<PAGE>
[logo]
75 [graphic] MFS(R)
INVESTMENT MANGEMENT
YEARS
WE INVENTED THE MUTUAL FUND(R)
MFS(R) GROWTH
OPPORTUNITIES FUND
- ---------------------------------
ANNUAL REPORT o DECEMBER 31, 1998
- ---------------------------------
DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 30)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 21
Independent Auditors' Report .............................................. 27
MFS Prepares for the Year 2000 ............................................ 29
Trustees and Officers ..................................................... 33
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE
YEARS AHEAD WILL BRING A NUMBER OF
CHALLENGES, OUR 75 YEARS OF EXPERIENCE
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Dear Shareholders,
In 1999, MFS celebrates its 75th anniversary. The nation's first mutual fund
- -- our Massachusetts Investors Trust (MIT) -- was introduced to the public on
March 21, 1924. Since then, MFS Investment Management(R), the company that grew
out of that original fund, has helped guide shareholders through many economic
and investment cycles, primarily by focusing on the long-term opportunities
created by an expanding global economy. As of December 31, 1998, MFS manages
nearly $100 billion, and the firm's 2,000 people serve almost four million
investors and their financial advisers worldwide. Meanwhile, MIT's assets have
grown to over $12 billion, and 56 mutual funds are offered in the MFS Family of
Funds(R).
One of the elements in the success of MIT did not exist before our founders
invented it in 1924. That is daily redemption. This innovation means that
if you want to sell your investment in any MFS mutual fund, you have the
security of knowing that you may do so immediately by exchanging into another
MFS fund. Or, if you need your money for other purposes, it can quickly be
wired or mailed to you. This daily redemption feature, through which new
shares were created when people invested in MIT and were redeemed when people
sold, brought another important change to the industry. Now, the price of a
mutual fund's shares wasn't determined by supply and demand, but by the value
of the securities owned by the fund.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike companies that rely on
Wall Street research reports, which can be used by many investors at the same
time, MIT's managers built its long-term track record by visiting companies,
talking to managers and competitors, and "kicking the tires" so they could
judge the quality and potential of each company's products and services for
themselves. Today, MFS has more than 100 full-time portfolio managers, stock
analysts, and credit analysts who track the equity and bond markets. That
number includes over 35 equity analysts who specialize in industries such as
aviation, media, technology, automobiles, and utilities.
While MIT introduced the daily redemption feature, that was not our only
invention. We also established the nation's first global bond fund, first
high-yield municipal bond fund, and first high-yield municipal closed-end
bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. The MFS Service Center handles millions of transactions and
phone calls every year. Supporting the work of financial advisers, promptly
sending out statements and confirmations, and answering hundreds of investors'
questions every day are crucial elements in maintaining long-term relationships
with our fund shareholders. That link to our investors has also been enhanced by
our site on the World Wide Web: WWW.MFS.COM. Since 1996, this site has given
investors and the general public access to up- to-date information about MFS
products and services, as well as market outlooks and retirement information.
The site has rapidly become one of our primary vehicles for communicating with
our investors and educating the public about mutual funds in general and MFS in
particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead and
build on our 75 years of innovation and experience to help meet your
investment needs in the next century. We appreciate your confidence and
welcome any questions or comments you may have.
Respectfully,
/s/ Jeffrey Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management
January 15, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Paul M. McMahon]
For the 12 months ended December 31, 1998, Class A shares of the Fund provided
a total return of 29.17%, Class B shares 28.15%, and Class I shares 29.45%.
These returns, which include the reinvestment of distributions but exclude the
effects of any sales charges, compare to a 28.58% 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. THE FUND'S CLASS A AND CLASS I SHARES OUTPERFORMED THE S&P 500 OVER THE PAST
12 MONTHS. TO WHAT DO YOU ATTRIBUTE THIS PERFORMANCE?
A. Some of our major weightings performed very well, particularly technology
sector holdings such as Microsoft, Cisco, Intel, and EMC. These companies
have been able to leverage the worldwide drive toward higher productivity
and lower cost structures that are predominantly enabled by technology.
This trend is apparent in industries around the world and is a result of
the current low-inflation scenario. Companies are compensating for the
inability to boost revenues through price increases by turning to cost
reduction and productivity enhancement as a means of keeping earnings
healthy. In Cisco's case, the company provides much of the communications
equipment that is the backbone of the Internet, and it has benefited from
the explosion of interest in the "Net.
Q. HOW HAVE OTHER HOLDINGS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Holdings in our leisure sector such as Time Warner and Viacom performed
well, driven by their ability to fill the need for cable programming and
operations services as that medium expands. Radio broadcasters such as
Jacor, Clear Channel, and Heftel also performed well in the wake of major
consolidation in the industry. Consolidation has enabled broadcasters to
offer comprehensive packages to potential advertisers that are more
compelling than several small individual advertising buys covering one
market. Additionally, advertisers are aware that radio allows them to reach
more consumers than other electronic media thanks to the medium's high rate
of out-of-home usage. Retailers such as CVS and Rite Aid have performed
well, buoyed both by consolidation in the industry and favorable
demographics that have resulted in increased prescription volume as the
population ages.
Q. WHAT STOCKS DID NOT PERFORM AS WELL AS YOU WOULD HAVE LIKED OVER THE PAST 12
MONTHS?
A. Cendant was one of our large holdings that had difficulty and, though it
has rallied somewhat, it is still down for the year. We still like the
company's business model, however, and look forward to an increased share
price in the future. Computer Associates also missed its earnings estimates
earlier in the year and suffered as a result, though we feel the company is
fundamentally sound and is worthy of our confidence long term. Gillette was
working its way through a product transition from its old shaving system to
its new product. As it was clearing old inventory, the Asian economic
crisis came to a head and hurt the company's earnings as a result of
reduced demand from those nations.
Q. WHAT SORT OF IMPACT HAVE THE DIFFICULTIES IN ASIA HAD ON THE PORTFOLIO AS A
WHOLE, IF ANY?
A. We didn't have a lot of direct Asian exposure. During the U.S. market
correction in September and October, some of which was the result of
weakness in the Asian economies, we took the opportunity to add to
technology holdings that still displayed solid fundamentals, good growth
prospects, and that we felt would rebound once the worst was over. Some of
these names included Compuware, DST Systems, Galileo International, and
Oracle.
Q. WERE THERE ANY OTHER MAJOR CHANGES TO THE PORTFOLIO IN THE PAST 12 MONTHS?
A. We lightened up significantly on the portfolio's exposure to industrial
goods and basic materials because we felt those industries were in the
process of a mini-recession of their own and were not as resilient as
technology stocks in the current environment. We also increased our health
care holdings and added some of the major pharmaceutical stocks because,
though expensive, they offer strong fundamentals and good earnings growth
prospects.
Q. WHAT'S YOUR INVESTMENT OUTLOOK FOR THE FIRST HALF OF 1999?
A. We like to look at the current environment in the same way that we look at
a potential investment. This entails factors such as earnings growth,
management quality, economic trends, cash flow generation, and valuations.
In light of those factors, we think that gross domestic product (GDP) may
grow on the order of 2.5%, while inflation will remain low, at about 1.5%.
Therefore, we expect to see moderate growth. We believe that many American
companies that are global leaders will continue to grow revenues and
earnings as they consolidate their leadership positions and leverage
secular trends. One concern here is that valuations in the market are
fairly high as the result of significant amounts of liquidity that were
pumped into the economy from interest-rate cuts around the world and a
flight from international markets to U.S. equities. However, we think we're
closer to achieving stability in the next few months, which means that
valuations may level off as investors pay closer attention to earnings
growth. In general, we think investors should expect more moderate
performance from the stock market in the future. For our part, we will
continue to focus on companies that we believe can deliver the best
earnings growth at the best prices and generate strong cash flow.
/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
- --------------------------------------------------------------------------------
PAUL M. MCMAHON IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R).
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 COLLEGE
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: $1.2 BILLION NET ASSETS AS OF DECEMBER 31, 1998
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results reflect the percentage change in net asset value, including
reinvestment of dividends. Benchmark comparisons are unmanaged and do not
reflect any fees or expenses. The performance of other share classes will be
less than the line shown, based on differences in sales charges and Rule 12b-1
fees paid by shareholders investing in different classes. (See Notes to
Performance Summary for more information.) It is not possible to invest
directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-year period ended December 31, 1998)
[Graphic Omitted]
MFS Growth S&P 500 Consumer
Opportunities Composite Price Index
Fund - Class A Index - U.S.
- -------------------------------------------
12/93 $ 9,426 $10,000 $10,000
12/94 9,030 10,132 10,268
12/95 12,140 13,940 10,521
12/96 14,800 17,140 10,878
12/97 18,245 22,859 11,063
12/98 23,568 29,390 11,262
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended December 31, 1998)
[Graphic Omitted]
MFS Growth S&P 500 Consumer
Opportunities Composite Price Index
Fund - Class A Index - U.S.
- -------------------------------------------
12/88 $ 9,424 $10,000 $10,000
12/90 11,580 12,760 11,104
12/92 15,267 17,915 11,772
12/94 17,003 19,982 12,423
12/96 27,866 33,802 13,162
12/98 44,376 57,961 13,627
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 1998
CLASS A
1 Year 3 Years 5 Years 10 Years/ Life
- --------------------------------------------------------------------------------
Average Annual Total Return +29.17% +24.73% +20.13% +16.76%
- --------------------------------------------------------------------------------
SEC Results +21.74% +22.30% +18.71% +16.07%
- --------------------------------------------------------------------------------
CLASS B
1 Year 3 Years 5 Years 10 Years/ Life
- --------------------------------------------------------------------------------
Average Annual Total Return +28.15% +23.67% +19.08% +16.21%
- --------------------------------------------------------------------------------
SEC Results +24.15% +23.02% +18.88% +16.21%
- --------------------------------------------------------------------------------
CLASS I
1 Year 3 Years 5 Years 10 Years/ Life
- --------------------------------------------------------------------------------
Average Annual Total Return +29.45% +24.86% +20.20% +16.80%
- --------------------------------------------------------------------------------
COMPARATIVE INDICES
1 Year 3 Years 5 Years 10 Years/ Life
- --------------------------------------------------------------------------------
Standard & Poor's 500 Composite
Index+ +28.58% +28.23% +24.06% +19.21%
- --------------------------------------------------------------------------------
Consumer Price Index+# + 1.80% + 2.30% + 2.41% + 3.14%
- --------------------------------------------------------------------------------
+Source: CDA/Wiesenberger.
#The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class
B share ("B") SEC results reflect the applicable contingent deferred sales
charge (CDSC), which declines over six years from 4% to 0%. Class I shares
("I") have no sales charge or Rule 12b-1 fees and are only available to
certain institutional investors.
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 A are lower than those of B, 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 DECEMBER 31, 1998
FIVE LARGEST STOCK SECTORS
[Graphic Omitted]
TECHNOLOGY 25.4%
LEISURE 15.1%
RETAILING 12.4%
CONGLOMERATES, SPECIAL
PRODUCTS/SERVICES 11.5%
HEALTH CARE 10.8%
TOP 10 STOCK HOLDINGS
<TABLE>
<CAPTION>
<S> <C>
MICROSOFT CORP. 7.0% CISCO SYSTEMS, INC. 2.7%
Computer software and systems company Computer network developer
TYCO INTERNATIONAL LTD. 6.8% CaDENCE DESIGN SYSTEMS, INC. 2.5%
Security systems, packaging, and electronic Computer software and systems company
equipment conglomerate
BMC SOFTWARE, INC. 2.5%
CVS CORP. 3.8% Computer software company
Drug store chain
FEDERAL HOME LOAN MORTGAGE CORP. 2.2%
COMPUTER ASSOCIATES INTERNATIONAL 3.5% U.S. mortgage banker and underwriter
Computer software company
PFIZER, INC. 2.2%
CENDANT CORP. 2.8% Pharmaceutical company
Hotel, real estate, and consumer services
franchiser
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- December 31, 1998
Stocks - 95.0%
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ISSUER SHARES VALUE
- --------------------------------------------------------------------------------------------------------
U.S. Stocks - 93.4%
Advertising - 0.1%
Outdoor Systems, Inc.* 48,800 $ 1,464,000
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Aerospace - 0.4%
United Technologies Corp. 43,900 $ 4,774,125
- --------------------------------------------------------------------------------------------------------
Automotive - 0.5%
Federal-Mogul Corp. 101,100 $ 6,015,450
- --------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.7%
Bank of New York, Inc. 208,400 $ 8,388,100
- --------------------------------------------------------------------------------------------------------
Broadcasting - 0.2%
Infinity Broadcasting Corp.* 75,300 $ 2,061,338
- --------------------------------------------------------------------------------------------------------
Business Services - 2.7%
DST Systems, Inc.* 215,300 $ 12,285,556
Galileo International, Inc.* 259,000 11,266,500
Modis Professional Services, Inc.* 387,500 5,618,750
Policy Management Systems Corp.* 45,500 2,297,750
--------------
$ 31,468,556
- --------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 6.6%
Microsoft Corp.* 570,300 $ 79,093,481
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Computer Software - Services - 0.5%
EMC Corp.* 72,000 $ 6,120,000
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Computer Software - Systems - 12.1%
BMC Software, Inc.* 631,600 $ 28,145,675
Cadence Design Systems, Inc.* 952,409 28,334,168
Cambridge Technology Partners, Inc.* 94,900 2,099,663
Computer Associates International, Inc. 927,575 39,537,884
Compuware Corp.* 186,800 14,593,750
Oracle Corp.* 532,475 22,962,984
Synopsys, Inc.* 155,600 8,441,300
--------------
$ 144,115,424
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Consumer Goods and Services - 9.8%
Clorox Co. 95,500 $ 11,155,594
Colgate-Palmolive Co. 132,300 12,287,362
Gillette Co. 341,000 16,474,562
Tyco International Ltd. 1,026,628 77,446,250
--------------
$ 117,363,768
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Defense Electronics - 0.9%
Loral Space & Communications Corp.* 576,700 $ 10,272,469
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Electrical Equipment - 1.3%
General Electric Co. 146,600 $ 14,962,362
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Electronics - 2.0%
Analog Devices, Inc.* 215,633 $ 6,765,486
Intel Corp. 147,300 17,464,256
--------------
$ 24,229,742
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Entertainment - 8.9%
CBS Corp. 400,500 $ 13,116,375
Clear Channel Communications, Inc.* 165,640 9,027,380
Heftel Broadcasting Corp., "A"* 140,400 6,914,700
Jacor Communications, Inc.* 248,900 16,022,937
MediaOne Group, Inc.* 498,100 23,410,700
Time Warner, Inc. 236,300 14,665,369
Univision Communications, Inc., "A"* 116,100 4,201,369
Viacom, Inc., "B"* 245,700 18,181,800
--------------
$ 105,540,630
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Financial Institutions - 7.0%
Associates First Capital Corp., "A" 482,200 $ 20,433,225
CIT Group, Inc., "A" 193,000 6,139,813
Federal Home Loan Mortgage Corp. 394,400 25,414,150
Federal National Mortgage Assn. 73,800 5,461,200
Financial Federal Corp.* 183,475 4,541,006
Finova Group, Inc. 259,400 13,991,387
Franklin Resources, Inc. 67,400 2,156,800
Morgan Stanley, Dean Witter & Co. 78,200 5,552,200
--------------
$ 83,689,781
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Financial Services - 0.8%
SunAmerica, Inc. 120,550 $ 9,779,619
- --------------------------------------------------------------------------------------------------------
Insurance - 1.1%
Equitable Cos., Inc. 53,100 $ 3,073,163
Lincoln National Corp. 120,800 9,882,950
MONY Group, Inc.* 100 3,131
--------------
$ 12,959,244
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Medical and Health Products - 5.3%
Boston Scientific Corp.* 299,600 $ 8,033,025
Eli Lilly & Co. 117,000 10,398,375
McKesson Corp. 94,700 7,487,219
Pfizer, Inc. 201,700 25,300,743
Schering Plough Corp. 208,300 11,508,575
--------------
$ 62,727,937
- --------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 5.0%
Cardinal Health, Inc. 182,002 $ 13,809,401
HBO & Co. 276,000 7,917,750
Health Management Associates, Inc., "A"* 438,750 9,487,969
HealthSouth Corp.* 718,100 11,085,669
Total Renal Care Holdings, Inc.* 42,800 1,265,275
United Healthcare Corp. 376,500 16,213,031
--------------
$ 59,779,095
- --------------------------------------------------------------------------------------------------------
Metals and Minerals - 0.6%
Minerals Technologies, Inc. 171,300 $ 7,012,594
- --------------------------------------------------------------------------------------------------------
Oils - 0.2%
Conoco, Inc., "A"* 132,000 $ 2,755,500
- --------------------------------------------------------------------------------------------------------
Railroads - 0.3%
Kansas City Southern Industries, Inc. 83,300 $ 4,097,319
- --------------------------------------------------------------------------------------------------------
Restaurants and Lodging - 4.7%
Cendant Corp.* 1,688,073 $ 32,178,892
McDonalds Corp. 127,100 9,739,037
Promus Hotel Corp.* 426,363 13,803,502
--------------
$ 55,721,431
- --------------------------------------------------------------------------------------------------------
Special Products and Services - 0.5%
USEC, Inc. 431,700 $ 5,989,838
- --------------------------------------------------------------------------------------------------------
Stores - 9.3%
CompUSA, Inc.* 570,300 $ 7,449,544
CVS Corp. 786,100 43,235,500
Linens 'n Things, Inc.* 22,800 903,450
Office Depot, Inc.* 638,400 23,580,900
Rite Aid Corp. 500,100 24,786,206
TJX Cos., Inc. 356,300 10,332,700
--------------
$ 110,288,300
- --------------------------------------------------------------------------------------------------------
Supermarkets - 2.6%
Meyer (Fred), Inc.* 203,600 $ 12,266,900
Safeway, Inc.* 302,900 18,457,969
--------------
$ 30,724,869
- --------------------------------------------------------------------------------------------------------
Telecommunications - 7.9%
3Com Corp.* 261,000 $ 11,696,062
American Tower Corp., "A"* 81,800 2,418,213
Cisco Systems, Inc.* 331,025 30,723,258
Global TeleSystems Group, Inc.* 212,000 11,819,000
Intermedia Communications, Inc.* 67,500 1,164,375
L-3 Communications Holding, Inc.* 2,000 93,125
Lucent Technologies, Inc. 78,800 8,668,000
MCI WorldCom, Inc.* 290,630 20,852,702
Nextlink Communications, Inc., "A"* 93,700 2,658,738
Qwest Communications International, Inc.* 35,754 1,787,700
Tel-Save.com, Inc.*## 134,900 2,259,575
--------------
$ 94,140,748
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Utilities - Electric - 1.4%
AES Corp.* 184,000 $ 8,717,000
CalEnergy Co., Inc.* 247,500 8,585,156
--------------
$ 17,302,156
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Total U.S. Stocks $1,112,837,876
- --------------------------------------------------------------------------------------------------------
Foreign Stocks - 1.6%
Bermuda - 0.6%
Ace Ltd. (Insurance) 181,500 $ 6,250,406
Global Crossing Ltd. (Telecommunications)* 9,800 442,225
--------------
$ 6,692,631
- --------------------------------------------------------------------------------------------------------
Brazil - 0.2%
Tele Sudeste Celular Participacoes S.A.
(Telecommunications)* 38,100 $ 788,194
Telesp Celular Participacoes S.A.
(Telecommunications)* 67,500 1,181,250
--------------
$ 1,969,444
- --------------------------------------------------------------------------------------------------------
United Kingdom - 0.8%
British Petroleum PLC, ADR (Oils) 59,545 $ 5,656,775
Reuters Group PLC (Business Services) 263,400 2,774,660
Taylor Nelson Sofres PLC (Market Research) 1,413,400 1,793,688
--------------
$ 10,225,123
- --------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 18,887,198
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Total Stocks (Identified Cost, $739,017,101) $1,131,725,074
- --------------------------------------------------------------------------------------------------------
Convertible Preferred Stock - 0.4%
- --------------------------------------------------------------------------------------------------------
Entertainment - 0.4%
MediaOne Group, Inc., 6.25% (Identified Cost,
$3,696,750) 63,600 $ 4,229,400
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 0.5%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., due 1/04/99 - 1/
07/99, at Amortized Cost $ 6,370 $ 6,366,712
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $749,080,563) $1,142,321,186
Other Assets, Less Liabilities - 4.1% 48,887,144
- --------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,191,208,330
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $749,080,563) $1,142,321,186
Cash 13,437
Receivable for Fund shares sold 26,616,387
Receivable for investments sold 31,000,385
Interest and dividends receivable 316,830
Other assets 6,460
--------------
Total assets $1,200,274,685
--------------
Liabilities:
Payable for Fund shares reacquired $ 4,082,195
Payable for investments purchased 4,300,633
Payable to affiliates -
Management fee 13,593
Shareholder servicing agent fee 3,669
Distribution and service fee 466,344
Accrued expenses and other liabilities 199,921
--------------
Total liabilities $ 9,066,355
--------------
Net assets $1,191,208,330
==============
Net assets consist of:
Paid-in capital $ 770,564,813
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 393,240,616
Accumulated undistributed net realized gain on
investments and
foreign currency transactions 27,497,091
Accumulated net investment loss (94,190)
--------------
Total $1,191,208,330
==============
Shares of beneficial interest outstanding 74,804,782
==========
Class A shares:
Net asset value per share
(net assets of $1,137,301,849 / 71,300,898 shares of
beneficial interest outstanding) $15.95
======
Offering price per share (100 / 94.25) $16.92
======
Class B shares:
Net asset value and offering price per share
(net assets of $48,806,001 / 3,184,151 shares of
beneficial interest outstanding) $15.33
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $5,100,480 / 319,733 shares of
beneficial interest outstanding) $15.95
======
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A and
Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations
- -------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 4,026,801
Interest (including income on securities
loaned of $37,917) 1,613,926
Foreign taxes withheld (23,053)
------------
Total investment income $ 5,617,674
------------
Expenses -
Management fee $ 4,405,363
Trustees" compensation 56,997
Shareholder servicing agent fee 1,182,692
Distribution and service fee (Class A) 1,847,835
Distribution and service fee (Class B) 349,792
Administrative fee 129,553
Custodian fee 329,633
Printing 63,119
Postage 110,572
Auditing fees 32,785
Legal fees 6,619
Miscellaneous 285,211
------------
Total expenses $ 8,800,171
Fees paid indirectly (310,724)
------------
Net expenses $ 8,489,447
------------
Net investment loss (2,871,773)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $163,238,560
Foreign currency transactions (3,708)
------------
Net realized gain on investments and foreign
currency transactions $163,234,852
------------
Change in unrealized appreciation (depreciation) -
Investments $118,684,996
Translation of assets and liabilities in
foreign currencies (2)
------------
Net unrealized gain on investments and
foreign currency translation $118,684,994
------------
Net realized and unrealized gain on
investments and foreign currency $281,919,846
------------
Increase in net assets from operations $279,048,073
============
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS -- continued
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment loss $ (2,871,773) $ (1,785,991)
Net realized gain on investments and foreign currency
transactions 163,234,852 133,803,519
Net unrealized gain on investments and foreign
currency translation 118,684,994 57,486,939
-------------- --------------
Increase in net assets from operations $ 279,048,073 $ 189,504,467
-------------- --------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (120,735,017) $ (118,989,258)
From net realized gain on investments and foreign
currency transactions (Class B) (5,043,936) (3,160,362)
From net realized gain on investment and foreign
currency transactions (Class I) (548,219) (488,974)
-------------- --------------
Total distributions declared to shareholders $ (126,327,172) $ (122,638,594)
-------------- --------------
Net increase in net assets from Fund share transactions $ 55,806,486 $ 92,987,853
-------------- --------------
Total increase in net assets $ 208,527,387 $ 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 $94,190 and $80,665, respectively) $1,191,208,330 $ 982,680,943
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $13.92 $12.97 $11.94 $10.17 $11.56
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.04) $(0.03) $(0.02) $ 0.03 $ 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 3.96 2.96 2.62 3.46 (0.50)
------ ------ ------ ------ ------
Total from investment operations $ 3.92 $ 2.93 $ 2.60 $ 3.49 $(0.48)
------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.01)
From net realized gain on investments
and foreign currency transactions (1.89) (1.98) (1.57) (1.72) (0.83)
In excess of net investment income -- -- -- -- (0.02)
In excess of net realized gain on
investments and foreign currency
transactions -- -- -- -- (0.05)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.89) $(1.98) $(1.57) $(1.72) $(0.91)
------ ------ ------ ------ ------
Net asset value - end of period $15.95 $13.92 $12.97 $11.94 $10.17
====== ====== ====== ====== ======
Total return(+) 29.17% 23.28% 21.87% 34.49% (4.15)%
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.81% 0.84% 0.84% 0.87% 0.86%
Net investment income (loss) (0.25)% (0.18)% (0.15)% 0.21% 0.21%
Portfolio turnover 79% 60% 65% 100% 78%
Net assets at end of period (000 omitted) $1,137,302 $953,194 $807,657 $721,467 $589,260
#Per share data are based on average shares outstanding.
##The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
(+)Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
(S)The distributor did not impose a portion of its distribution fee for certain of the periods indicated. If this fee had
been paid by the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.02 $ 0.01
Ratios (to average net assets):
Expenses## 0.97% 0.96%
Net investment income 0.11% 0.11%
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $13.54 $12.73 $11.79 $10.08 $11.53
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.16) $(0.14) $(0.14) $(0.09) $(0.08)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 3.83 2.89 2.57 3.42 (0.49)
------ ------ ------ ------ ------
Total from investment operations $ 3.67 $ 2.75 $ 2.43 $ 3.33 $(0.57)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net realized gain on investments and
foreign currency transactions $(1.88) $(1.94) $(1.49) $(1.62) $(0.83)
In excess of net realized gain on investments
and foreign currency transactions -- -- -- -- (0.05)
------ ------ ------ ------ ------
Total distributions declared to shareholders $(1.88) $(1.94) $(1.49) $(1.62) $(0.88)
------ ------ ------ ------ ------
Net asset value - end of period $15.33 $13.54 $12.73 $11.79 $10.08
====== ====== ====== ====== ======
Total return 28.15% 22.27% 20.72% 33.20% (4.96)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.63% 1.64% 1.75% 1.81% 1.81%
Net investment loss (1.05)% (0.98)% (1.06)% (0.75)% (0.70)%
Portfolio turnover 79% 60% 65% 100% 78%
Net assets at end of period (000 omitted) $48,806 $25,578 $15,170 $6,673 $3,166
</TABLE>
#Per share data are based on average shares outstanding.
##The Fund has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian
and dividend disbursing agent. For fiscal years ending after September 1,
1995, the Fund's expenses are calculated without reduction for this expense
offset arrangement.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997*
- -----------------------------------------------------------------------------------------------------------------
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 3.96 3.07
------ ------
Total from investment operations $ 3.95 $ 3.07
------ ------
Less distributions declared to shareholders from net realized gain
on investments and foreign currency transactions $(1.91) $(2.00)
------ ------
Net asset value - end of period $15.95 $13.91
====== ======
Total return 29.45% 24.65%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.63% 0.65%+
Net investment income (loss) (0.06)% 0.01%+
Portfolio turnover 79% 60%
Net assets at end of period (000 omitted) $5,100 $3,909
</TABLE>
*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 has an expense offset arrangement which reduces the Fund's custodian
fee based upon the amount of cash maintained by the Fund with its custodian
and dividend disbursing agent. The Fund's expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements
<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.
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 payments received in additional securities are
recorded on the ex-dividend date in an amount equal to the value of the
security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code, which may differ from generally accepted accounting principles, the
basis on which these financial statements are prepared. Accordingly, the
amount of net investment income and net realized gain reported on these
financial statements may differ from that reported on the Fund's tax return
and, consequently, the character of distributions to shareholders reported in
the financial highlights may differ from that reported to shareholders on Form
1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as 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. During
the year ended December 31, 1998, $2,858,248 and $14,445,103 were reclassified
to accumulated net investment loss and paid-in capital from accumulated net
realized gain on investments and foreign currency transactions due to
differences between book and tax accounting for currency transactions and the
offset of net investment loss against short-term capital gains. 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 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%
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
$17,877 for the year ended December 31, 1998.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$120,769 for the year ended December 31, 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 (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 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 $793,817 for the year
ended December 31, 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 year ended December 31, 1998,
were 0.18% 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 $5,002 for Class B shares for the year
ended December 31, 1998. Fees incurred under the distribution plan during the
year ended December 31, 1998, 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 by
retirement plans are subject to a contingent deferred sales charge in the
event of a shareholder redemption within 12 months following purchase. A
contingent deferred sales charge is imposed on shareholder redemption's 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, 1998, were
$1,713 and $47,937 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%
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. government securities $ 8,006,042 $ 1,745,037
------------ ------------
Investments (non-U.S. government
securities) $801,518,270 $892,124,429
------------ ------------
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 $752,106,295
------------
Gross unrealized appreciation $406,818,556
Gross unrealized depreciation (16,603,665)
------------
Net unrealized appreciation $390,214,891
============
(4) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were
as follows:
<TABLE>
Class A Shares
YEAR ENDED DECEMBER 31, 1998 YEAR ENDED DECEMBER 31, 1997
--------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 101,045,903 $1,553,750,903 27,510,057 $407,082,844
Shares issued to shareholders
in reinvestment of
distributions 7,591,986 113,783,982 8,193,543 109,056,560
Shares transferred to Class I -- -- (269,714) (3,463,128)
Shares reacquired (105,812,055) (1,631,375,079) (29,248,030) (433,063,756)
------------ -------------- ----------- ------------
Net increase 2,825,834 $ 36,159,806 6,185,856 $ 79,612,520
============ ============== =========== ============
Class B Shares
YEAR ENDED DECEMBER 31, 1998 YEAR ENDED DECEMBER 31, 1997
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
Shares sold 3,553,497 $ 52,527,790 1,904,196 $ 27,635,898
Shares issued to shareholders
in reinvestment of
distributions 325,330 4,676,943 222,809 2,885,376
Shares reacquired (2,583,295) (38,131,305) (1,430,169) (20,713,143)
------------ -------------- ----------- ------------
Net increase 1,295,532 $ 19,073,428 696,836 $ 9,808,131
============ ============== =========== ============
Class I Shares
YEAR ENDED DECEMBER 31, 1998 PERIOD ENDED DECEMBER 31, 1997*
--------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
Shares sold 22,646 $ 333,921 13,562 $ 191,430
Shares transferred from Class
A -- -- 269,714 3,463,128
Shares issued to shareholders
in reinvestment of
distributions 36,578 548,219 36,765 488,974
Shares reacquired (20,402) (308,888) (39,130) (576,330)
------------ -------------- ----------- ------------
Net increase 38,822 $ 573,252 280,911 $ 3,567,202
============ ============== =========== ============
</TABLE>
*For the period from the inception of Class I, January 2, 1997, through
December 31, 1997.
(5) 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 year ended December 31, 1998, was $7,903.
(6) Security Lending
The Fund may lend its securities to member banks of the Federal Reserve System
and to member firms of the New York Stock Exchange or subsidiaries thereof.
The securities are loaned by State Street Bank and Trust Company ("State
Street") as agent, to certain brokers (the "Borrower") approved by the Fund.
The loans are collateralized at all times by U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State
Street provides the Fund with indemnification against Borrower default.
At December 31, 1998, the value of securities loaned was $19,069,525. These
loans were collateralized by U.S. Treasury securities of $19,695,600. On these
loans a fee is received from the Borrower, and is allocated between the Fund
and State Street. In addition to this fee, the Fund also continues to earn
income on the securities loaned. Income from securities lending is included in
interest income on the Statement of Operations. The dividend and interest
income earned on the securities loaned is accounted for in the same manner as
other dividend and interest income.
<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, 1998, the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December 31,
1998 and 1997, and the financial highlights for each of the years in the five-
year period ended December 31, 1998. These financial statements and financial
highlights are the responsibility of the Trust'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, 1998 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Growth
Opportunities Fund at December 31, 1998, 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 4, 1999
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 1999, SHAREHOLDERS WERE MAILED A FORM 1099 REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR
1998.
THE FUND HAS DESIGNATED $125,915,530 AS A CAPITAL GAIN DIVIDEND.
<PAGE>
<TABLE>
MFS(R) GROWTH OPPORTUNITIES FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified services
company) AUDITORS
Deloitte & Touche LLP
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) INVESTOR INFORMATION For MFS stock and bond market
outlooks, call toll free: 1-800-637-4458 anytime
William J. Poorvu - Adjunct Professor, Harvard from a touch-tone telephone.
University Graduate School of Business
Administration For information on MFS mutual funds, call your
financial adviser or, for an information kit, call
Charles W.Schmidt - Private Investor toll free: 1-800-637-2929 any business day from 9
a.m. to 5 p.m. Eastern time (or leave a message
Arnold D. Scott* - Senior Executive anytime).
Vice President, Director, and Secretary,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman, Chief P.O. Box 2281
Executive Officer, and Director, Boston, MA 02107-9906
MFS Investment Management
For general information, call toll free:
Elaine R. Smith - Independent Consultant 1-800-225-2606 any business day from
8 a.m. to 8 p.m. Eastern time.
David B. Stone - Chairman and Director,
North American Management Corp. For service to speech- or hearing-impaired, call
(investment advisers) toll free: 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use this service,
INVESTMENT ADVISER your phone must be equipped with a
Massachusetts Financial Services Company Telecommunications Device for the Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, and exchanges,
call toll free: 1-800-MFS-TALK (1-800-637-8255)
DISTRIBUTOR anytime from a touch-tone telephone.
MFS Fund Distributors, Inc.
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
PORTFOLIO MANAGER
Paul M. McMahon*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
MFS(R) GROWTH OPPORTUNITIES FUND -----------------
Bulk Rate
U.S. Postage
[LOGO] MFS(R) Paid
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) -----------------
500 Boylston Street
Boston, MA 02116-3741
(C)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MGO-2 2/99 57M 16/216/816
