<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) GROWTH
OPPORTUNITIES FUND
ANNUAL REPORT o DECEMBER 31, 1999
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 24
Independent Auditors' Report .............................................. 30
MFS' Year 2000 Readiness Disclosure ....................................... 32
Trustees and Officers ..................................................... 33
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
One could easily argue that the Internet represents the greatest technological
development most of us may see in our lifetimes. There is no disputing that this
new communication medium is changing forever the way we work, play, and shop.
One might also argue that investing in this new technology represents the
investment opportunity of a lifetime. The question for any investor is whether
and how to take advantage of it.
The popular press, it seems, would have us believe that by surfing the Web, we
can learn everything we need to know about investing. Indeed, there is no doubt
that Internet-delivered information and brokerage services enable individual
investors to be well informed and to trade at bargain prices. But we believe the
numbers and facts argue that, for most of us, mutual funds purchased through a
financial consultant will continue to be one of the best products for long-term
investing in this new millennium.
According to a survey by the Investment Company Institute, the national
association of American investment companies, 44% of American households own
stock or bond mutual funds, while only 25.5% own individual stocks.(1) Of course
that doesn't tell us how well they did owning those funds or stocks, but another
statistic gives us a clue. In the third quarter of 1999, during a period of
volatility in the greatest bull market in history, a quarter of the 7,500 stocks
tracked by Morningstar, a popular rating service, lost more than 20% of their
value. But during the same period, less than 1% of the mutual funds tracked by
Morningstar -- 6 out of 10,000 funds -- were down by a similar amount.(2) So an
investor's chance of picking one of those losing stocks was about 25 times
greater than his or her chance of picking an equally losing fund.
The numbers also show that a majority of Americans seek professional advice when
buying mutual funds. Outside of employer-sponsored retirement plans,
approximately 68% of fund shareholders state that their primary method of
purchasing shares is through a financial consultant.(1)
Why do we at MFS(R) believe that mutual funds plus professional advice will
continue to define the best course of action for many investors? Let's look at
some of the characteristics of a successful long-term investment approach:
o HAVING A PLAN AND STICKING TO IT: Our experience is that successful
investors -- those whose lives are enriched by the fruits of their investing
-- share two characteristics. They have a plan for reaching their monetary
goals, and they stick with that plan through up as well as down markets. And
for many investors, working with a financial consultant may be the best way
to develop a plan. Although the Internet abounds with calculators for
developing all sorts of investment plans, none has your financial
consultant's high level of experience and an understanding of your unique
situation. And no calculator can counsel you during a down market, when you
may be tempted to abandon your goals and your plan.
o DIVERSIFICATION: Few investors can afford to own a large number of holdings,
so poor performance of one company can potentially drag down their entire
portfolio. This is especially true when investing in volatile new areas such
as the Internet. On the other hand, a diversified mutual fund that owns
dozens or even hundreds of holdings is better positioned to survive a
disappointment in one or several investments.
o GOOD IN A DOWN MARKET: As we enter the tenth year of the greatest bull
market in history, it's easy to forget that market downturns are an almost
inevitable part of investing. Few mutual funds, of course, are going to be
up when the overall market is down. But as the numbers above from the third
quarter of 1999 demonstrate, mutual funds may be less likely to suffer the
extreme downturns experienced by a large number of individual holdings when
the market heads south.
o MFS ORIGINAL RESEARCH(R): The Internet is one of the greatest research tools
ever invented, but it's still not the same as being eyeball to eyeball with
the management of a company and discussing their plans for their firm's
future.
o GOOD PERFORMANCE AT AN ACCEPTABLE LEVEL OF RISK: Investing in individual
stocks or bonds does indeed offer the potential of exhilarating performance
that few mutual funds even attempt. The downside is that the most exciting
investments are also likely to be the ones that give you sleepless nights.
The diversification and professional management of mutual funds help make
them inherently less risky than individual stock picking, and funds are
available in a wide range of risk profiles.
We believe that now, more than ever, mutual funds sold by an investment
professional may offer many investors the best way to participate in whatever
investment opportunities the new millennium may bring. The combination of
professional portfolio management and professional advice recognizes the key
reason that investors give us their money: because they don't want to make a
hobby or a second profession out of investing; they simply want their money to
work for them so they have a better likelihood of realizing their dreams.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
January 15, 2000
(1) Source: Investment Company Institute.
(2) Source: Morningstar CEO Don Phillips' keynote address at The Baltimore Sun's
Dollars and Sense Conference, 10/99. In the period 7/1/99 through 9/ 30/99,
of the 7,500 stocks tracked by Morningstar, 1,865 lost 20% or more; of the
10,000 mutual funds tracked by Morningstar, six lost 20% or more. Mutual
fund results are at net asset value; if sales charges had been reflected,
results would have been lower.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Paul M. McMahon]
Paul M. McMahon
For the 12 months ended December 31, 1999, Class A shares of the Fund provided a
total return of 32.82%, Class B shares 31.73%, and Class I shares 33.09%. These
returns include the reinvestment of any distributions but exclude the effects of
any sales charges. During the same period, the average growth fund tracked by
Lipper Analytical Services, Inc., an independent firm that reports mutual fund
performance, returned 29.27%. The Fund's returns also compare to a return of
21.04% 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. HOW DID THE FUND'S HOLDINGS CHANGE OVER THE COURSE OF THE YEAR?
A. In line with what we perceived as a shift in the overall markets, we
repositioned much of the portfolio over the course of 1999 to try to take
advantage of technology-related opportunities. One of our key areas of focus
was telecommunications. We increased the Fund's holdings in that sector to
profit from what we perceived as a global trend toward wireless
communication of both voice and data. In the United States and in Europe,
cellular providers have been striving to create national or continental
networks, which could allow customers to pay a flat rate to use their phones
anywhere. In the United States, the Fund is invested in wireless network
companies NEXTEL and Sprint PCS. We also have holdings in several European
cellular networks we feel are potential candidates for stock price
appreciation as they have thriving businesses in their own right and may be
acquisition candidates. These companies include Bouygues, one of the largest
French cellular operators; Telecom Italia Mobile, a cellular operator that
serves Italy; and Mannesmann, a German cellular operator that recently
acquired a British telecommunications company called Orange and is itself
the current subject of a takeover attempt by Vodafone AirTouch, another
British telecommunications company.
Mannesmann is also a good example of the global reach of MFS Original
Research(R). Its addition to the portfolio this year was in large part the
result of ongoing discussions with our analyst in London, who believed that
the company had the potential to benefit from the global expansion of
wireless communication and also that it could be a possible acquisition
candidate. In fact, Mannesmann, as well as most of our other holdings in
cellular providers, has been a strong performer this year.
The Fund also has holdings in leading cellular equipment manufacturers,
including Nokia and Motorola. In addition to allowing the portfolio to
profit from the current high demand for voice handsets, we feel these
positions could allow the portfolio to potentially benefit from wireless
data communication using the Internet. We believe this may become a strong
trend over the next several years, requiring users to purchase an entirely
new class of cellular handsets and other devices designed to transmit data
as well as voice.
Q. WHAT OTHER AREAS HELPED THE FUND'S PERFORMANCE?
A. In the entertainment area, the Fund benefited from large positions in
radio-station operators Infinity Broadcasting and Clear Channel
Communications. As the major television networks have lost viewers to cable
and as Americans have increased the time they spend in their cars, radio has
gained advertising market share. A strong user of radio ads has been the
Internet community, as a significant portion of the money raised by many
Internet IPOs (initial public offerings) appears to us to be flowing into
advertising. Infinity Broadcasting has been a dominant owner of radio
stations in the top 20 markets across the country. The company is also
notable, we believe, for having very good management. Clear Channel
Communications has traditionally been the leader in the markets outside the
top 20 cities. However, through recent acquisitions, they also have moved
heavily into the top 20 markets and into billboard advertising and European
radio.
Technology was the final key area for the Fund this year. Technology has
been by far the biggest driver of the market in the second half of 1999, so
we significantly increased the Fund's weighting in this area. Top portfolio
holdings such as Cisco, Sun MicroSystems, and Oracle have benefited from the
tremendous changes taking place in technology, especially the ongoing
building and upgrading of the Internet. Our experience with Cisco
illustrates how we use research to help make buying decisions.
Cisco had built a great business providing routers and other products for
so-called enterprise computing, which is basically internal communications
systems for large corporations. Early in 1999, we met with Cisco's
management regarding their plans to expand into a new arena, developing
routers and software for the Internet. Based on the meeting and further
research, we became convinced that the market opportunity for Cisco over the
next several years was huge, and we significantly increased our Cisco
holding in the portfolio. Cisco has since become a major beneficiary of the
buildup of the Internet, and the stock became one of our best-performing
technology holdings of the year.
Q. WHAT HOLDINGS DETRACTED FROM PERFORMANCE THIS YEAR?
A. The stocks that disappointed us this year were largely in the area of
consumer goods and services, which the market had seemed to favor for the
last several years but turned against in 1999. Holdings in supermarkets,
drugstore chains, and office supply superstores such as Safeway, CVS, and
Office Depot began to suffer lower P/E (price-to- earnings) multiples. We
believe this was largely because of the market's perception that these
"brick-and-mortar" businesses would be hurt by online competitors and by the
expansion of mega-stores such as Wal-Mart into their markets. Seeing more
attractive opportunities in technology and telecommunications stocks, we
reduced our consumer goods and services holdings and increased the
portfolio's weighting in technology- related companies.
Q. WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
A. Looking ahead, we feel there will be more growth opportunity in technology
-- and in associated areas like telecommunications and leisure -- than just
about anywhere else in the market. But we are concerned about the high
valuations in these sectors. As market valuations in tech and tech-related
stocks become increasingly higher than those in other sectors, we feel the
risk increases of a correction at some point.
Another potential danger to the markets is rising interest rates. Our
feeling is that rates may continue to increase somewhat in the first half of
the year, but we don't expect that they will move dramatically in either
direction. In our opinion, there is no major inflationary force to drive
large rate increases, and we think the steps the Federal Reserve Board has
taken will keep U.S. growth at a moderate level.
/s/ Paul M. McMahon
Paul M. McMahon
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
current only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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PAUL M. MCMAHON IS SENIOR VICE PRESIDENT OF MFS INVESTMENT
MANAGEMENT(R). HE IS PORTFOLIO MANAGER OF MFS(R) GROWTH OPPORTUNITIES
FUND AND THE CAPITAL APPRECIATION SERIES OFFERED THROUGH MFS(R)/SUN LIFE
ANNUITY PRODUCTS.
HE JOINED THE MFS RESEARCH DEPARTMENT IN 1981 AS A RESEARCH ANALYST AND WAS
NAMED INVESTMENT OFFICER IN 1983, ASSISTANT VICE PRESIDENT IN 1984, VICE
PRESIDENT 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.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED BY
AN INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS ORIGINAL
RESEARCH(R), A GLOBAL, COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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 consultant, 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.
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: $1.4 BILLION NET ASSETS AS OF DECEMBER 31, 1999
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and 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 greater than or less than the line
shown. (See Notes to Performance Summary.) It is not possible to invest directly
in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended December 31, 1999)
MFS Growth S&P 500
Opportunities Composite
Fund - Class A Index
- ------------------------------------------------
12/89 $ 9,425 $10,000
12/91 11,034 12,642
12/93 13,809 14,976
12/95 17,799 20,876
12/97 26,742 34,232
12/99 45,880 53,278
<TABLE>
<CAPTION>
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN THROUGH DECEMBER 31, 1999
CLASS A
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +32.82% +111.52% +246.66% +386.79%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +32.82% + 28.37% + 28.23% + 17.15%
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Average Annual Total Return Including Sales Charge +25.19% + 25.86% + 26.72% + 16.46%
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<CAPTION>
CLASS B
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +31.73% +106.41% +231.91% +360.62%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +31.73% + 27.32% + 27.12% + 16.50%
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Average Annual Total Return Including Sales Charge +27.73% + 26.70% + 26.96% + 16.50%
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<CAPTION>
CLASS I
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +33.09% +112.59% +248.42% +389.26%
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Average Annual Total Return Excluding Sales Charge +33.09% + 28.58% + 28.36% + 17.21%
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<CAPTION>
COMPARATIVE INDICES(+)
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average growth fund+ +29.27% + 25.35% + 25.04% + 16.52%
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Standard & Poor's 500 Composite Index# +21.04% + 27.56% + 28.56% + 18.21%
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(+) Average annual rates of return.
+ Source: Lipper Analytical Services, Inc.
# Source: Standard & Poor's Micropal, Inc.
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% sales charge. Class B Share Performance Including
Sales Charge takes into account the deduction of the applicable contingent
deferred sales charge (CDSC), which declines over six years from 4% to 0%. Class
I shares have no sales charge and are only available to certain institutional
investors.
Class B and I share performance includes the performance of the Fund's Class A
shares for periods prior to its inception (blended performance). Class B
performance has been adjusted to take into account the CDSC applicable to Class
B shares rather than the initial sales charge (load) applicable to Class A
shares. Class I share blended performance has been adjusted to account for the
fact that Class I shares have no sales charge. These blended performance figures
have not been adjusted to take into account the differences in class- specific
operating expenses. Because operating expenses of Class B shares are higher than
those of Class A, the blended Class B share performance is higher than it would
have been had Class B shares been offered for the entire period. Conversely,
because operating expenses of Class I shares are lower than those of Class A,
the blended Class I share performance is lower than it would have been had Class
I shares been offered for the entire period.
All performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of 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. MORE RECENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
<PAGE>
PORTFOLIO CONCENTRATION AS OF DECEMBER 31, 1999
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 40.6%
UTILITIES & COMMUNICATIONS 18.6%
LEISURE 12.9%
CONGLOMERATES/SPECIAL PRODUCTS AND SERVICES 8.2%
FINANCIAL SERVICES 6.2%
TOP 10 STOCK HOLDINGS
ORACLE CORP. 5.1% NOKIA CORP. 2.1%
U.S. database software developer Finnish cellular phone company
and manufacturer
GENERAL ELECTRIC CO. 2.0%
CISCO SYSTEMS, INC. 4.9% U.S. diversified manufacturing and
U.S. computer network developer financial services conglomerate
MICROSOFT CORP. 3.6% INFINITY BROADCASTING CORP. 2.0%
U.S. computer software and systems U.S. radio station operator
company and outdoor advertising company
TYCO INTERNATIONAL LTD. 2.9% MANNESMANN AG 2.0%
U.S. security systems, packaging, German industrial and
and electronic equipment conglomerate telecommunications company
SUN MICROSYSTEMS, INC. 2.2% MCI WORLDCOM, INC. 2.0%
U.S. computer systems company U.S. telecommunications company
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- December 31, 1999
Stocks - 98.0%
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ISSUER SHARES VALUE
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U.S. Stocks - 82.6%
Advertising - 1.1%
Young & Rubicam, Inc. 218,400 $ 15,451,800
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Automotive - 0.2%
Harley-Davidson, Inc. 55,400 $ 3,549,063
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Banks and Credit Companies - 0.9%
Providian Financial Corp. 131,800 $ 12,002,038
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Broadcasting - 0.3%
Radio One, Inc.* 6,300 $ 579,600
Spanish Broadcasting Systems, Inc.* 94,900 3,819,725
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$ 4,399,325
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Business Machines - 2.1%
Sun Microsystems, Inc.* 388,800 $ 30,107,700
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Business Services - 0.9%
Airnet Commerce Corp.* 2,340 $ 85,118
Bea Systems, Inc.* 24,400 1,706,475
Digimarc Corp.* 57,360 2,868,000
eBenX, Inc.* 600 27,150
Finisar Corp.* 1,820 163,573
First Data Corp. 146,600 7,229,212
McAfee.com Corp.* 2,680 120,600
Official Payments Corp.* 2,140 111,280
Virginia Linux Systems, Inc.* 1,260 260,347
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$ 12,571,755
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Cellular Telephones - 1.6%
Sprint Corp. (PCS Group)* 217,300 $ 22,273,250
TeleCorp PCS, Inc.* 2,370 90,060
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$ 22,363,310
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Computer Software - Personal Computers - 4.6%
America Online, Inc.* 201,400 $ 15,193,112
Microsoft Corp.* 420,900 49,140,075
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$ 64,333,187
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Computer Software - Services - 1.6%
EMC Corp.* 201,700 $ 22,035,725
Informatica Corp.* 1,000 106,375
Intertrust Technologies Corp.* 1,500 176,437
Metasolv Software, Inc.* 1,170 95,648
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$ 22,414,185
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Computer Software - Systems - 12.0%
Agile Software Corp.* 3,200 $ 695,150
Ariba, Inc.* 4,000 709,500
BMC Software, Inc.* 311,700 24,916,519
Cadence Design Systems, Inc.* 669,409 16,065,816
Computer Associates International, Inc. 181,975 12,726,877
Compuware Corp.* 556,200 20,718,450
Comverse Technology, Inc.* 51,600 7,469,100
Foundry Networks, Inc.* 1,525 460,073
JNI Corp.* 1,325 87,450
Keane, Inc.* 41,600 1,320,800
Open TV Corp.* 1,740 139,635
Oracle Corp.* 630,712 70,679,163
VERITAS Software Corp.* 86,700 12,408,938
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$ 168,397,471
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Conglomerates - 3.0%
Sodexho Marriott Services, Inc. 150,500 $ 1,956,500
Tyco International Ltd. 1,042,556 40,529,364
--------------
$ 42,485,864
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Consumer Goods and Services - 1.2%
Colgate-Palmolive Co. 115,400 $ 7,501,000
Galileo International, Inc. 301,000 9,011,187
--------------
$ 16,512,187
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Electrical Equipment - 2.0%
General Electric Co. 179,400 $ 27,762,150
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Electronics - 6.4%
Agilent Technologies, Inc.* 70,400 $ 5,442,800
Altera Corp.* 129,300 6,408,431
Analog Devices, Inc.* 220,933 20,546,769
E Tek Dynamics, Inc.* 25,400 3,419,475
Flextronics International Ltd.* 292,000 13,432,000
Intel Corp. 80,400 6,617,925
KLA-Tencor Corp.* 12,700 1,414,463
Lam Research Corp.* 14,200 1,584,188
LSI Logic Corp.* 47,100 3,179,250
Micron Technology, Inc.* 48,300 3,755,325
Novellus Systems, Inc.* 76,100 9,324,628
SCI Systems, Inc.* 81,100 6,665,406
SDL, Inc.* 23,100 5,035,800
Teradyne, Inc.* 25,400 1,676,400
Varian Semiconductor Equipment
Associates, Inc.* 61,900 2,104,600
Virata Corp.* 870 25,991
--------------
$ 90,633,451
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Entertainment - 8.7%
CBS Corp.* 270,900 $ 17,320,669
Clear Channel Communications, Inc.* 299,195 26,703,154
Comcast Corp., "A" 456,400 23,076,725
Infinity Broadcasting Corp.* 755,800 27,350,512
Macromedia, Inc.* 38,200 2,793,375
Radio Unica Communications Co.* 2,525 72,909
Time Warner, Inc. 275,100 19,927,556
Univision Communications, Inc., "A"* 47,000 4,802,813
--------------
$ 122,047,713
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Financial Institutions - 2.9%
Citigroup, Inc. 253,100 $ 14,062,869
Financial Federal Corp.* 183,475 4,185,523
Goldman Sachs Group, Inc. 79,300 7,469,069
Morgan Stanley Dean Witter & Co. 101,900 14,546,225
--------------
$ 40,263,686
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Food and Beverage Products - 0.4%
Keebler Foods Co.* 202,900 $ 5,706,563
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Forest and Paper Products - 0.5%
Bowater, Inc. 127,500 $ 6,924,844
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Insurance - 1.9%
American International Group, Inc. 157,212 $ 16,998,547
Aon Corp. 84,200 3,368,000
Gallagher (Arthur J.) & Co. 36,600 2,369,850
Marsh & McLennan Cos., Inc. 38,000 3,636,125
--------------
$ 26,372,522
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Internet - 2.3%
Agency.com, Inc.* 700 $ 35,700
Akamai Technologies, Inc.* 2,100 688,012
Allaire Corp.* 11,800 1,726,487
C Bridge Internet Solutions, Inc.* 810 39,386
CacheFlow, Inc.* 1,710 223,476
CNET, Inc.* 35,200 1,997,600
Deltathree.com, Inc.* 1,030 26,523
Digital Impact, Inc.* 1,390 69,674
Digital Insight Corp.* 2,025 73,659
Ebay, Inc.* 43,900 5,495,731
eSPEED, Inc.* 2,900 103,131
Expedia, Inc.* 1,550 54,250
FreeMarkets, Inc.* 510 174,069
Harris Interactive, Inc.* 980 12,801
Internap Network Services Corp.* 4,375 756,875
Jupiter Communications, Inc.* 1,150 34,788
Lifeminders.com, Inc.* 960 55,440
Mediaplex, Inc.* 1,160 72,790
MedicaLogic, Inc.* 1,670 35,070
NextCard, Inc.* 89,400 2,581,425
OnDisplay, Inc.* 300 27,263
Pfsweb, Inc.* 10 375
Retek, Inc.* 1,170 88,043
SciQuest.com, Inc.* 1,170 93,015
VeriSign, Inc.* 95,900 18,310,906
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$ 32,776,489
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Medical and Health Products - 1.0%
American Home Products Corp. 238,700 $ 9,413,731
Pharmacia & Upjohn, Inc. 120,000 5,400,000
--------------
$ 14,813,731
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Medical and Health Technology and Services - 0.7%
Health Management Associates, Inc., "A"* 693,050 $ 9,269,544
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Oils - 0.7%
Conoco, Inc., "A" 247,900 $ 6,135,525
EOG Resources, Inc. 242,700 4,262,419
--------------
$ 10,397,944
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Photographic Products
Polaroid Corp. 34,411 $ 647,357
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Restaurants and Lodging - 0.9%
Cendant Corp.* 303,367 $ 8,058,186
Wendy's International, Inc. 250,400 5,164,500
--------------
$ 13,222,686
- -------------------------------------------------------------------------------
Special Products and Services - 0.1%
Harmonic Lightwaves, Inc.* 9,300 $ 882,919
- -------------------------------------------------------------------------------
Stores - 4.3%
Costco Wholesale Corp.* 177,700 $ 16,215,125
CVS Corp. 327,500 13,079,531
Office Depot, Inc.* 288,300 3,153,281
Tandy Corp. 187,300 9,212,819
Wal-Mart Stores, Inc. 281,800 19,479,425
--------------
$ 61,140,181
- -------------------------------------------------------------------------------
Supermarkets - 1.3%
Kroger Co.* 407,200 $ 7,685,900
Safeway, Inc.* 302,900 10,771,881
--------------
$ 18,457,781
- -------------------------------------------------------------------------------
Telecommunications - 17.2%
American Tower Corp., "A"* 58,400 $ 1,784,850
Ancor Communications, Inc.* 83,000 5,633,625
AT&T Corp.* 147,100 8,347,925
Bell Atlantic Corp. 98,100 6,039,281
Cisco Systems, Inc.* 634,550 67,976,169
Corning, Inc. 143,800 18,541,212
Cox Communications, Inc.* 199,300 10,263,950
EchoStar Communications Corp.* 48,000 4,680,000
Emulex Corp.* 19,000 2,137,500
Firstcom Corp.* 73,400 2,697,450
Global TeleSystems Group, Inc.* 288,700 9,996,237
iBasis, Inc.* 540 15,525
Lucent Technologies, Inc. 87,900 6,576,019
MCI WorldCom, Inc.* 519,645 27,573,663
Metromedia Fiber Network, Inc., "A"* 15,020 720,021
Motorola, Inc. 106,100 15,623,225
Network Solutions, Inc.* 32,400 7,049,025
Next Level Communications, Inc.* 1,160 86,855
NEXTEL Communications, Inc.* 127,800 13,179,375
Nextlink Communications, Inc., "A"* 70,800 5,880,825
Nortel Networks Corp. 87,100 8,797,100
NTL, Inc.* 13,600 1,696,600
Qwest Communications International, Inc.* 219,008 9,417,344
Tritel, Inc.* 1,710 54,186
Winstar Communications, Inc.* 102,600 7,720,650
--------------
$ 242,488,612
- -------------------------------------------------------------------------------
Utilities - Electric - 1.8%
AES Corp.* 346,100 $ 25,870,975
- -------------------------------------------------------------------------------
Total U.S. Stocks $1,164,267,033
- -------------------------------------------------------------------------------
Foreign Stocks - 15.4%
Bermuda - 0.9%
Global Crossing Ltd. (Telecommunications)* 255,400 $ 12,770,000
- -------------------------------------------------------------------------------
Canada - 0.9%
Abitibi-Consolidated, Inc. (Forest and Paper
Products) 321,300 $ 3,815,438
BCE, Inc. (Telecommunications) 95,800 8,639,962
--------------
$ 12,455,400
- -------------------------------------------------------------------------------
Finland - 2.0%
Nokia Corp., ADR (Telecommunications) 149,200 $ 28,348,000
- -------------------------------------------------------------------------------
France - 1.1%
Bouygues S.A. (Telecommunications) 24,200 $ 15,378,619
- -------------------------------------------------------------------------------
Germany - 1.9%
Mannesmann AG (Conglomerate) 112,600 $ 27,159,172
- -------------------------------------------------------------------------------
Israel - 0.2%
Partner Communications Co. Ltd., ADR*
(Cellular Telephones) 120,550 $ 3,119,231
- -------------------------------------------------------------------------------
Italy - 1.9%
Telecom Italia Mobile S.p.A.
(Telecommunications) 2,323,300 $ 25,948,333
- -------------------------------------------------------------------------------
Japan - 2.1%
Daiwa Securities Group, Inc. (Banks and Credit
Cos.) 541,000 $ 8,466,030
Hitachi Ltd. (Electronics) 236,000 3,787,825
Nippon Telephone & Telegraph Co. (Utilities -
Telephone) 400 6,850,656
NTT Mobile Communications Network, Inc.
(Telecommunications) 280 10,769,231
--------------
$ 29,873,742
- -------------------------------------------------------------------------------
Netherlands - 1.6%
KPN N.V. (Telecommunications)* 152,000 $ 14,833,375
Libertel N.V. (Cellular Telephones)* 293,700 7,690,418
--------------
$ 22,523,793
- -------------------------------------------------------------------------------
Singapore - 0.8%
Chartered Semiconductor Manufacturing Co., ADR
(Electronics)* 156,875 $ 11,451,875
- -------------------------------------------------------------------------------
Spain - 0.4%
Terra Networks S.A. (Internet)* 93,000 $ 5,081,072
- -------------------------------------------------------------------------------
Sweden - 1.1%
Ericsson LM, ADR (Telecommunications) 234,800 $ 15,423,425
- -------------------------------------------------------------------------------
United Kingdom - 0.5%
British Telecommunications PLC
(Telecommunications)* 292,500 $ 7,082,302
NDS Group PLC, ADR (Internet)* 3,530 107,665
--------------
$ 7,189,967
- -------------------------------------------------------------------------------
Total Foreign Stocks $ 216,722,629
- -------------------------------------------------------------------------------
Total Stocks (Identified Cost, $817,831,394) $1,380,989,662
- -------------------------------------------------------------------------------
Short-Term Obligation - 2.0%
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
due 1/03/00, at Amortized Cost $ 27,800 $ 27,797,683
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $845,629,077) $1,408,787,345
Other Assets, Less Liabilities - 0.0% (293,428)
- -------------------------------------------------------------------------------
Net Assets - 100.0% $1,408,493,917
- -------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
DECEMBER 31, 1999
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $845,629,077) $1,408,787,345
Cash 63,562
Receivable for Fund shares sold 497,304
Receivable for investments sold 2,053,820
Interest and dividends receivable 272,471
Other assets 12,620
--------------
Total assets $1,411,687,122
--------------
Liabilities:
Payable for Fund shares reacquired $ 1,151,483
Payable for investments purchased 1,314,300
Payable to affiliates -
Management fee 15,832
Shareholder servicing agent fee 3,821
Distribution and service fee 493,816
Accrued expenses and other liabilities 213,953
--------------
Total liabilities $ 3,193,205
--------------
Net assets $1,408,493,917
==============
Net assets consist of:
Paid-in capital $ 785,494,625
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 563,159,025
Accumulated undistributed net realized gain on
investments and foreign currency transactions 59,944,058
Accumulated net investment loss (103,791)
--------------
Total $1,408,493,917
==============
Shares of beneficial interest outstanding 74,049,094
==========
Class A shares:
Net asset value per share
(net assets of $1,330,505,674 / 69,765,735 shares of
beneficial interest outstanding) $19.07
======
Offering price per share (100 / 94.25 of net asset
value per share) $20.23
======
Class B shares:
Net asset value and offering price per share
(net assets of $71,362,854 / 3,936,155 shares of
beneficial interest outstanding) $18.13
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $6,625,389 / 347,204 shares of
beneficial interest outstanding) $19.08
======
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, 1999
- ------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 4,094,742
Interest 2,794,895
Foreign taxes withheld (43,026)
------------
Total investment income $ 6,846,611
------------
Expenses -
Management fee $ 4,920,865
Trustees' compensation 67,508
Shareholder servicing agent fee 1,216,667
Distribution and service fee (Class A) 2,092,775
Distribution and service fee (Class B) 533,593
Administrative fee 146,749
Custodian fee 370,641
Printing 53,073
Postage 99,910
Auditing fees 33,115
Legal fees 6,169
Miscellaneous 355,097
------------
Total expenses $ 9,896,162
Fees paid indirectly (355,946)
------------
Net expenses $ 9,540,216
------------
Net investment loss $ (2,693,605)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $187,420,212
Foreign currency transactions (208,236)
------------
Net realized gain on investments and foreign
currency transactions $187,211,976
------------
Change in unrealized appreciation -
Investments $169,917,645
Translation of assets and liabilities in foreign
currencies 764
------------
Net unrealized gain on investments and foreign
currency translation $169,918,409
------------
Net realized and unrealized gain on investments
and foreign currency $357,130,385
------------
Increase in net assets from operations $354,436,780
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (2,693,605) $ (2,871,773)
Net realized gain on investments and foreign
currency transactions 187,211,976 163,234,852
Net unrealized gain on investments and foreign
currency translation 169,918,409 118,684,994
--------------- ---------------
Increase in net assets from operations $ 354,436,780 $ 279,048,073
--------------- ---------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (121,962,345) $ (120,735,017)
From net realized gain on investments and foreign
currency transactions (Class B) (6,170,386) (5,043,936)
From net realized gain on investments and foreign
currency transactions (Class I) (592,166) (548,219)
--------------- ---------------
Total distributions declared to shareholders $ (128,724,897) $ (126,327,172)
--------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions $ (8,426,296) $ 55,806,486
--------------- ---------------
Total increase in net assets $ 217,285,587 $ 208,527,387
Net assets:
At beginning of period 1,191,208,330 982,680,943
--------------- ---------------
At end of period (including accumulated net investment
loss of $103,791 and $94,190, respectively) $ 1,408,493,917 $ 1,191,208,330
=============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $15.95 $13.92 $12.97 $11.94 $10.17
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.03) $(0.04) $(0.03) $(0.02) $ 0.03
Net realized and unrealized gain on
investments and foreign currency 4.99 3.96 2.96 2.62 3.46
------ ------ ------ ------ ------
Total from investment operations $ 4.96 $ 3.92 $ 2.93 $ 2.60 $ 3.49
------ ------ ------ ------ ------
Less distributions declared to
shareholders from net realized gain
on investments and foreign currency
transactions $(1.84) $(1.89) $(1.98) $(1.57) $(1.72)
------ ------ ------ ------ ------
Net asset value - end of period $19.07 $15.95 $13.92 $12.97 $11.94
====== ====== ====== ====== ======
Total return(+) 32.82% 29.17% 23.28% 21.87% 34.49%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.80% 0.81% 0.84% 0.84% 0.87%
Net investment income (loss) (0.19)% (0.25)% (0.18)% (0.15)% 0.21%
Portfolio turnover 87% 79% 60% 65% 100%
Net assets at end of period (000
Omitted) $1,330,506 $1,137,302 $953,194 $807,657 $721,467
(S) The distributor did not impose a portion of its distribution fee for the period 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
Ratios (to average net assets):
Expenses## 0.97%
Net investment income 0.11%
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
(+) Total returns for Class A do not include the applicable sales charge. If the charge had been included, the results would have
been lower.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $15.33 $13.54 $12.73 $11.79 $10.08
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.16) $(0.16) $(0.14) $(0.14) $(0.09)
Net realized and unrealized gain on
investments and foreign currency 4.75 3.83 2.89 2.57 3.42
------ ------ ------ ------ ------
Total from investment operations $ 4.59 $ 3.67 $ 2.75 $ 2.43 $ 3.33
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net realized gain on investments and
foreign currency transactions $(1.79) $(1.88) $(1.94) $(1.49) $(1.62)
------ ------ ------ ------ ------
Net asset value - end of period $18.13 $15.33 $13.54 $12.73 $11.79
====== ====== ====== ====== ======
Total return 31.73% 28.15% 22.27% 20.72% 33.20%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.62% 1.63% 1.64% 1.75% 1.81%
Net investment loss (1.01)% (1.05)% (0.98)% (1.06)% (0.75)%
Portfolio turnover 87% 79% 60% 65% 100%
Net assets at end of period (000 Omitted) $71,363 $48,806 $25,578 $15,170 $6,673
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------- PERIOD ENDED
1999 1998 DECEMBER 31, 1997*
- -------------------------------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $15.95 $13.91 $12.84
------ ------ ------
Income from investment operations# -
Net investment income (loss) $ 0.00** $(0.01) $ 0.00**
Net realized and unrealized gain on investments and
foreign currency 5.00 3.96 3.07
------ ------ ------
Total from investment operations $ 5.00 $ 3.95 $ 3.07
------ ------ ------
Less distributions declared to shareholders from
net realized gain on investments and foreign currency
transactions $(1.87) $(1.91) $(2.00)
------ ------ ------
Net asset value - end of period $19.08 $15.95 $13.91
====== ====== ======
Total return 33.09% 29.45% 24.65%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.62% 0.63% 0.65%+
Net investment income (loss) (0.01)% (0.06)% 0.01%+
Portfolio turnover 87% 79% 60%
Net assets at end of period (000 Omitted) $6,625 $5,100 $3,909
* For the period from the inception of Class I, January 2, 1997, through December 31, 1997.
** Per share amount was less than $0.01.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
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. The Fund can
invest in foreign securities. Investments in foreign securities are vulnerable
to the effects of changes in the relative values of the local currency and the
U.S. dollar and to the effects of changes in each country's legal, political,
and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Short-term obligations, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Securities for which there are
no such quotations or valuations are valued in good faith, at fair value, by the
Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Security Loans - State Street Bank and Trust Company ("State Street") and Chase
Manhattan Bank ("Chase"), as lending agents, may loan the securities of the Fund
to certain qualified institutions (the "Borrowers") approved by the Fund. The
loans are collateralized at all times by cash and/or U.S. Treasury securities in
an amount at least equal to the market value of the securities loaned. State
Street and Chase provide the Fund with indemnification against Borrower default.
The Fund bears the risk of loss with respect to the investment of cash
collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the Fund and the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the Borrower,
and is allocated between the Fund and the lending agents. Income from securities
lending is included in interest income on the Statement of Operations. The
dividend and interest income earned on the securities loaned is accounted for in
the same manner as other dividend and interest income.
At December 31, 1999, the value of securities loaned was $37,992,889. These
loans were collateralized by U.S. Treasury securities of $38,155,857.
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. During
the period, the Fund's custodian fees were reduced by $331,061 under this
arrangement. The Fund has entered into a directed brokerage agreement, under
which the broker will credit the Fund a portion of the commissions generated, to
offset certain expenses of the Fund. For the period, the Fund's custodian fees
were reduced by $24,885 under this agreement. These amounts are 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.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which 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, 1999, $2,684,004 and $23,356,108 were reclassified
to accumulated net investment loss and paid-in capital, respectively, from
accumulated undistributed net realized gain on investments and foreign currency
transactions due to differences between book and tax accounting for currency
transactions, dividends, 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 daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual rates:
First $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 $23,989 for the year ended
December 31, 1999.
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
$119,815 for the year ended December 31, 1999, 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 $814,319 for the year ended December 31,
1999. 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, 1999, were 0.19% 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 $6,618 for Class B shares for the year
ended December 31, 1999. Fees incurred under the distribution plan during the
year ended December 31, 1999, were 1.00% of average daily net assets
attributable to Class B shares on an annualized basis.
Purchases over $1 million of Class A 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 redemptions of Class B shares in the event of a
shareholder redemption within six years of purchase. MFD receives all contingent
deferred sales charges. Contingent deferred sales charges imposed during the
year ended December 31, 1999, were $9,039 and $156,641 for Class A and Class B
shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the Fund's average daily net assets at an annual rate of 0.10%.
Prior to April 1, 1999, the fee was calculated as a percentage of the Fund's
average daily net assets at an annual rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than short-term obligations, were as
follows:
PURCHASES SALES
- ------------------------------------------------------------------------------
U.S. government securities $ -- $ 26,567,058
------------ --------------
Investments (non-U.S. government securities) $984,950,159 $1,070,356,219
------------ --------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are as
follows:
Aggregate cost $847,415,990
------------
Gross unrealized appreciation $581,517,725
Gross unrealized depreciation (20,146,370)
------------
Net unrealized appreciation $561,371,355
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were
as follows:
<TABLE>
<CAPTION>
Class A Shares
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 80,501,562 $ 1,299,702,953 101,045,903 $ 1,553,750,903
Shares issued to
shareholders in
reinvestment of
distributions 6,998,047 117,986,476 7,591,986 113,783,982
Shares reacquired (89,034,772) (1,438,631,961) (105,812,055) (1,631,375,079)
--------------- --------------- --------------- ---------------
Net increase (decrease) (1,535,163) $ (20,942,532) 2,825,834 $ 36,159,806
=============== =============== =============== ===============
<CAPTION>
Class B Shares
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 5,285,119 $ 82,675,429 3,553,497 $ 52,527,790
Shares issued to
shareholders in
reinvestment of
distributions 351,673 5,654,144 325,330 4,676,943
Shares reacquired (4,884,788) (76,269,456) (2,583,295) (38,131,305)
--------------- --------------- --------------- ---------------
Net increase 752,004 $ 12,060,117 1,295,532 $ 19,073,428
=============== =============== =============== ===============
<CAPTION>
Class I Shares
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 30,338 $ 487,418 22,646 $ 333,921
Shares issued to
shareholders in
Reinvestment of
distributions 34,999 592,166 36,578 548,219
Shares reacquired (37,866) (623,465) (20,402) (308,888)
--------------- --------------- --------------- ---------------
Net increase 27,471 $ 456,119 38,822 $ 573,252
=============== =============== =============== ===============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $820 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, 1999, was $8,610.
<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,
1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. 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 securities owned as of
December 31, 1999, by correspondence with the custodian and brokers; where
responses were not received from brokers, we performed other audit 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Growth Opportunities Fund as of December 31, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 3, 2000
<PAGE>
FEDERAL TAX INFORMATION
IN JANUARY 2000, SHAREHOLDERS WILL BE MAILED A FORM 1099-DIV REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 1999.
THE FUND HAS DESIGNATED $150,154,499 AS A CAPITAL GAIN DIVIDEND FOR THE YEAR
ENDED DECEMBER 31, 1999.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and
on behalf of the MFS funds, is committed to the effective
use of technology in managing our portfolio investments,
delivering high-quality service to MFS fund shareholders, [Graphic Omitted]
retirement plan participants, and MFS' institutional
clients, and supporting the financial consultants who sell
our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the same stringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com, call our toll-free line, 1-800-637-4406, or
write to the MFS Year 2000 Program Management Office by e-mail at [email protected] or
by letter at 500 Boylston Street, Boston, MA 02116-3741.
<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(R) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
J. Atwood Ives+ - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified services CUSTODIAN
company) State Street Bank and Trust Company
Lawrence T. Perera+ - Partner, Hemenway AUDITORS
& Barnes (attorneys) Deloitte & Touche LLP
William J. Poorvu+ - Adjunct Professor, Harvard INVESTOR INFORMATION
University Graduate School of Business For information on MFS mutual funds, call your
Administration financial consultant or, for an information kit,
call toll free: 1-800-637-2929 any business day
Charles W. Schmidt+ - Private Investor from 9 a.m. to 5 p.m. Eastern time (or leave a
message anytime).
Arnold D. Scott* - Senior Executive
Vice President, Director, and Secretary, INVESTOR SERVICE
MFS Investment Management MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman and Chief Boston, MA 02107-9906
Executive Officer, 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, North American
Management Corp. (investment advisers) For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from 9
INVESTMENT ADVISER a.m. to 5 p.m. Eastern time. (To use this service,
Massachusetts Financial Services Company your phone must be equipped with a Telecommunications
500 Boylston Street Device for the Deaf.)
Boston, MA 02116-3741
For share prices, account balances, exchanges, or
DISTRIBUTOR stock and bond outlooks, call toll free:
MFS Fund Distributors, Inc. 1-800-MFS-TALK (1-800-637-8255) anytime from a
500 Boylston Street touch-tone telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
CHAIRMAN AND PRESIDENT www.mfs.com
Jeffrey L. Shames*
PORTFOLIO MANAGER
Paul M. McMahon*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+ Independent Trustee
* MFS Investment Management
</TABLE>
<PAGE>
MFS(R) GROWTH OPPORTUNITIES FUND ------------
BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management.(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116 MGO-2 02/00 58M 16/216/816
