ahead, we expect continued growth from our technology holdings as
worldwide demand for technology products increases, spurred by the need for
Europe and Asia to make up for their historical lack of investment in the
types of technology that can often boost business productivity. The regions
outside the United States need to keep pace technologically if they wish to
compete effectively in the world economy.
We are equally optimistic about the leisure sector, specifically our
broadcast media investments, because those companies should be able to offer
better advertising packages to potential customers, again thanks to the
consolidation wave.
Q. WHAT ARE SOME OF YOUR OTHER STOCK "SUCCESS STORIES" FOR 1998 THUS FAR?
A. Colgate, boosted by its new Total toothpaste, is up 20% in the first half. As
I mentioned before, Clear Channel Communications is having an excellent year
and has grown its share price by 37% in the first part of 1998. The company
is benefiting from the consolidation wave but also has good cash flow
generation, strong earnings growth and, I believe, the best management in its
industry. This should be a very good long-term investment. Another impressive
stock is McDonald's, which is undertaking a corporate restructuring designed
to improve efficiency and boost product quality. So far the program has
resulted in increased revenue growth per store and a share price increase of
44% since the end of 1997.
Q. WHAT STOCKS HAVEN'T PERFORMED IN LINE WITH YOUR EXPECTATIONS SO FAR?
A. Cendant, a hotel, real estate, and consumer services company franchiser that
was created by a merger of HFS and CUC International, has been a major
disappointment. Earlier this year the company uncovered potential accounting
fraud in the former CUC, and we're closely monitoring the situation while the
company reviews its accounting practices and attempts to uncover the depth of
the problem. IKON Office Solutions, a provider of office products and
computer and networking solutions, also failed to meet its revenue and
profitability targets and has performed poorly as a result.
Q. WHAT HAS BEEN THE IMPACT OF THE ASIAN ECONOMIC CRISIS ON THE PORTFOLIO?
A. We've eliminated or sharply reduced our holdings in companies that we felt
had a large exposure to the Asian troubles. This is most apparent in our
semiconductor holdings, in which we are now underweighted in comparison to
the S&P 500. Most prominently, we reduced our Intel holding. As a result we
feel we have minimized the negative impact of the Asian turmoil on this
portfolio.
Q. WHAT IMPACT HAS THE BOOMING EUROPEAN ECONOMY HAD ON THE FUND, AND WHAT WILL
BE THE IMPACT ON THE FUND, IF ANY, OF THE UPCOMING MONETARY CONVERGENCE IN
EUROPE?
A. The Fund has limited direct investment in European stocks. However, the
strength of the European economies and the easing of barriers to
international trade made possible by the upcoming single European currency
could have a positive impact on U.S. stocks in our portfolio that have
significant European exposure. As their markets expand, their earnings growth
may increase as well.
Q. WHAT HAVE BEEN THE MAJOR PORTFOLIO CHANGES OVER THE PAST SIX MONTHS?
A. Philip Morris has dropped out of our top holdings list. After meeting with
corporate management earlier in the year, we determined that there was little
prospect for growth given the current political situation surrounding tobacco
companies. As I mentioned previously, Intel also was reduced in the
portfolio. We feel that it's a very good company, but now is not the time to
be investing in its shares due to the potential impact on the company of the
Asian economic slow down.
Q. WHAT'S YOUR INVESTMENT OUTLOOK FOR THE PORTFOLIO FOR THE BALANCE OF 1998?
A. We'll continue to focus on earnings growth because we believe earnings drive
stock prices. At this time, we feel that stocks are at a high valuation level
and we anticipate limited upside in the values of stocks. In this type of
market, in which earnings missteps are severely punished by Wall Street, we
need to have a high degree of confidence in our portfolio companies'
abilities to generate consistent earnings. We're anticipating moderate gross
domestic product (GDP) growth and moderate inflation. This scenario provides
a good backdrop for the stock market and should result in moderately positive
earnings growth.
/s/ Paul M. McMahon
Paul M. McMahon
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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PAUL M. MCMAHON IS A SENIOR VICE PRESIDENT AT MFS(R) INVESTMENT MANAGEMENT(SM).
HE IS THE PORTFOLIO MANAGER OF MFS(R) GROWTH OPPORTUNITIES FUND, THE CAPITAL
APPRECIATION SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS, AND
CO-MANAGER OF THE WORLD ASSET ALLOCATION(SM) SERIES OFFERED THROUGH MFS(R)/SUN
LIFE ANNUITY PRODUCTS.
HE JOINED THE MFS RESEARCH DEPARTMENT IN 1981 AS AN INDUSTRY SPECIALIST AND WAS
NAMED INVESTMENT OFFICER IN 1983, ASSISTANT VICE PRESIDENT -- INVESTMENTS IN
1984, VICE PRESIDENT -- INVESTMENTS IN 1986, AND SENIOR VICE PRESIDENT IN 1992.
MR. MCMAHON IS A GRADUATE OF HOLY CROSS AND THE AMOS TUCK SCHOOL OF BUSINESS
ADMINISTRATION OF DARTMOUTH COLLEGE. HE IS A MEMBER OF THE BOSTON SECURITY
ANALYSTS SOCIETY, INC.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS GROWTH OF CAPITAL. DIVIDEND INCOME, IF ANY, IS
INCIDENTAL.
COMMENCEMENT OF
INVESTMENT OPERATIONS: SEPTEMBER 9, 1970
CLASS INCEPTION: CLASS A SEPTEMBER 9, 1970
CLASS B SEPTEMBER 7, 1993
CLASS I JANUARY 2, 1997
SIZE: $1.1 BILLION NET ASSETS AS OF JUNE 30, 1998
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including reinvestment of dividends.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH JUNE 30, 1998
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +20.39% +28.67% +102.76% +147.59% +342.29%
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Average Annual Total Return -- +28.67% + 26.57% + 19.88% + 16.03%
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SEC Results -- +21.28% + 24.10% + 18.47% + 15.34%
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<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +19.88% +27.54% + 97.48% +137.14% +323.59%
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Average Annual Total Return -- +27.54% + 25.46% + 18.85% + 15.53%
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SEC Results -- +23.54% + 24.82% + 18.64% + 15.53%
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<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +20.50% +28.83% +103.15% +148.11% +343.05%
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Average Annual Total Return -- +28.83% + 26.65% + 19.93% + 16.05%
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</TABLE>
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class B
share ("B") SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years from 4% to 0%. Class I shares ("I") have
no sales charge or Rule 12b-1 fees and are only available to certain
institutional investors.
B results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of B. Because operating expenses
of B are greater than those of A, B performance generally would have been lower
than A performance. The A performance included within the B SEC performance has
been adjusted to reflect the CDSC generally applicable to B rather than the
initial sales charge generally applicable to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been higher
than A performance. The A performance included in the I performance has been
adjusted to reflect the fact that I have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF JUNE 30, 1998
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 26.2%
LEISURE 14.2%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 11.5%
HEALTH CARE 9.4%
FINANCIAL SERVICES 9.3%
TOP 10 STOCK HOLDINGS
TYCO INTERNATIONAL LTD. 7.2% BMC SOFTWARE, INC. 2.7%
Security systems, packaging, and Computer software company
electronic equipment conglomerate
CADENCE DESIGN SYSTEMS, INC. 2.6%
MICROSOFT CORP. 6.5% Computer software and systems company
Computer software and systems company
CISCO SYSTEMS, INC. 2.4%
CENDANT CORP. 3.8% Computer network developer
Hotel, real estate, and consumer
services company franchiser UNITED HEALTHCARE CORP. 2.3%
Health maintenance organization
COMPUTER ASSOCIATES
INTERNATIONAL, INC. 3.2% ORACLE CORP. 2.1%
Computer software company Database software developer
and manufacturer
CVS CORP. 3.0%
Drug store chain
Portfolio information is as of June 30, 1998. The portfolio is actively managed,
and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 1998
Stocks - 97.8%
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ISSUER SHARES VALUE
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U.S. Stocks - 95.9%
Aerospace - 1.7%
United Technologies Corp. 210,000 $ 19,425,000
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Automotive - 0.5%
Federal-Mogul Corp. 85,800 $ 5,791,500
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Banks and Credit Companies - 0.8%
Bank of New York, Inc. 107,600 $ 6,529,975
BankBoston Corp. 39,600 2,202,750
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$ 8,732,725
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Business Machines - 0.9%
Affiliated Computer Services, Inc., "A"* 104,500 $ 4,023,250
Xerox Corp. 54,600 5,548,725
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$ 9,571,975
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Business Services - 3.4%
AccuStaff, Inc.* 320,300 $ 10,009,375
Computer Sciences Corp. 177,500 11,360,000
DST Systems, Inc.* 135,500 7,588,000
Galileo International, Inc. 194,800 8,778,175
IKON Office Solutions, Inc. 46,700 680,069
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$ 38,415,619
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Computer Hardware - Systems - 2.5%
EMC Corp.* 322,700 $ 14,460,994
Dell Computer Corp.* 144,400 13,402,125
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$ 27,863,119
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Computer Software - Personal Computers - 6.4%
Microsoft Corp.* 657,600 $ 71,267,400
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Computer Software - Systems - 11.8%
BMC Software, Inc.* 561,600 $ 29,168,100
Cadence Design Systems, Inc.* 914,750 28,585,937
Computer Associates International, Inc. 625,075 34,730,730
Compuware Corp.* 120,400 6,155,450
Oracle Corp.* 931,075 22,869,530
Peoplesoft, Inc.* 38,300 1,800,100
Synopsys, Inc.* 180,800 8,271,600
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$ 131,581,447
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Consumer Goods and Services - 11.6%
Clorox Co. 60,600 $ 5,779,725
Colgate-Palmolive Co. 236,800 20,838,400
Gillette Co. 256,200 14,523,337
Revlon, Inc., "A"* 124,900 6,416,738
Service Corp. International 70,600 3,026,975
Tyco International Ltd. 1,243,728 78,354,864
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$ 128,940,039
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Defense Electronics - 1.6%
Loral Space & Communications Corp.* 640,700 $ 18,099,775
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Electrical Equipment - 1.2%
General Electric Co. 151,700 $ 13,804,700
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Electronics - 2.9%
AES Corp.* 230,400 $ 12,110,400
Altera Corp.* 176,700 5,223,694
Analog Devices, Inc.* 170,333 4,183,804
Microchip Technology, Inc.* 220,200 5,752,725
Xilinx, Inc.* 140,700 4,783,800
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$ 32,054,423
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Entertainment - 7.3%
CBS Corp. 201,200 $ 6,388,100
Clear Channel Communications, Inc.* 154,620 16,872,907
Harrah's Entertainment, Inc.* 95,100 2,211,075
Hearst-Argyle Television, Inc.* 59,800 2,392,000
Heftel Broadcasting Corp., "A"* 145,300 6,502,175
Jacor Communications, Inc.* 173,000 10,207,000
Mirage Resorts, Inc.* 297,600 6,342,600
Time Warner, Inc. 101,300 8,654,819
Univision Communications, Inc., "A"* 172,300 6,418,175
Viacom, Inc., "B"* 265,100 15,442,075
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$ 81,430,926
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Financial Institutions - 6.5%
Associates First Capital Corp., "A" 225,900 $ 17,366,062
CIT Group, Inc., "A" 159,400 5,977,500
Federal Home Loan Mortgage Corp. 328,700 15,469,444
Financial Federal Corp.* 188,975 5,066,892
Finova Group, Inc. 209,700 11,874,262
Franklin Resources, Inc. 199,400 10,767,600
Morgan Stanley Dean Witter & Co. 69,700 6,368,838
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$ 72,890,598
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Financial Services - 0.7%
SunAmerica, Inc. 135,750 $ 7,797,141
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Insurance - 0.6%
Annuity and Life Re Holdings Ltd.* 4,000 $ 88,500
Lincoln National Corp. 67,000 6,122,125
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$ 6,210,625
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Machinery - 0.2%
Lear Corp.* 52,700 $ 2,704,169
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Medical and Health Products - 2.7%
Biomet, Inc. 94,200 $ 3,114,488
Boston Scientific Corp.* 74,900 5,364,712
Bristol-Myers Squibb Co. 191,300 21,987,544
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$ 30,466,744
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Medical and Health Technology and Services - 6.5%
Cardinal Health, Inc. 74,300 $ 6,965,625
Columbia/HCA Healthcare Corp. 294,600 8,580,225
Health Management Associates, Inc., "A"* 153,900 5,146,031
HealthSouth Corp.* 454,000 12,116,125
Lincare Holdings, Inc.* 81,400 3,423,887
Scherer R.P. Corp.* 29,700 2,632,163
Total Renal Care Holdings, Inc.* 149,600 5,161,200
United Healthcare Corp. 387,800 24,625,300
Wellpoint Health Networks, Inc., "A"* 50,500 3,737,000
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$ 72,387,556
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Metals and Minerals - 0.8%
Minerals Technologies, Inc. 180,000 $ 9,157,500
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Oil Services - 0.7%
Cooper Cameron Corp.* 55,500 $ 2,830,500
Diamond Offshore Drilling, Inc. 70,600 2,824,000
EVI Weatherford, Inc.* 50,100 1,859,962
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$ 7,514,462
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Oils - 1.0%
USX-Marathon Group 325,600 $ 11,172,150
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Pollution Control - 0.6%
Waste Management, Inc. 176,000 $ 6,160,000
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Printing and Publishing - 0.2%
Scripps (E.W.) Howard, Inc. 39,400 $ 2,159,613
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Railroads - 0.1%
Wisconsin Central Transportation Corp.* 47,900 $ 1,047,813
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Restaurants and Lodging - 6.4%
Cavanaughs Hospitality Corp.* 4,000 $ 52,250
Cendant Corp.* 2,004,073 41,835,024
McDonalds Corp. 161,400 11,136,600
Promus Hotel Corp.* 466,363 17,954,975
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$ 70,978,849
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Stores - 7.0%
CompUSA, Inc.* 118,000 $ 2,131,375
Corporate Express, Inc.* 161,700 2,051,569
CVS Corp. 851,400 33,151,387
Linens 'N Things, Inc.* 23,200 709,050
Office Depot, Inc.* 671,800 21,203,687
Rite Aid Corp. 461,000 17,316,313
Staples, Inc.* 62,450 1,807,147
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$ 78,370,528
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Supermarkets - 2.0%
Meyer (Fred), Inc.* 62,200 $ 2,643,500
Safeway, Inc.* 485,800 19,765,987
--------------
$ 22,409,487
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Telecommunications - 6.6%
Cisco Systems, Inc.* 278,650 $ 25,653,216
Global TeleSystems Group, Inc.* 220,800 10,764,000
Hyperion Telecommunications, Inc., "A"* 9,200 144,325
Intermedia Communications, Inc.* 69,400 2,910,463
L-3 Communications Holding, Inc.* 2,000 65,375
Metromedia Fiber Network, Inc., "A"* 6,600 307,725
Nextlink Communications, Inc., "A"* 65,800 2,492,175
Qwest Communications International, Inc.* 163,254 5,693,483
Tel-Save Holdings, Inc.##* 134,900 1,989,775
Tel-Save Holdings, Inc.* 97,100 1,432,225
Tellabs, Inc.* 84,500 6,052,312
WorldCom, Inc.* 331,230 16,043,953
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$ 73,549,027
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Utilities - Electric - 0.7%
CalEnergy Co., Inc.* 252,500 $ 7,590,781
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Total U.S. Stocks $1,069,545,691
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Foreign Stocks - 1.9%
Bermuda - 0.5%
Ace Ltd. (Insurance) 149,000 $ 5,811,000
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Canada - 0.4%
Canadian National Railway Co. (Railroads) 88,800 $ 4,717,500
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United Kingdom - 1.0%
British Petroleum PLC, ADR (Oils) 126,429 $ 11,157,359
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Total Foreign Stocks $ 21,685,859
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Total Stocks (Identified Cost, $726,026,402) $1,091,231,550
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Short-Term Obligations - 2.9%
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PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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Federal Home Loan Bank, due 7/29/98 $ 2,000 $ 1,991,631
Federal Home Loan Mortgage Corp.,
due 7/08/98 - 7/14/98 14,440 14,418,397
Federal National Mortgage Assn., due 7/07/98 10,000 9,990,733
General Electric Co., due 7/01/98 6,640 6,640,000
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Total Short-Term Obligations, at Amortized Cost $ 33,040,761
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Total Investments (Identified Cost, $759,067,163) $1,124,272,311
Other Assets, Less Liabilities - (0.7)% (8,103,768)
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Net Assets - 100.0% $1,116,168,543
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* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
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JUNE 30, 1998
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Assets:
Investments, at value (identified cost, $759,067,163) $1,124,272,311
Cash 19,335
Receivable for Fund shares sold 1,779,329
Receivable for investments sold 11,760,919
Dividends receivable 281,676
Other assets 6,460
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Total assets $1,138,120,030
--------------
Liabilities:
Payable for Fund shares reacquired $ 15,775,111
Payable for investments purchased 5,516,203
Payable to affiliates -
Management fee 38,623
Administrative fee 1,361
Shareholder servicing agent fee 10,468
Distribution and service fee 421,471
Accrued expenses and other liabilities 188,250
--------------
Total liabilities $ 21,951,487
--------------
Net assets $1,116,168,543
==============
Net assets consist of:
Paid-in capital $ 653,159,590
Unrealized appreciation on investments 365,205,148
Accumulated undistributed net realized gain on
investments and foreign currency transactions 99,305,743
Accumulated net investment loss (1,501,938)
--------------
Total $1,116,168,543
==============
Shares of beneficial interest outstanding 67,414,647
==========
Class A shares:
Net asset value per share
(net assets of $1,075,256,439 / 64,876,479 shares of
beneficial interest outstanding) $16.57
======
Offering price per share (100 / 94.25) $17.58
======
Class B shares:
Net asset value and offering price per share
(net assets of $36,200,670 / 2,253,638 shares of
beneficial interest outstanding) $16.06
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $4,711,434 / 284,530 shares of
beneficial interest) $16.56
======
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
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1998
- -------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 1,979,634
Interest 750,527
Foreign taxes withheld (6,835)
------------
Total investment income $ 2,723,326
------------
Expenses -
Management fee $ 2,199,358
Trustees' compensation 25,684
Shareholder servicing agent fee 590,676
Distribution and service fee (Class A) 806,597
Distribution and service fee (Class B) 153,783
Administrative fee 77,797
Custodian fee 134,782
Postage 72,950
Printing 49,677
Auditing fees 19,114
Legal fees 1,006
Interest Expense 2,183
Miscellaneous 142,447
------------
Total expenses $ 4,276,054
Fees paid indirectly (131,455)
------------
Net expenses $ 4,144,599
------------
Net investment loss $ (1,421,273)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $103,307,518
Foreign currency transactions (3,999)
------------
Net realized gain on investments and foreign
currency transactions $103,303,519
------------
Change in unrealized appreciation -
Investments $ 90,649,521
Translation of assets and liabilities in
foreign currencies 5
------------
Net unrealized gain on investments
and foreign currency transactions $ 90,649,526
------------
Net realized and unrealized gain on
investments and foreign currency $193,953,045
------------
Increase in net assets from operations $192,531,772
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (1,421,273) $ (1,785,991)
Net realized gain on investments and foreign currency
transactions 103,303,519 133,803,519
Net unrealized gain on investments and foreign
currency translation 90,649,526 57,486,939
-------------- --------------
Increase in net assets from operations $ 192,531,772 $ 189,504,467
-------------- --------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (11,483,265) $ (118,989,258)
From net realized gain on investments and foreign
currency transactions (Class B) (350,210) (3,160,362)
From net realized gain on investments and foreign
currency transactions (Class I) (57,063) (488,974)
-------------- --------------
Total distributions declared to shareholders $ (11,890,538) $ (122,638,594)
-------------- --------------
Net increase in net assets from Fund share transactions $ (47,153,634) $ 92,987,853
-------------- --------------
Total increase in net assets $ 133,487,600 $ 159,853,726
Net assets:
At beginning of period 982,680,943 822,827,217
-------------- --------------
At end of period (including accumulated net investment
loss of $1,501,938 and $80,665, respectively) $1,116,168,543 $ 982,680,943
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ------------------------------------------------------------------------
JUNE 30, 1998 1997 1996 1995 1994 1993
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.92 $12.97 $11.94 $10.17 $11.56 $11.17
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income
(loss)(S) $(0.02) $(0.03) $(0.02) $ 0.03 $ 0.02 $ 0.07
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 4.83 2.96 2.62 3.46 (0.50) 1.73
------ ------ ------ ------ ------ ------
Total from investment
operations $ 4.81 $ 2.93 $ 2.60 $ 3.49 $(0.48) $ 1.80
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.01) $(0.07)
From net realized gain on
investments and foreign
currency transactions (2.16) (1.98) (1.57) (1.72) (0.83) (1.32)
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 $(2.16) $(1.98) $(1.57) $(1.72) $(0.91) $(1.41)
------ ------ ------ ------ ------ ------
Net asset value - end of period $16.57 $13.92 $12.97 $11.94 $10.17 $11.56
====== ====== ====== ====== ====== ======
Total return(+) 20.39%++ 23.28% 21.87% 34.49% (4.15)% 16.19%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.79%+ 0.84% 0.84% 0.87% 0.86% 0.84%
Net investment income (loss) (0.25)%+ (0.18)% (0.15)% 0.21% 0.21% 0.60%
Portfolio turnover 43% 60% 65% 100% 78% 79%
Net assets at end of period
(000 omitted) $1,075,256 $953,194 $807,657 $721,467 $589,260 $709,839
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
(+) 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.
(S) The distributor voluntarily waived 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 the 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>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.75 $ 9.97 $10.93 $10.96 $10.81
------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.15 $ 0.24 $ 0.30 $ 0.36 $ 0.22
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 0.67 1.94 (0.77) 2.74 0.76
------ ------ ------ ------ ------
Total from investment operations $ 0.82 $ 2.18 $(0.47) $ 3.10 $ 0.98
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.14) $(0.18) $(0.33) $(0.36) $(0.19)
From net realized gain on investments and
foreign currency transactions (0.26) (1.22) (0.16)# (2.77) (0.64)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.40) $(1.40) $(0.49) $(3.13) $(0.83)
------ ------ ------ ------ ------
Net asset value - end of period $11.17 $10.75 $ 9.97 $10.93 $10.96
====== ====== ====== ====== ======
Total return(+) 8.06% 9.29% (4.57)% 28.23% 8.90%
Ratios (to average net assets)/Supplemental data:
Expenses 0.89% 0.88% 0.80% 0.77% 0.86%
Net investment income 1.40% 2.14% 2.91% 2.79% 1.90%
Portfolio turnover 102% 131% 89% 83% 68%
Net assets at end of period (000 omitted) $694,084 $739,791 $687,847 $805,712 $767,924
(+) Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to
October 1, 1989). If the charge had been included, the results would have been lower.
# Includes per share distribution from paid-in capital of $0.0006.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ---------------------------------------------------------------------
JUNE 30, 1998 1997 1996 1995 1994 1993*
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $13.54 $12.73 $11.79 $10.08 $11.53 $12.52
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.08) $(0.14) $(0.14) $(0.09) $(0.08) $ --
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 4.71 2.89 2.57 3.42 (0.49) 0.36
------ ------ ------ ------ ------ ------
Total from investment operations $ 4.63 $ 2.75 $ 2.43 $ 3.33 $(0.57) $ 0.36
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net realized gain on
investments and foreign currency
transactions $(2.11) $(1.94) $(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 $(2.11) $(1.94) $(1.49) $(1.62) $(0.88) $(1.35)
------ ------ ------ ------ ------ ------
Net asset value - end of period $16.06 $13.54 $12.73 $11.79 $10.08 $11.53
====== ====== ====== ====== ====== ======
Total return 19.88%++ 22.27% 20.72% 33.20% (4.96)% 9.29%+
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.63%+ 1.64% 1.75% 1.81% 1.81% 1.33%+
Net investment loss (1.09)%+ (0.98)% (1.06)% (0.75)% (0.70)% --
Portfolio turnover 43% 60% 65% 100% 78% 79%
Net assets at end of period
(000 omitted) $36,201 $25,578 $15,170 $6,673 $3,166 $805
+ Annualized.
++ Not annualized.
* For the period from the inception of Class B, September 7, 1993, through December 31, 1993.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997**
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------------
CLASS I
- --------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C>
Net asset value - beginning of period $13.91 $12.84
------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $ 0.00+++
Net realized and unrealized gain on investments and foreign
currency transactions 4.77 3.07
------ ------
Total from investment operations $ 4.76 $ 3.07
------ ------
Less distributions declared to shareholders from net realized gain
on investments and foreign currency tranactions $(2.11) $(2.00)
------ ------
Net asset value - end of period $16.56 $13.91
====== ======
Total return 20.50%++ 24.65%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.63%+ 0.65%+
Net investment income (loss) (0.09)%+ 0.01%+
Portfolio turnover 43% 60%
Net assets at end of period (000 omitted) $4,711 $3,909
** For the period from the inception of Class I, January 2, 1997, through December 31, 1997.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(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 an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Investments
in foreign securities are vulnerable to the effects of changes in the relative
values of the local currency and the U.S. dollar and to the effects of changes
in each country's legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued at fair value as determined in good
faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend 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 custody fee is calculated as a percentage of
the Fund's average month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code, which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as 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 net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual rates:
First $200 million of average net assets 0.50%
Average net assets in excess of $200 million 0.40%
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all of its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $6,689 for the six months
ended June 30, 1998.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$114,299 for the six months ended June 30, 1998, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A and Class B shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class A shares
which are attributable to that securities dealer and a distribution fee to MFD
of up to 0.10% per annum of the Fund's average daily net assets attributable to
Class A shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $395,736 for the six months ended June 30,
1998. Payment of the 0.10% per annum Class A distribution fee will commence on
such date as the Trustees of the Fund may determine. Fees incurred under the
distribution plan during the six months ended June 30, 1998, were 0.15% of
average daily net assets attributable to Class A shares on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B shares. MFD will pay to
securities dealers that enter into a sales agreement with MFD all or a portion
of the service fee attributable to Class B shares. The service fee is intended
to be consideration for services rendered by the dealer with respect to Class B
shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $10,323 for Class B shares for the six
months ended June 30, 1998. Fees incurred under the distribution plan during the
six months ended June 30, 1998, were 1.00% of average daily net assets
attributable to Class B on an annualized basis.
Purchases over $1 million of Class A shares and certain purchases by retirement
plans are subject to a contingent deferred sales charge in the event of a
shareholder redemption within 12 months following such purchase. A contingent
deferred sales charge is imposed on shareholder redemptions of Class B shares in
the event of a shareholder redemption within six years of purchase. MFD receives
all contingent deferred sales charges. Contingent deferred sales charges imposed
during the six months ended June 30, 1998, were $140 and $24,821 for Class A and
Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an effective annual rate of
0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than short-term obligations,
aggregated $443,518,448 and $484,620,108, 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 $759,067,163
============
Gross unrealized appreciation $372,334,550
Gross unrealized depreciation (7,129,402)
------------
Net unrealized appreciation $365,205,148
============
(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
SIX MONTHS ENDED JUNE 30, 1998 YEAR ENDED DECEMBER 31, 1997
----------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 31,977,938 $ 503,129,042 27,510,057 $ 407,082,844
Shares issued to shareholders
in reinvestment of
distributions 671,403 11,008,524 8,193,543 109,056,560
Shares transferred to Class I -- -- (269,714) (3,463,128)
Shares reacquired (36,247,926) (566,935,570) (29,248,030) (433,063,756)
------------- -------------- --------- -------------
Net increase (decrease) (3,598,585) $ (52,798,004) 6,185,856 $ 79,612,520
============= ============== ========= =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED JUNE 30, 1998 YEAR ENDED DECEMBER 31, 1997
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,085,442 $ 16,232,953 1,904,196 $ 27,635,898
Shares issued to shareholders
in reinvestment of
distributions 19,889 317,970 222,809 2,885,376
Shares reacquired (740,312) (10,964,599) (1,430,169) (20,713,143)
------------- -------------- --------- -------------
Net increase 365,019 $ 5,586,324 696,836 $ 9,808,131
============= ============== ========= =============
<CAPTION>
Class I Shares
SIX MONTHS ENDED JUNE 30, 1998 PERIOD ENDED DECEMBER 31, 1997*
---------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,660 $ 134,036 13,562 $ 191,430
Shares issued to shareholders
in reinvestment of
distributions 3,482 57,414 36,765 488,974
Shares transferred from Class A -- -- 269,714 3,463,128
Shares reacquired (8,523) (133,404) (39,130) (576,330)
------------- -------------- --------- -------------
Net increase 3,619 $ 58,046 280,911 $ 3,567,202
============= ============== ========= =============
* For the period from the inception of Class I, January 2, 1997, through December 31, 1997.
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of Fund
shares. Interest is charged to each fund, based on its borrowings, at a rate
equal to the bank's base rate. In addition, a commitment fee, based on the
average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated to
the Fund for the six months ended June 30, 1998, was $1,343.
The Fund and other affiliated funds also participate in a $20 million
uncommitted, unsecured line of credit provided by State Street Bank and Trust
Company under a line of credit agreement. Borrowings may be made to temporarily
finance the purchase of securities, the redemption of shares, or emergency
expenses. During the period, the maximum amount outstanding was $2,376,000 and
$0 was outstanding at June 30, 1998. Interest expense incurred on the borrowings
amounted to $2,183 for the six months ended June 30, 1998, and the weighted
average interest rate on these borrowings 6.8%.
<PAGE>
MFS(R) GROWTH OPPORTUNITIES FUND
<TABLE>
<S> <C>
TRUSTEES CUSTODIAN
Richard B. Bailey* - Private Investor; State Street Bank and Trust Company
Former Chairman and Director (until 1991),
MFS Investment Management INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Peter G. Harwood - Private Investor call toll free: 1-800-637-4458 anytime
from a touch-tone telephone.
J. Atwood Ives - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified For information on MFS mutual funds,
services company) call your financial adviser or, for an
information kit, call toll free:
Lawrence T. Perera - Partner, Hemenway 1-800-637-2929 any business day from
& Barnes (attorneys) 9 a.m. to 5 p.m. Eastern time (or leave
a message anytime).
William J. Poorvu - Adjunct Professor,
Harvard University Graduate School INVESTOR SERVICE
of Business Administration MFS Service Center, Inc.
P.O. Box 2281
Charles W. Schmidt - Private Investor Boston, MA 02107-9906
Arnold D. Scott* - Senior Executive For general information, call toll free:
Vice President, Director, and Secretary, 1-800-225-2606 any business day from
MFS Investment Management 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - Chairman, Chief For service to speech- or hearing-impaired,
Executive Officer, and Director, call toll free: 1-800-637-6576 any
MFS Investment Management business day from 9 a.m. to 5 p.m.
Eastern time. (To use this service, your
Elaine R. Smith - Independent Consultant phone must be equipped with a
Telecommunications Device for the Deaf.)
David B. Stone - Chairman and Director,
North American Management Corp. For share prices, account balances, and
(investment advisers) exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
INVESTMENT ADVISER telephone.
Massachusetts Financial Services Company
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
DISTRIBUTOR
MFS Fund Distributors, Inc. [DALBAR LOGO] For the fourth year in a row,
500 Boylston Street MFS earned a #1 ranking in the DALBAR,
Boston, MA 02116-3741 Inc. Broker/Dealer Survey, Main
Office Operations Service Quality
PORTFOLIO MANAGER Category. The firm achieved a 3.42
Paul M. McMahon* overall score on a scale of 1 to 4
in the 1997 survey. A total of 111
TREASURER firms responded, offering input on
W. Thomas London* the quality of service they
received from 29 mutual fund
ASSISTANT TREASURERS companies nationwide. The survey
Mark E. Bradley* contained questions about service
Ellen Moynihan* quality in 11 categories, including
James O. Yost* "knowledge of operations contact,"
"keeping you informed," and "ease
SECRETARY of doing business" with the firm.
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
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MFS(R) GROWTH ----------------
OPPORTUNITIES FUND Bulk Rate
U.S. Postage
Paid
MFS
----------------
[LOGO] MFS(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
[DALBAR
LOGO]
TOP-RATED SERVICE
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MGO-3 8/98 65M 16/216/816
