<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MFS(R) GROWTH
OPPORTUNITIES FUND
SEMIANNUAL REPORT o JUNE 30, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 23
Trustees and Officers ..................................................... 29
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,
I'm sure you've noticed that whenever financial markets suffer a large decline,
as they did very dramatically this past spring, there's a flurry of information
on "how to deal with market volatility" -- both in the popular press and from
those of us in the investment business. Our own thinking on this is that, first,
for long-term investors volatility is not necessarily something to be feared;
occasional volatility may in fact be healthy for the markets.
Second, our experience has been that when markets begin to fall, it's often too
late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market volatility
in stride, here are some points you may want to consider the next time you talk
with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with very
high prices, relative to their earnings, or with business concepts that looked
great in the euphoria of a booming market but in the end appeared to have no
fundamental backing. It has always been our view that one of the best
protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask how
they fared in previous periods of volatility, as well as in the good times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over nearly
all long-term periods -- 5, 10, 20 years, and more -- stock and bond returns, as
represented by most common indices, have been positive and have considerably
outpaced inflation. Investing is the best way we know of to make your money work
for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading. In
our view, traders who buy securities with the intention of selling them at a
profit in a matter of hours, days, or weeks are gambling. We believe this seldom
turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy, because
only in retrospect do we know when that right time really was. Periods of
volatility are probably the worst times to make an investment decision. Faced
with turmoil in the markets, many investors have opted to simply stay on the
sidelines.
On the other hand, we think one of the best techniques for investing is through
automatic monthly or quarterly deductions from a checking or savings account.
This approach has at least three major benefits. First, you can formulate a
long-term plan -- how much to invest, how often, and into what portfolios -- in
a calm, rational manner, working with your investment professional. Second, with
this approach you invest regularly without agonizing over the decision each time
you buy shares.
And, third, if you invest equal amounts of money at regular intervals, you'll be
taking advantage of a strategy called dollar-cost averaging: by investing a
fixed amount while the share cost fluctuates, you end up with an average share
cost to you that is lower than the average share price over your investment
period.(1) If all this sounds familiar, it's probably because you're already
taking advantage of dollar-cost averaging by investing regularly for retirement
through a 401(k) or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, i.e., move money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or value;
United States or international; stocks or bonds. The problem with this approach
is that by the time a particular area is generally recognized as "hot," you may
have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in 7 out of
10 years.(2) For the decade, the MSCI EAFE's average annual performance was 23%,
compared to 18% for the S&P 500. Going into the 1990s, then, an investor looking
only at recent performance might have favored international investments over
U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in 7 out of 10 years, with
the S&P 500 returning an average of 18% annually for the decade and the MSCI
EAFE returning a 7% annual average. Looking ahead, however, we are optimistic
about international markets because we feel that many of the same forces that
propelled the current U.S. economic boom -- deregulation, restructuring, and
increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We would
suggest that one way to potentially profit from swings in the market -- to
potentially be invested in various asset classes before the market shifts in
their favor -- is with a diversified portfolio covering several asset classes.
If you haven't already done so, we encourage you to discuss these thoughts with
your investment professional and factor them into your long-range financial
planning. Hopefully, the next time the markets appear to be going wild, you'll
feel confident enough in your plan to view periods of volatility as a time of
potential opportunity -- or perhaps just a time to sit back and do nothing.
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)
July 17, 2000
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(1)The use of a systematic investing program does not guarantee a profit or
protect against a loss in declining markets. You should consider your
financial ability to continue to invest through periods of low prices.
(2)Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89, '90s --
12/31/89- 12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization- weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of common
stock total return performance. It is not possible to invest directly in an
index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
A prospectus containing more complete information on any MFS product, including
all charges and expenses, can be obtained from your investment professional.
Please read it carefully before you invest or send money. 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 six months ended June 30, 2000, Class A shares of the fund provided a
total return of 6.28%, Class B shares 5.82%, and Class I shares 6.38%. These
returns include the reinvestment of any distributions but exclude the effects of
any sales charges. During the same period, the average large-cap growth fund
tracked by Lipper Inc., an independent firm that reports mutual fund
performance, returned 2.98%. The fund's returns also compare to a return of
-0.42% over the same period for the fund's benchmark, the Standard & Poor's 500
Composite Index (the S&P 500). The S&P 500 is a popular, unmanaged index of
common stock total return performance.
Q. WHAT MOVES OF NOTE HAVE YOU MADE WITH THE FUND OVER THE PAST SIX MONTHS?
A. Technology continued to be our main focus, having started the period at about
41% of the fund's investments. However, we significantly changed the makeup
of our technology investments. We reduced our holdings in some of the
mainframe software companies that had populated the fund at the beginning of
2000, such as BMC Software, Microsoft, and Compuware. We also cut back or
eliminated some of the fund's larger technology positions, including Oracle
and Cisco Systems, because we felt their stock prices had reached or
approached full value. Fortunately, a good deal of this selling, which
decreased the fund's technology exposure to about 35% at that time, came
before the market and the technology sector suffered a serious correction in
March and April. During the correction, we took the opportunity to
significantly increase our positions in fiber optic- equipment firms Nortel
Networks and Corning. By the end of the period, our technology stake had
grown to 45%.
Much of our tech focus has been tied to the development of e-commerce, where
a significant amount of corporate spending has been turning. VeriSign, for
example, acts as the custodian for online transactions, taking care of
payments and validations. Nortel Networks and Corning have been benefiting
from the explosive expansion of Web communications, as more and more fiber
capacity is needed to carry data. We also increased the fund's holdings in
two semiconductor manufacturers, Micron Technology and Intel, because we
anticipate a fairly significant upturn in personal computer (PC) sales during
the second half of 2000 for two reasons. First, we feel the holiday selling
season typically is a good time of year for PC sales. Second, since we are
now well beyond the Year 2000 phenomenon and the computer bug fears it
spawned, we think corporate spending on computers will increase. We also
anticipate continued growth in the server market, an area where Intel, in
particular, has made significant inroads. With these trends in place, we
believe demand for all types of semiconductors, high-speed processors, and
memory chips should outpace very tight supply to help these companies'
prospects.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. In the utilities and communications sector. It's important to point out that
our largest investments here were dedicated to companies involved with
cellular communications. This segment performed much better than the sector
as a whole, based on the dynamic growth of wireless voice and data
communications. For example, you can now access the Internet with a cellular
phone. Two of the fund's top holdings in this area were service providers
Sprint PCS and Vodafone AirTouch. We also invested in companies like
Metromedia, which are developing local fiber networks in metropolitan areas.
We also added to the fund's energy weighting, particularly in the oil service
segment, including drillers like Transocean Offshore and Global Marine. In
our view, these companies have hit the sweet spot of their business cycle.
With oil prices up, more and more oil companies have sought to increase their
drilling activity. A limited supply of drilling rigs means the price for
these companies' services has been driven higher.
Our financial services holdings were focused on brokerage stocks such as
Merrill Lynch and Morgan Stanley Dean Witter. These companies have done well
due to strong capital markets activity, and we feel they should be well
positioned if interest rates start to trend downward. In the retail sector,
we have found our best opportunities in supermarkets and drug stores,
including Safeway, Wal-Mart, and CVS. At the same time, we have been looking
to add to the fund's health care investments in order to take advantage of
the steady earnings growth that we believe pharmaceutical firms offer, and as
a way to balance the fund's large technology stake.
All in all, we've tended to concentrate the fund more so than in the past.
The market has been very choppy, with some sectors performing very well and
others really struggling. Our research analysts have worked to identify
global trends in industry and business so we can try to either capitalize on
them, or avoid them altogether.
Q. WHICH INVESTMENTS PROVED TO BE DISAPPOINTING?
A. On the down side, the fund's leisure investments lagged somewhat, including
its cable and radio holdings. The feeling in this sector was that -- with the
Olympics and a U.S. presidential election coming up -- conditions for these
companies could not improve over where they are in 2000. Revenue growth for a
lot of these companies hit record levels, and many investors apparently
believed any economic slowdown would spell nothing but bad news. However,
we've remained positive about these companies' long-term prospects. We felt
their struggles were a result of purely emotional market plays rather than
any deterioration in their fundamentals. We believe that their continued
strong fundamentals will help their stock prices rebound in the long run.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 2000?
A. The market enjoyed a significant run-up in the first few months of 2000 as
investors became overly enthusiastic. Then, we entered a corrective phase
largely due to rising interest rates. Recently, we've clearly seen signs that
the economy is slowing, evidenced by weaker retail sales, a decline in
automobile sales, and increases in inventories. In addition, it appears to us
that global economic trends may moderate due to rising interest rates.
Therefore, we think the outlook is good, and that the economy should slow
down to a more sustainable level without sparking inflation or entering a
recession. We believe moderate growth and declining interest rates should
paint a more favorable picture for the second half of the year. Of course,
this outlook comes with a warning: In our opinion, companies that miss their
earnings projections in this type of market will most likely suffer
significant declines in share price. As a result, we believe a focus on
bottom-up, company-oriented research will be even more important. Our goal
will be to use our MFS Original Research(R) capabilities to try to unearth
the best opportunities.
/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.
His views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
<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 MFS
product is available from your investment professional 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: $1.5 BILLION NET ASSETS AS OF JUNE 30, 2000
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including the reinvestment of dividends. (See Notes to Performance
Summary.)
TOTAL RATES OF RETURN THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return
Excluding Sales Charge +6.28% +30.21% +94.89% +207.11% +409.42%
-------------------------------------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- +30.21% +24.91% + 25.16% + 17.68%
-------------------------------------------------------------------------------------------------------------
Average Annual Total Return
Including Sales Charge -- +22.73% +22.47% + 23.68% + 16.99%
-------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return
Excluding Sales Charge +5.82% +29.13% +90.06% +194.30% +379.97%
-------------------------------------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- +29.13% +23.87% + 24.10% + 16.98%
-------------------------------------------------------------------------------------------------------------
Average Annual Total Return
Including Sales Charge -- +25.13% +23.21% + 23.93% + 16.98%
-------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return
Excluding Sales Charge +6.38% +30.53% +95.94% +208.98% +412.51%
-------------------------------------------------------------------------------------------------------------
Average Annual Total Return
Excluding Sales Charge -- +30.53% +25.13% + 25.31% + 17.75%
-------------------------------------------------------------------------------------------------------------
</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 their 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 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
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF JUNE 30, 2000
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 45.4%
UTILITIES & COMMUNICATIONS 14.6%
LEISURE 8.7%
FINANCIAL SERVICES 7.4%
ENERGY 7.0%
TOP 10 STOCK HOLDINGS
MICRON TECHNOLOGY, INC. 4.6% VERISIGN, INC. 2.9%
Semiconductor manufacturer Provider of Internet-based trust services
ORACLE CORP. 3.3% INTEL CORP. 2.1%
Database software developer Semiconductor manufacturer
and manufacturer
MICROSOFT CORP. 1.9%
CISCO SYSTEMS, INC. 3.3% Computer software and systems company
Computer network developer
SPRINT CORP. (PCS GROUP) 1.8%
CORNING, INC. 3.2% Wireless communications provider
Materials and equipment supplier to
communications industries AES CORP. 1.6%
Electric power plant operator
NORTEL NETWORKS CORP. 2.9%
Canadian designer and developer of
data and telephony networks
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- June 30, 2000
Stocks - 97.0%
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ISSUER SHARES VALUE
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U.S. Stocks - 84.1%
Aerospace - 1.3%
Boeing Co. 445,400 $ 18,623,287
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Automotive - 0.6%
Harley-Davidson, Inc. 236,800 $ 9,116,800
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Banks and Credit Companies - 0.2%
Wells Fargo Co. 91,800 $ 3,557,250
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Biotechnology - 1.3%
Pharmacia Corp. 214,000 $ 11,061,125
Waters Corp.* 67,600 8,437,325
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$ 19,498,450
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Business Machines - 0.7%
Seagate Technology, Inc.* 62,000 $ 3,410,000
Sun Microsystems, Inc.* 72,700 6,611,156
--------------
$ 10,021,156
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Business Services - 1.5%
BEA Systems, Inc.* 75,600 $ 3,737,475
Computer Sciences Corp.* 165,900 12,390,656
Nextel Partners, Inc. 63,380 2,063,811
Thermo Electron Corp.* 181,200 3,816,525
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$ 22,008,467
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Cellular Telephones - 1.8%
Sprint Corp. (PCS Group)* 433,200 $ 25,775,400
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Computer Software - Personal Computers - 2.1%
Mercury Interactive Corp.* 37,700 $ 3,647,475
Microsoft Corp.* 337,200 26,976,000
--------------
$ 30,623,475
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Computer Software - Services - 1.6%
EMC Corp.* 229,600 $ 17,664,850
Informatica Corp.* 2,000 163,875
TIBCO Software, Inc.* 48,300 5,179,420
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$ 23,008,145
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Computer Software - Systems - 11.4%
Agile Software Corp.* 6,400 $ 452,400
Ariba, Inc.* 28,100 2,755,117
BMC Software, Inc.* 227,700 8,307,492
Cadence Design Systems, Inc.* 434,409 8,851,083
Cisco Systems, Inc.* 732,400 46,553,175
Compuware Corp.* 353,800 3,670,675
Comverse Technology, Inc.* 79,800 7,421,400
Digex, Inc.* 74,600 5,068,137
E.piphany, Inc.* 44,600 4,780,563
Foundry Networks, Inc.* 3,050 335,500
I2 Technologies, Inc.* 30,300 3,159,248
MMC Networks, Inc.* 25,300 1,351,969
Oracle Corp.* 563,924 47,404,861
Rational Software Corp.* 53,400 4,962,863
Siebel Systems, Inc.* 27,100 4,432,544
StorageNetworks, Inc.* 1,820 164,255
VERITAS Software Corp.* 123,350 13,940,477
Vitria Technology, Inc.* 41,325 2,525,991
--------------
$ 166,137,750
--------------------------------------------------------------------------------
Conglomerates - 1.5%
Tyco International Ltd. 448,556 $ 21,250,340
--------------------------------------------------------------------------------
Consumer Goods and Services - 0.6%
Colgate-Palmolive Co. 154,700 $ 9,262,663
--------------------------------------------------------------------------------
Drugs & Health Care - 0.1%
Celera Genomics Co.* 20,400 $ 1,907,400
--------------------------------------------------------------------------------
Electrical Equipment
Capstone Turbine Corp.* 790 $ 35,599
--------------------------------------------------------------------------------
Electronics - 14.8%
Altera Corp.* 90,800 $ 9,255,925
Analog Devices, Inc.* 213,266 16,208,216
DuPont Photomasks, Inc.* 47,100 3,226,350
Fairchild Semiconductor International Co.* 49,500 2,004,750
Flextronics International Ltd.* 208,700 14,335,081
Helix Technology Corp.* 60,600 2,363,400
Intel Corp. 226,100 30,226,744
KLA-Tencor Corp.* 49,600 2,904,700
Lam Research Corp.* 172,600 6,472,500
LSI Logic Corp.* 126,700 6,857,638
Micron Technology, Inc.* 734,800 64,708,325
Novellus Systems, Inc.* 183,700 10,390,531
Photronics, Inc.* 84,800 2,406,200
Sanmina Corp.* 75,700 6,472,350
SCI Systems, Inc.* 17,400 681,863
Solectron Corp.* 95,800 4,011,625
Tektronix, Inc. 149,800 11,085,200
Teradyne, Inc.* 72,100 5,299,350
Varian Semiconductor Equipment Associates, Inc.* 140,000 8,793,750
Veeco Instruments, Inc.* 118,900 8,709,425
--------------
$ 216,413,923
--------------------------------------------------------------------------------
Entertainment - 4.4%
Clear Channel Communications, Inc.* 272,095 $ 20,407,125
Infinity Broadcasting Corp., "A"* 595,500 21,698,531
Time Warner, Inc. 158,200 12,023,200
Viacom, Inc., "B"* 153,527 10,468,623
--------------
$ 64,597,479
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Financial Institutions - 3.8%
Associates First Capital Corp., "A" 158,800 $ 3,543,225
Citigroup, Inc. 253,100 15,249,275
Donaldson, Lufkin & Jenrette, Inc. 79,200 3,361,050
Federal National Mortgage Assn. 108,800 5,678,000
Financial Federal Corp.* 183,475 3,187,878
Goldman Sachs Group, Inc. 39,800 3,776,025
Merrill Lynch & Co., Inc. 89,400 10,281,000
Morgan Stanley Dean Witter & Co. 134,600 11,205,450
--------------
$ 56,281,903
--------------------------------------------------------------------------------
Insurance - 2.7%
American International Group, Inc. 80,200 $ 9,423,500
Gallagher (Arthur J.) & Co. 156,900 6,589,800
Hartford Financial Services Group, Inc. 252,900 14,146,594
Marsh & McLennan Cos., Inc. 96,000 10,026,000
--------------
$ 40,185,894
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Internet - 3.0%
Allaire Corp.* 23,600 $ 867,300
Interwoven, Inc.* 9,000 989,859
Selectica, Inc.* 20,140 1,411,059
VeriSign, Inc.* 233,672 41,243,108
--------------
$ 44,511,326
--------------------------------------------------------------------------------
Machinery - 0.6%
Deere & Co., Inc. 221,500 8,195,500
--------------------------------------------------------------------------------
Medical and Health Products - 2.5%
American Home Products Corp. 166,700 $ 9,793,625
Bristol-Myers Squibb Co. 228,000 13,281,000
Pfizer, Inc. 284,900 13,675,200
--------------
$ 36,749,825
--------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.9%
Health Management Associates, Inc., "A"* 524,750 $ 6,854,547
PE Corp. - PE Biosystems Group 104,000 6,851,000
--------------
$ 13,705,547
--------------------------------------------------------------------------------
Oil Services - 3.5%
Baker Hughes, Inc. 309,900 $ 9,916,800
Cooper Cameron Corp.* 88,400 5,834,400
Global Marine, Inc.* 501,900 14,147,306
Halliburton Co. 230,000 10,853,125
Noble Drilling Corp.* 161,400 6,647,663
Weatherford International, Inc.* 80,400 3,200,925
--------------
$ 50,600,219
--------------------------------------------------------------------------------
Oils - 2.3%
Conoco, Inc., "A" 380,100 $ 8,362,200
EOG Resources, Inc. 107,900 3,614,650
Santa Fe International Corp. 149,200 5,212,675
Transocean Sedco Forex, Inc. 293,700 15,694,594
--------------
$ 32,884,119
--------------------------------------------------------------------------------
Pharmaceuticals - 0.1%
Sepracor, Inc.* 16,900 $ 2,038,563
--------------------------------------------------------------------------------
Restaurants and Lodging - 0.3%
Cendant Corp.* 303,367 $ 4,247,138
--------------------------------------------------------------------------------
Retail - 4.2%
Best Buy Co., Inc.* 53,500 $ 3,383,875
CVS Corp. 505,400 20,216,000
Home Depot, Inc. 61,300 3,061,169
Office Depot, Inc.* 323,700 2,023,125
RadioShack Corp. 262,400 12,431,200
Wal-Mart Stores, Inc. 344,200 19,834,525
--------------
$ 60,949,894
--------------------------------------------------------------------------------
Supermarkets - 1.3%
Safeway, Inc.* 426,600 $ 19,250,325
--------------------------------------------------------------------------------
Telecommunications - 12.1%
Allegiance Telecom, Inc.* 96,100 $ 6,150,400
Amdocs Ltd.* 52,400 4,021,700
American Tower Corp., "A"* 151,100 6,298,981
AT&T Corp., "A"* 492,000 11,931,000
Cabletron Systems, Inc.* 378,800 9,564,700
Copper Mountain Networks, Inc.* 26,900 2,370,563
Corning, Inc. 165,800 44,745,275
Cox Communications, Inc.* 277,700 12,652,706
EchoStar Communications Corp.* 50,600 1,675,334
Emulex Corp.* 34,800 2,285,925
Exfo Electro - Optical Engineering, Inc.* 5,740 251,843
Metromedia Fiber Network, Inc., "A"* 467,440 18,551,525
MGC Communications, Inc.* 61,300 3,674,169
NEXTEL Communications, Inc.* 176,000 10,769,000
Nextlink Communications, Inc., "A"* 149,000 5,652,687
NTL, Inc.* 104,200 6,238,975
Qwest Communications International, Inc.* 87,008 4,323,210
Spectrasite Holdings, Inc.* 115,400 3,274,475
Stratos Lightwave, Inc.* 760 21,185
Time Warner Telecom, Inc.* 131,200 8,446,000
UnitedGlobalCom, Inc.* 138,800 6,488,900
Williams Communications Group, Inc.* 112,500 3,733,594
Winstar Communications, Inc.* 101,300 3,431,537
--------------
$ 176,553,684
--------------------------------------------------------------------------------
Telecommunications and Cable - 1.3%
Comcast Corp., "A"* 456,400 $ 18,484,200
--------------------------------------------------------------------------------
Utilities - Electric - 1.6%
AES Corp.* 510,200 $ 23,277,875
--------------------------------------------------------------------------------
Total U.S. Stocks $1,229,753,596
--------------------------------------------------------------------------------
Foreign Stocks - 12.9%
Bermuda - 1.3%
FLAG Telecom Holdings Ltd. (Telecommunications)* 283,750 $ 4,220,781
Global Crossing Ltd. (Telecommunications)* 565,400 14,877,088
--------------
$ 19,097,869
--------------------------------------------------------------------------------
Canada - 2.8%
Nortel Networks Corp. (Telecommunications) 605,849 $ 41,349,194
--------------------------------------------------------------------------------
Finland - 0.4%
Sonera Oyj (Telecommunications) 140,800 $ 6,417,968
--------------------------------------------------------------------------------
France - 0.1%
Business Objects S.A., ADR
(Computer Software - Systems)* 17,200 $ 1,515,750
--------------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications) 522,000 $ 4,603,913
--------------------------------------------------------------------------------
Israel - 0.6%
Check Point Software Technologies Ltd.
(Computer Software - Services)* 35,500 $ 7,517,125
Partner Communications Co. Ltd., ADR
(Cellular Telephones)* 87,150 827,925
--------------
$ 8,345,050
--------------------------------------------------------------------------------
Japan - 1.0%
Daiwa Securities Group, Inc. (Banks and Credit
Cos.) 654,000 $ 8,631,222
NTT Mobile Communications Network, Inc.
(Telecommunications) 210 5,681,561
--------------
$ 14,312,783
--------------------------------------------------------------------------------
Mexico - 0.6%
Grupo Iusacell S. A. de C. V., ADR
(Telecommunications)* 292,800 $ 4,575,000
Telefonos de Mexico S.A., ADR (Utilities -
Telephone) 65,010 3,713,696
--------------
$ 8,288,696
--------------------------------------------------------------------------------
Netherlands - 0.9%
ASM Lithography Holding N.V.
(Computer Software - Systems)* 88,200 $ 3,891,825
KPN N.V. (Telecommunications)* 2,806 125,493
Libertel N.V. (Cellular Telecommunications)* 184,300 2,806,128
Versatel Telecommunications N.V.
(Telecommunications)* 163,760 6,878,314
--------------
$ 13,701,760
--------------------------------------------------------------------------------
Norway - 0.2%
Schibsted ASA (Publishing) 166,550 $ 3,087,136
--------------------------------------------------------------------------------
Singapore - 0.7%
Chartered Semiconductor Manufacturing Co., ADR
(Electronics)* 113,445 $ 10,210,050
--------------------------------------------------------------------------------
South Korea - 1.1%
Samsung Electronics (Electronics) 48,100 $ 15,919,723
--------------------------------------------------------------------------------
Sweden - 0.4%
Ericsson LM, ADR (Telecommunications) 284,300 $ 5,686,000
--------------------------------------------------------------------------------
United Kingdom - 2.5%
BP Amoco PLC, ADR (Oils) 287,200 $ 16,244,750
Vodafone AirTouch PLC (Telecommunications)* 5,121,289 20,683,063
--------------
$ 36,927,813
--------------------------------------------------------------------------------
Total Foreign Stocks $ 189,463,705
--------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,063,670,961) $1,419,217,301
--------------------------------------------------------------------------------
Short-Term Obligation - 1.8%
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
--------------------------------------------------------------------------------
General Electric Capital Corp., due 7/03/00,
at Amortized Cost $ 25,632 $ 25,622,103
--------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,089,293,064) $1,444,839,404
Other Assets, Less Liabilities - 1.2% 18,256,171
--------------------------------------------------------------------------------
Net Assets - 100.0% $1,463,095,575
--------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
---------------------------------------------------------------------------
JUNE 30, 2000
---------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,089,293,064) $1,444,839,404
Cash 9,908
Foreign currency, at value (identified cost, $53) 57
Receivable for fund shares sold 1,534,682
Receivable for investments sold 31,714,393
Interest and dividends receivable 356,268
Other assets 12,622
--------------
Total assets $1,478,467,334
--------------
Liabilities:
Payable for fund shares reacquired $ 4,703,626
Payable for investments purchased 9,590,266
Payable to affiliates -
Management fee 16,485
Shareholder servicing agent fee 3,984
Distribution and service fee 817,160
Administrative fee 697
Accrued expenses and other liabilities 239,541
--------------
Total liabilities $ 15,371,759
--------------
Net assets $1,463,095,575
==============
Net assets consist of:
Paid-in capital $ 814,706,996
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 355,547,590
Accumulated undistributed net realized gain on
investments and foreign currency transactions 290,192,936
Accumulated undistributed net investment income 2,648,053
--------------
Total $1,463,095,575
==============
Shares of beneficial interest outstanding 75,453,408
==========
Class A shares:
Net asset value per share
(net assets of $1,372,851,459 / 70,563,825 shares of
beneficial interest outstanding) $19.46
======
Offering price per share (100 / 94.25 of net asset value
per share) $20.65
======
Class B shares:
Net asset value and offering price per share
(net assets of $83,540,653 / 4,545,613 shares of
beneficial interest outstanding) $18.38
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $6,703,463 / 343,970 shares of
beneficial interest outstanding) $19.49
======
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 (Unaudited)
------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 7,854,720
Interest 752,886
Income on securities loaned 171,417
Foreign taxes withheld (42,381)
-------------
Total investment income $ 8,736,642
-------------
Expenses -
Management fee $ 2,937,496
Trustees' compensation 28,041
Shareholder servicing agent fee 709,374
Distribution and service fee (Class A) 1,472,299
Distribution and service fee (Class B) 377,894
Administrative fee 112,449
Custodian fee 301,017
Printing 28,266
Postage 44,004
Auditing fees 16,500
Legal fees 241
Miscellaneous 166,873
-------------
Total expenses $ 6,194,454
Fees paid indirectly (209,656)
-------------
Net expenses $ 5,984,798
-------------
Net investment income $ 2,751,844
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 291,943,261
Foreign currency transactions 40,179
-------------
Net realized gain on investments and foreign
currency transactions $ 291,983,440
-------------
Change in unrealized appreciation (depreciation) -
Investments $(207,611,928)
Translation of assets and liabilities in foreign
currencies 493
-------------
Net unrealized loss on investments and foreign
currency translation $(207,611,435)
-------------
Net realized and unrealized gain on investments
and foreign currency $ 84,372,005
-------------
Increase in net assets from operations $ 87,123,849
=============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ 2,751,844 $ (2,693,605)
Net realized gain on investments and foreign
currency transactions 291,983,440 187,211,976
Net unrealized gain (loss) on investments and
foreign currency translation (207,611,435) 169,918,409
-------------- --------------
Increase in net assets from operations $ 87,123,849 $ 354,436,780
-------------- --------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (57,993,689) $ (121,962,345)
From net realized gain on investments and foreign
currency transactions (Class B) (3,460,854) (6,170,386)
From net realized gain on investments and foreign
currency transactions (Class I) (280,019) (592,166)
-------------- --------------
Total distributions declared to shareholders $ (61,734,562) $ (128,724,897)
-------------- --------------
Net increase (decrease) in net assets from fund share
transactions $ 29,212,371 $ (8,426,296)
-------------- --------------
Total increase in net assets $ 54,601,658 $ 217,285,587
Net assets:
At beginning of period $1,408,493,917 $1,191,208,330
-------------- --------------
At end of period (including accumulated undistributed
net investment income and accumulated net investment
loss of $2,648,053 and $103,791, respectively) $1,463,095,575 $1,408,493,917
============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------------------------------
JUNE 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning
of period $19.07 $15.95 $13.92 $12.97 $11.94 $10.17
------ ------ ------ ------ ------ ------
Income from investment
operations# -
Net investment income(loss)(S) $ 0.04 $(0.03) $(0.04) $(0.03) $(0.02) $ 0.03
Net realized and
unrealized gain on
investments and
foreign currency 1.20 4.99 3.96 2.96 2.62 3.46
------ ------ ------ ------ ------ ------
Total from investment
operations $ 1.24 $ 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 $(0.85) $(1.84) $(1.89) $(1.98) $(1.57) $(1.72)
------ ------ ------ ------ ------ ------
Net asset value - end of
period $19.46 $19.07 $15.95 $13.92 $12.97 $11.94
====== ====== ====== ====== ====== ======
Total return(+) 6.28%++ 32.82% 29.17% 23.28% 21.87% 34.49%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.84%+ 0.80% 0.81% 0.84% 0.84% 0.87%
Net investment income (loss) 0.43%+ (0.19)% (0.25)% (0.18)% (0.15)% 0.21%
Portfolio turnover 71% 87% 79% 60% 65% 100%
Net assets at end of
period (000 Omitted) $1,372,851 $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%
+ 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.
(+) 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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------------------------------------
JUNE 30, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $18.13 $15.33 $13.54 $12.73 $11.79 $10.08
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.03) $(0.16) $(0.16) $(0.14) $(0.14) $(0.09)
Net realized and unrealized gain on
investments and foreign currency 1.13 4.75 3.83 2.89 2.57 3.42
------ ------ ------ ------ ------ ------
Total from investment operations $ 1.10 $ 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 $(0.85) $(1.79) $(1.88) $(1.94) $(1.49) $(1.62)
------ ------ ------ ------ ------ ------
Net asset value - end of period $18.38 $18.13 $15.33 $13.54 $12.73 $11.79
====== ====== ====== ====== ====== ======
Total return 5.82%++ 31.73% 28.15% 22.27% 20.72% 33.20%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.62%+ 1.62% 1.63% 1.64% 1.75% 1.81%
Net investment loss (0.32)%+ (1.01)% (1.05)% (0.98)% (1.06)% (0.75)%
Portfolio turnover 71% 87% 79% 60% 65% 100%
Net assets at end of period (000
Omitted) $83,541 $71,363 $48,806 $25,578 $15,170 $6,673
+ 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>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
-----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
SIX MONTHS ENDED DECEMBER 31, PERIOD ENDED
JUNE 30, 2000 ---------------------------- DECEMBER 31,
1999 1998 1997*
(UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
CLASS I
-----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C>
Net asset value - beginning of period $19.08 $15.95 $13.91 $12.84
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $ 0.06 $ 0.00** $ (0.01) $ 0.00**
Net realized and unrealized gain on investments and
foreign currency 1.20 5.00 3.96 3.07
------ ------ ------ ------
Total from investment operations $ 1.26 $ 5.00 $ 3.95 $ 3.07
------ ------ ------ ------
Less distributions declared to shareholders from net
realized gain on investments and foreign currency
transactions $(0.85) $(1.87) $(1.91) $(2.00)
------ ------ ------ ------
Net asset value - end of period $19.49 $19.08 $15.95 $13.91
====== ====== ====== ======
Total return 6.38%++ 33.09% 29.45% 24.65%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.62%+ 0.62% 0.63% 0.65%+
Net investment income (loss) 0.64%+ (0.01)% (0.06)% 0.01%+
Portfolio turnover 71% 87% 79% 60%
Net assets at end of period (000 Omitted) $6,703 $6,625 $5,100 $3,909
* For the period from the inception of Class I shares, 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 (Unaudited)
(1) Business and Organization
MFS Growth Opportunities Fund (the fund) is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as 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"), as
lending agent, 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
provides 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 agent. 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 June 30, 2000, the value of securities loaned was $34,040,718. These loans
were collateralized by U.S. Treasury securities of $34,191,009.
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 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 $163,735
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 $45,921 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 net 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 only distributions in excess of tax basis earnings and profits are
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.
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. Included in Trustees' compensation is a net
periodic pension expense of $8,886 for the six months ended June 30, 2000.
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 incurs an administrative fee at
the following annual percentages of the fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$90,631 for the six months ended June 30, 2000, 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 (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 $454,261 for the six months ended June 30, 2000. Payment of
the 0.10% per annum Class A distribution fee will commence on such date as the
Trustees of the fund may determine. Fees incurred under the distribution plan
during the six months ended June 30, 2000, were 0.22% 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 $4,144 for Class B shares for the six
months ended June 30, 2000. Fees incurred under the distribution plan during the
six months ended June 30, 2000, 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 redemptions of Class B shares in
the event of a shareholder redemption within six years of purchase. MFD receives
all contingent deferred sales charges. Contingent deferred sales charges imposed
during the six months ended June 30, 2000, were $153 and $61,440 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%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
------------------------------------------------------------------------------
Investments (non-U.S. government securities) $978,986,336 $1,032,213,980
------------ --------------
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 $1,089,293,064
--------------
Gross unrealized appreciation $ 425,605,983
Gross unrealized depreciation (70,059,643)
--------------
Net unrealized appreciation $ 355,546,340
==============
(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
SIX MONTHS ENDED JUNE 30, 2000 YEAR ENDED DECEMBER 31, 1999
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,391,586 $ 161,941,695 80,501,562 $ 1,299,702,953
Shares issued to shareholders in
reinvestment of distributions 2,718,184 55,450,691 6,998,047 117,986,476
Shares reacquired (10,311,680) (199,220,144) (89,034,772) (1,438,631,961)
--------------- --------------- --------------- ---------------
Net increase (decrease) 798,090 $ 18,172,242 (1,535,163) $ (20,942,532)
=============== =============== =============== ===============
<CAPTION>
Class B shares
SIX MONTHS ENDED JUNE 30, 2000 YEAR ENDED DECEMBER 31, 1999
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,074,556 $ 55,937,444 5,285,119 $ 82,675,429
Shares issued to shareholders in
reinvestment of distributions 161,847 3,123,624 351,673 5,654,144
Shares reacquired (2,626,945) (47,962,494) (4,884,788) (76,269,456)
--------------- --------------- --------------- ---------------
Net increase 609,458 $ 11,098,574 752,004 $ 12,060,117
=============== =============== =============== ===============
<CAPTION>
Class I shares
SIX MONTHS ENDED JUNE 30, 2000 YEAR ENDED DECEMBER 31, 1999
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 352,251 $ 6,818,641 30,338 $ 487,418
Shares issued to shareholders in
reinvestment of distributions 13,720 280,019 34,999 592,166
Shares reacquired (369,205) (7,157,105) (37,866) (623,465)
--------------- --------------- --------------- ---------------
Net increase (decrease) (3,234) $ (58,445) 27,471 $ 456,119
=============== =============== =============== ===============
</TABLE>
(6) Line of Credit
The fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the fund for the six months ended June
30, 2000, was $5,155. The fund had no significant borrowings during the period.
<PAGE>
MFS(R) GROWTH OPPORTUNITIES FUND
TRUSTEES SECRETARY
J. Atwood Ives+ - Chairman and Chief Stephen E. Cavan*
Executive Officer, Eastern
Enterprises (diversified services ASSISTANT SECRETARY
company) James R. Bordewick, Jr.*
Lawrence T. Perera+ - Partner, CUSTODIAN
Hemenway & Barnes (attorneys) State Street Bank and Trust Company
William J. Poorvu+ - Adjunct INVESTOR INFORMATION
Professor, Harvard University For information on MFS mutual funds,
Graduate School of Business call your investment professional
Administration or, for an information kit, call
toll free: 1-800-637-2929 any
Charles W. Schmidt+ - Private business day from 9 a.m. to 5 p.m.
Investor Eastern time (or leave a message
anytime).
Arnold D. Scott* - Senior Executive
Vice President, Director, and INVESTOR SERVICE
Secretary, MFS Investment Management MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman and Boston, MA 02107-9906
Chief Executive Officer, MFS
Investment Management For general information, call toll
free: 1-800-225-2606 any business
Elaine R. Smith - Independent day from 8 a.m. to 8 p.m. Eastern
Consultant time.
David B. Stone - Chairman, North For service to speech- or
American Management Corp. hearing-impaired, call toll free:
(investment adviser) 1-800-637-6576 any business day from
9 a.m. to 5 p.m. Eastern time. (To
INVESTMENT ADVISER use this service, your phone must be
Massachusetts Financial Services Company equipped with a Telecommunications
500 Boylston Street Device for the Deaf.)
Boston, MA 02116-3741
For share prices, account balances,
DISTRIBUTOR exchanges, or stock and bond
MFS Fund Distributors, Inc. outlooks, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255)
Boston, MA 02116-3741 anytime from a touch-tone telephone.
CHAIRMAN AND PRESIDENT WORLD WIDE WEB
Jeffrey L. Shames* www.mfs.com
PORTFOLIO MANAGER
Paul M. McMahon*
TREASURER
James O. Yost*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
+ Independent Trustee
*MFS Investment Management
<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-3 08/00 59M 16/216/816
