<PAGE>
{LOGO: M F S ANNUAL REPORT FOR
THE FIRST NAME IN MUTUAL FUNDS] YEAR ENDED
NOVEMBER 30, 1995
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
Front cover
A photo of computer keyboard.
<PAGE>
<TABLE>
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
<S> <C>
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company; INVESTOR INFORMATION
Director, Cambridge Bancorp; Director, For MFS stock and bond market outlooks,
Cambridge Trust Company call toll free: 1-800-637-4458 anytime from
Peter G. Harwood - Private Investor a touch-tone telephone.
J. Atwood Ives - Chairman and Chief Executive For information on MFS mutual funds,
Officer, Eastern Enterprises call your financial adviser or, for an
Lawrence T. Perera - Partner, information kit, call toll free:
Hemenway & Barnes 1-800-637-2929 any business day from
William J. Poorvu - Adjunct Professor, 9 a.m. to 5 p.m. Eastern time (or leave
Harvard University Graduate School of a message anytime).
Business Administration INVESTOR SERVICE
Charles W. Schmidt - Private Investor MFS Service Center, Inc.
Arnold D. Scott* - Senior Executive Vice P.O. Box 2281
President, Director and Secretary, Boston, MA 02107-9906
Massachusetts Financial Services Company For general information, call toll free:
Jeffrey L. Shames* - President and Director, 1-800-225-2606 any business day from
Massachusetts Financial Services Company 8 a.m. to 8 p.m. Eastern time.
Elaine R. Smith - Independent Consultant For service to speech- or hearing-impaired,
David B. Stone - Chairman, North American call toll free: 1-800-637-6576 any business
Management Corp. (investment adviser) day from 9 a.m. to 5 p.m. Eastern time.
INVESTMENT ADVISER (To use this service, your phone must be
Massachusetts Financial Services Company equipped with a Telecommunications Device for
500 Boylston Street the Deaf.)
Boston, MA 02116-3741 For share prices, account balances and
DISTRIBUTOR exchanges, call toll free: 1-800-MFS-TALK
MFS Fund Distributors, Inc. (1-800-637-8255) anytime from a touch-tone
500 Boylston Street telephone.
Boston, MA 02116-3741
PORTFOLIO MANAGERS
George F. Bennett, Jr.*
Christian Felipe* ----------------------------------------------------
TREASURER TOP-RATED SERVICE
W. Thomas London* DALBAR For the second year in a
ASSISTANT TREASURER row, MFS earned a
James O. Yost* MFS #1 MFS #1 ranking in
SECRETARY DALBAR, Inc.'s
Stephen E. Cavan* DALBAR Broker/Dealer Survey,
ASSISTANT SECRETARY Main Office Operations
James R. Bordewick, Jr.* Service Quality category. The firm achieved a 3.49
overall score - on a scale of 1 to 4 - in the 1995
survey. A total of 71 firms responded, offering input
on the quality of service they receive from 36 mutual
fund companies nationwide. The survey contained
questions about service quality in 17 categories,
including "knowledge of phone service contacts,"
"accuracy of transaction processing," and "overall
ease of doing business with the firm."
*Affiliated with the Investment Adviser ----------------------------------------------------
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
A moderate-growth economy, the apparent demise of high inflation, and declining
interest rates have driven the stock market up to record levels. For the year
ended November 30, 1995, Class A shares of the Fund achieved a total return of
+32.91% and Class B shares +32.09%. These returns include the reinvestment
of distributions but exclude the effects of any sales charges. While these
returns lagged the +36.93% return of the Standard & Poor's 500 Composite Index
(the S&P 500), a popular, unmanaged index of common stock performance, they were
slightly ahead of the Lipper Growth Fund category, which had an average return
of +31.42%. A discussion of the factors which contributed to the Fund's
results may be found in the Portfolio Performance and Strategy section of this
letter.
Economic Outlook
Moderate, but sustainable, growth has been the hallmark of the economic
expansion's fifth year. While initial estimates showed the U.S. economy growing
at an annual rate of 4.2% in the third quarter, this surprisingly strong growth
was mainly driven by a pickup in consumer spending and an increase in business
and government outlays. Although impressive, this growth rate is not expected to
continue in coming months. Recent retail sales have been disappointing, in part
because of rising levels of consumer debt. An extended period of lower mortgage
rates seems to have relieved much of the pent-up demand for housing. Growth is
not expected to get much help from the manufacturing sector, either, as order
flows from manufacturers have moderated. Export activity, meanwhile, is also
expected to remain modest as continued weakness abroad has limited demand for
many U.S. goods. However, the Federal Reserve Board's consistent and, so far,
successful efforts to fight inflation seem to be giving consumers and businesses
enough longer term confidence to help maintain modest growth in real (adjusted
for inflation) gross domestic product into 1996.
Stock Market
After some volatility late in the third quarter, the stock market continued to
strengthen. Although many companies reported solid third-quarter results, there
was some weakness in the earnings of retail, financial services and even some
technology companies. However, a slowdown in earnings may be a positive
development if it is an indication that the economy is not overheating and that
inflation is under control. While we see a deceleration of corporate earnings as
the inevitable consequence of traditional business cycles, we remain encouraged
by the high absolute level of profitability among U.S. companies. Also, many
companies' increasing emphasis on cost containment and growing use of technology
have helped keep them highly competitive and reasonably profitable. Looking
ahead, we believe that a stabilizing interest rate environment, coupled with
reasonable earnings reports, could justify current market valuations.
Portfolio Performance and Strategy
After first-half returns that lagged those of the large-capitalization stocks
found in the S&P 500 and the Lipper Growth Fund category, the Fund enjoyed a
strong second-half recovery, relative to the indices, and increased in value by
over 20%. Investments in the cellular telephone and retail industries held back
performance. Cellular telephone stocks were impacted by concerns about future
competition and a recent slowdown in the very high growth rate of new
subscribers. Their weighting in the Fund has been reduced substantially
throughout the year. The retail industry, despite disappointing overall sales,
showed outstanding performance in certain segments where positions were
initiated or increased. Companies such as PetSmart, the dominant specialty store
in pet food and supplies, and Micro Warehouse, a catalog retailer of computer
software and hardware, were strong contributors to the Fund's performance.
On the positive side, the technology and telecommunications sectors were the
driving force in performance. Both sectors have been overweighted throughout the
year and the outlook for the rest of the decade continues to be positive. With
strong cash flows, and the need to be more competitive and productive, industry
is shifting its capital spending budget away from bricks and mortar and toward
technology. Companies such as LSI Logic and Intel in semiconductors, Cisco
Systems and Bay Networks in networking, and Oracle and Microsoft in software are
positions which we believe will benefit from this long-term trend.
While growth stocks as a group have lagged the stock market as a whole, we
believe that the weakening economy could eventually result in the relative
earnings of growth stocks becoming more attractive and that positive relative
price performance could follow.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ George F. Bennett, Jr.
/s/ A. Keith Brodkin /s/ Christian Felipe
George F. Bennett, Jr.
A. Keith Brodkin Christian Felipe
Chairman and President Portfolio Managers
December 13, 1995
PORTFOLIO MANAGER PROFILES
George Bennett began his career at MFS in 1969 as an industry specialist and was
promoted to Assistant Vice President - Investments in 1973, Vice President -
Investments in 1979, and Senior Vice President in 1986. He became Portfolio
Manager of Massachusetts Investors Growth Stock Fund in 1993.
On May 1, 1995, Christian Felipe joined George Bennett as a Portfolio Manager of
the Fund. Christian joined the MFS investment staff in 1986 as an industry
specialist. A graduate of the University of California, Los Angeles and the
Wharton School of Finance and Commerce of the University of Pennsylvania, he was
promoted to Assistant Vice President - Investments in 1988 and Vice President -
Investments in 1989.
OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital and future income
rather than current income.
The Fund's investment policy is to keep assets invested, except for working cash
balances, in the common stocks, or securities convertible into common stocks, of
companies believed by the investment adviser to possess better- than-average
prospects for long-term growth. Emphasis is placed on the selection of
progressive, well-managed companies.
TAX FORM SUMMARY
In January 1996, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1995.
The Fund has designated $106,740,705 as a long-term capital gain distribution
for tax purposes. This distribution was made to shareholders of record as of
December 28, 1995, payable December 29, 1995.
PERFORMANCE
The information below and on the following page illustrates the historical
performance of Massachusetts Investors Growth Stock Fund Class A shares in
comparison to various market indicators. Fund results in the graph reflect the
deduction of the 5.75% maximum sales charge; benchmark comparisons are unmanaged
and do not reflect any fees or expenses. You cannot invest in an index. All
results reflect the reinvestment of all dividends and capital gains.
Please note that effective September 7, 1993, Class B shares were offered.
Information on Class B share performance appears on the next page.
In the table on the next page, we have included the average annual total returns
of all growth funds (including the Fund) tracked by Lipper Analytical Services,
Inc. (an independent firm which rates mutual fund performance) for the
applicable time periods. Because these returns do not reflect any applicable
sales charges, we have also included the Fund's results at net asset value (no
sales charge) for comparison.
All results are historical and, therefore, are not an indication of future
results. The investment return and principal value of an investment in a mutual
fund will vary with changes in market conditions, and shares, when redeemed, may
be worth more or less than their original cost. All Class A results reflect the
applicable expense subsidy which is explained in the Notes to Financial
Statements. Had the subsidy not been in effect, the results would have been less
favorable.
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-Year Period Ended November 30, 1995)
Line graph representing the growth of a $10,000 investment for the five-year
period ended November 30, 1995. The graph is scaled from $5,000 to $30,000 in
$5,000 segments. The years are marked in 12-month segments from 1990 to 1995.
There are three lines drawn to scale. One is a solid line representing
Massachusetts Investors Growth Stock Fund (Class A), a second line of short
dashes represents the S&P 500, a third line of medium-short dashes represents
the Consumer Price Index.
Massachusetts Investors Growth Stock Fund (Class A) $21,998
S&P 500 $21,700
Consumer Price Index $11,480
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-Year Period Ended November 30, 1995)
Line graph representing the growth of a $10,000 investment for the ten-year
period ended November 30, 1995. The graph is scaled from $0 to $50,000 in
$10,000 segments. The years are marked in 12-month segments from 1985 to 1995.
There are three lines drawn to scale. One is a solid line representing MFS Value
Fund (Class A), a second line of short dashes represents the S&P 500, a third
line of medium-short dashes represents the Consumer Price Index.
Massachusetts Investors Growth Stock Fund (Class A) $34,647
S&P 500 $41,096
Consumer Price Index $14,089
AVERAGE ANNUAL TOTAL RETURNS
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
Massachusetts Investors Growth Stock
Fund (Class A) including 5.75%
sales charge +25.26% +10.52% +17.08% +13.23%
- ------------------------------------------------------------------------------
Massachusetts Investors Growth Stock
Fund (Class A) at net asset value +32.91% +12.72% +18.48% +13.90%
- ------------------------------------------------------------------------------
Massachusetts Investors Growth Stock
Fund (Class B) with CDSC<F1> +28.09% -- -- + 9.22%<F2>
- ------------------------------------------------------------------------------
Massachusetts Investors Growth Stock
Fund (Class B) without CDSC +32.09% -- -- +10.36%<F2>
- ------------------------------------------------------------------------------
Average growth fund +31.42% +12.80% +16.61% +13.17%
- ------------------------------------------------------------------------------
Standard & Poor's 500 Composite
Index +36.93% +15.05% +16.76% +15.18%
- ------------------------------------------------------------------------------
Consumer Price Index<F3> + 2.61% + 2.65% + 2.80% + 3.49%
- ------------------------------------------------------------------------------
<F1> These returns reflect the current Class B contingent deferred sales charge
(CDSC) of 4% for the 1-year period and 3% for the period commencing
September 7, 1993.
<F2> For the period from the commencement of offering of Class B shares,
September 7, 1993 to November 30, 1995.
<F3> The Consumer Price Index is a popular measure of change in prices.
<PAGE>
PORTFOLIO OF INVESTMENTS - November 30, 1995
Common Stocks - 90.7%
- -------------------------------------------------------------------------------
Issuer Shares Value
- -------------------------------------------------------------------------------
Airlines - 0.4%
Southwest Airlines Co. 200,000 $ 5,000,000
- -------------------------------------------------------------------------------
Apparel and Textiles - 0.8%
Nike, Inc., "B" 160,000 $ 9,280,000
- -------------------------------------------------------------------------------
Banks and Credit Companies - 0.3%
First Interstate Bancorp 25,000 $ 3,350,000
- -------------------------------------------------------------------------------
Business Machines - 2.4%
Motorola, Inc. 325,000 $ 19,906,250
Sun Microsystems, Inc.* 100,000 8,412,500
--------------
$ 28,318,750
- -------------------------------------------------------------------------------
Business Services - 6.8%
Alco Standard Corp. 260,000 $ 11,310,000
CUC International, Inc.* 1,462,500 55,575,000
Ceridian Corp.* 160,000 6,720,000
Computer Sciences Corp.* 72,200 5,252,550
DST Systems, Inc.* 45,600 1,316,700
Danka Business Systems, ADR 35,000 1,190,000
--------------
$ 81,364,250
- -------------------------------------------------------------------------------
Cellular Telephones - 3.1%
AirTouch Communications, Inc.* 425,000 $ 12,378,125
Cellular Communications of Puerto Rico* 213,832 5,720,006
Telephone & Data Systems, Inc. 500,000 19,062,500
--------------
$ 37,160,631
- -------------------------------------------------------------------------------
Computer Software - Personal Computers - 6.8%
Electronic Arts, Inc.* 500,000 $ 17,062,500
First Data Corp. 119,295 8,469,945
Microsoft Corp.* 645,000 56,195,625
--------------
$ 81,728,070
- -------------------------------------------------------------------------------
Computer Software - Systems - 12.4%
Adobe Systems, Inc. 210,000 $ 14,201,250
Compaq Computer Corp.* 108,300 5,360,850
Computer Associates International, Inc. 300,000 19,650,000
Compuware Corp.* 445,900 9,140,950
General Motors Corp., "E" 125,000 6,312,500
Informix Corp.* 637,900 17,661,856
Oracle Systems Corp.* 1,025,000 46,509,375
Sybase, Inc.* 533,200 18,728,650
System Software Associates, Inc. 293,900 10,580,400
--------------
$ 148,145,831
- -------------------------------------------------------------------------------
Consumer Goods and Services - 1.6%
Duracell International, Inc. 40,000 $ 2,120,000
Estee Lauder Cos., "A"* 9,700 352,838
Service Corp. International 88,500 3,595,313
Tyco International Ltd. 398,600 12,506,075
--------------
$ 18,574,226
- -------------------------------------------------------------------------------
Electronics - 7.3%
Intel Corp. 630,900 $ 38,406,038
LSI Logic Corp.* 895,700 37,507,438
Maxim Integrated Products, Inc.* 50,000 3,750,000
Tower Semiconductor Ltd.* 125,000 3,109,375
VLSI Technology, Inc.* 200,000 4,250,000
--------------
$ 87,022,851
- -------------------------------------------------------------------------------
Entertainment - 5.1%
Capital Cities/ABC, Inc. 85,000 $ 10,508,125
Comcast Corp., Special, "A" 400,000 7,900,000
Harrah's Entertainment, Inc.* 1,130,800 28,128,650
Infinity Broadcasting Corp., "A"* 200,000 6,400,000
Mirage Resorts, Inc.* 225,000 7,621,875
--------------
$ 60,558,650
- -------------------------------------------------------------------------------
Financial Institutions - 3.7%
Advanta Corp., "B" 100,000 $ 3,875,000
Donaldson Lufkin & Jenrette, Inc.* 17,300 575,225
Federal Home Loan Mortgage Corp. 100,000 7,700,000
Franklin Resources, Inc. 255,000 13,483,125
MBNA Corp. 450,000 18,168,750
--------------
$ 43,802,100
- -------------------------------------------------------------------------------
Insurance - 0.9%
General Re Corp. 75,000 $ 11,221,875
- -------------------------------------------------------------------------------
Medical and Health Products - 2.2%
Alza Corp.* 500,000 $ 11,500,000
Johnson & Johnson 100,000 8,662,500
Schering Plough Corp. 100,000 5,737,500
U.S. Healthcare, Inc. 20,000 910,000
--------------
$ 26,810,000
- -------------------------------------------------------------------------------
Medical and Health Technology and Services - 6.6%
Cardinal Health, Inc. 200,000 $ 10,800,000
Health Management Assoc., Inc.* 225,000 5,962,500
Manor Care, Inc. 75,000 2,446,875
Pacificare Health Systems, Inc., "B"* 195,000 16,916,250
United Healthcare Corp. 675,000 42,440,625
--------------
$ 78,566,250
- -------------------------------------------------------------------------------
Metals and Minerals - 0.5%
Nucor Corp. 130,000 $ 6,483,750
- -------------------------------------------------------------------------------
Pollution Control - 1.0%
WMX Technologies, Inc. 400,000 $ 11,800,000
- -------------------------------------------------------------------------------
Restaurants and Lodging - 2.1%
Brinker International, Inc.* 667,500 $ 10,262,812
Promus Hotel Corp.* 690,900 15,286,162
--------------
$ 25,548,974
- -------------------------------------------------------------------------------
Stores - 11.6%
AutoZone, Inc.* 489,600 $ 14,259,600
Bed Bath & Beyond, Inc.* 410,000 13,478,750
Circuit City Stores, Inc. 300,000 8,700,000
Gymboree Corp.* 192,400 4,545,450
Home Depot, Inc. 582,800 25,861,750
Micro Warehouse, Inc.* 464,500 21,831,500
Office Depot, Inc.* 1,011,250 24,775,625
Officemax, Inc.* 175,000 3,981,250
PetSmart, Inc.* 656,180 21,161,805
--------------
$ 138,595,730
- -------------------------------------------------------------------------------
Telecommunications - 9.1%
Bay Networks, Inc.* 349,297 $ 15,718,388
Cabletron Systems, Inc.* 505,300 41,939,900
Cisco Systems, Inc.* 310,000 26,078,750
Glenayre Technologies, Inc.* 81,400 4,660,150
Novell, Inc.* 200,000 3,375,000
Paging Network, Inc.* 575,000 12,793,750
Rogers Cantel Mobile Co., "B"* 50,000 1,125,000
Tellabs, Inc.* 30,000 1,177,500
U.S. Robotics Corp.* 17,100 1,881,000
--------------
$ 108,749,438
- -------------------------------------------------------------------------------
Utilities - Telephone - 2.1%
Frontier Corp. 215,600 $ 5,578,650
MCI Communications Corp. 733,500 19,621,125
--------------
$ 25,199,775
- -------------------------------------------------------------------------------
Foreign Stocks - 3.9%
Canada - 0.8%
Rogers Communications, Inc., "B"
(Telecommunications) 929,500 $ 9,745,702
- -------------------------------------------------------------------------------
Germany - 0.2%
Adidas AG* (Shoes - Leather) 38,600 $ 2,057,421
- -------------------------------------------------------------------------------
Singapore - 0.1%
Singapore Press Holdings (Publishing
- Newspaper) 100,000 $ 1,581,560
- -------------------------------------------------------------------------------
Sweden - 2.8%
Astra AB, Free, "B" (Pharmaceuticals) 900,000 $ 33,090,254
- -------------------------------------------------------------------------------
Total Foreign Stocks $ 46,474,937
- -------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $724,301,709) $1,083,756,088
- -------------------------------------------------------------------------------
Convertible Preferred Stock - 1.0%
- -------------------------------------------------------------------------------
Cellular Telephones - 1.0%
Cellular Communications (Identified Cost,
$5,703,270) 244,130 $ 11,687,724
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - continued
Short-Term Obligations - 7.7%
- -------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -------------------------------------------------------------------------------
Federal Farm Credit, due 12/08/95 $ 7,050 $ 7,042,186
Federal Home Loan Bank, due 12/06/95 11,800 11,790,691
Federal Home Loan Bank, due 12/12/95 11,510 11,490,059
Federal Home Loan Mortgage Corp.,
due 12/13/95 9,000 8,983,020
Federal Home Loan Mortgage Corp.,
due 12/19/95 7,010 6,990,092
Federal National Mortgage Assn.,
due 12/04/95 13,540 13,533,625
Federal National Mortgage Assn.,
due 12/07/95 8,640 8,631,835
General Electric Co., due 12/01/95 9,150 9,150,000
General Electric Co., due 12/21/95 3,290 3,279,490
Raytheon Co., due 12/11/95 5,055 5,046,968
Transamerica Co., due 12/05/95 6,000 5,996,187
- -------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized
Cost and Value $ 91,934,153
- -------------------------------------------------------------------------------
Total Investments (Identified Cost,
$821,939,132) $1,187,377,965
Other Assets, Less Liabilities - 0.6% 7,442,197
===============================================================================
Net Assets - 100.0% $1,194,820,162
- -------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
November 30, 1995
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $821,939,132) $1,187,377,965
Cash 242
Receivable for investments sold 18,899,317
Receivable for Fund shares sold 170,616
Dividends receivable 169,833
Other assets 13,503
--------------
Total assets $1,206,631,476
--------------
Liabilities:
Payable for investments purchased $ 10,513,372
Payable for Fund shares reacquired 697,240
Payable to affiliates -
Management fee 9,830
Shareholder servicing agent fee 4,228
Distribution fee 335,809
Accrued expenses and other liabilities 250,835
--------------
Total liabilities $ 11,811,314
--------------
Net assets $1,194,820,162
==============
Net assets consist of:
Paid-in capital $ 676,454,387
Unrealized appreciation on investments 365,438,833
Accumulated undistributed net realized gain on
investments and foreign currency transactions 152,988,797
Accumulated net investment loss (61,855)
--------------
Total $1,194,820,162
==============
Shares of beneficial interest outstanding 95,530,878
==============
Class A shares:
Net asset value and redemption price per share
(net assets of $1,180,344,126 / 94,350,267 shares of
beneficial interest outstanding) $12.51
======
Offering price per share (100/94.25) $13.27
======
Class B shares:
Net asset value and offering price per share
(net assets of $14,476,036 / 1,180,611 shares of
beneficial interest outstanding) $12.26
======
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 November 30, 1995
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 3,404,333
Interest 3,199,285
------------
Total investment income $ 6,603,618
------------
Expenses -
Management fee $ 3,339,532
Trustees' compensation 59,944
Shareholder servicing agent fee (Class A) 1,401,735
Shareholder servicing agent fee (Class B) 27,050
Distribution and service fee (Class A) 3,015,974
Distribution and service fee (Class B) 122,954
Custodian fee 421,149
Postage 102,538
Printing 83,468
Legal fees 49,278
Auditing fees 39,250
Miscellaneous 287,043
------------
Total expenses $ 8,949,915
Reduction of expenses by distributor (1,057,470)
Fees paid indirectly (302,673)
------------
Net expenses $ 7,589,772
------------
Net investment loss $ (986,154)
============
Realized and unrealized gain on investments:
Realized gain (identified cost basis) -
Investment transactions $155,042,765
Foreign currency transactions 2,083
------------
Net realized gain on investments and foreign currency
transactions $155,044,848
------------
Change in unrealized appreciation (depreciation) -
Investments $150,836,357
Translation of assets and liabilities in foreign currencies (2,840)
------------
Net unrealized gain on investments $150,833,517
------------
Net realized and unrealized gain on investments and
foreign currency $305,878,365
------------
Increase in net assets from operations $304,892,211
============
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<CAPTION>
- -----------------------------------------------------------------------------------------------
Year Ended November 30, 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (986,154) $ (724,941)
Net realized gain on investments and foreign
currency transactions 155,044,848 101,534,996
Net unrealized gain (loss) on investments and
foreign currency 150,833,517 (153,476,898)
-------------- --------------
Increase (decrease) in net assets from operations $ 304,892,211 $ (52,666,843)
-------------- --------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (100,591,643) $ (173,544,772)
From net realized gain on investments and foreign
currency transactions (Class B) (1,381,907) (311,145)
-------------- --------------
Total distributions declared to shareholders $ (101,973,550) $ (173,855,917)
-------------- --------------
Fund share (principal) transactions -
Net proceeds from sale of shares $ 141,763,381 $ 123,072,342
Net asset value of shares issued to shareholders in
reinvestment of distributions 81,493,960 138,766,670
Cost of shares reacquired (218,071,853) (182,859,857)
-------------- --------------
Increase in net assets from Fund share
transactions $ 5,185,488 $ 78,979,155
-------------- --------------
Total increase (decrease) in net assets $ 208,104,149 $ (147,543,605)
Net assets:
At beginning of period 986,716,013 1,134,259,618
-------------- --------------
At end of period (including accumulated net
investment loss of $61,855 and $50,843,
respectively) $1,194,820,162 $ 986,716,013
============== ==============
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Year Ended November 30, 1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $10.48 $12.97 $12.15 $10.87 $ 8.48 $10.70
------ ------ ------ ------ ------ ------
Income from investment operations<F1>-
Net investment income (loss) $(0.01) $(0.01) $(0.01) $(0.03) $ 0.01 $ 0.05
Net realized and unrealized
gain (loss) on investments 3.12 (0.49) 1.55 2.07 2.93 (1.02)
------ ------ ------ ------ ------ ------
Total from investment
operations $ 3.11 $ (0.50) $ 1.54 $ 2.04 $ 2.94 $(0.97)
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders -
From net investment income $ -- $ -- $ -- $ -- $(0.03) $(0.05)
From net realized gain on
investments (1.08) (1.99) (0.72) (0.76) (0.52) (1.20)
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.08) $(1.99) $(0.72) $(0.76) $(0.55) $(1.25)
------ ------ ------ ------ ------ ------
Net asset value - end of period $12.51 $10.48 $12.97 $12.15 $10.87 $ 8.48
====== ====== ====== ====== ====== ======
Total return<F3> 32.91% (5.00)% 13.43% 19.35% 36.56% (10.27)%
Ratios (to average net assets)
/Supplemental data<F4>:
Expenses<F2> 0.73% 0.72% 0.71% 0.67% 0.63% 0.53%
Net investment income (loss) (0.08)% (0.06)% (0.19)% (0.24)% 0.14% 0.55%
Portfolio turnover 46% 56% 52% 16% 39% 44%
Net assets at end of period
(000,000 omitted) $1,180 $ 977 $1,132 $1,070 $ 950 $ 749
<FN>
<F1> Per share data for the periods subsequent to November 30, 1992 is based on
average shares outstanding.
<F2> For the year ended November 30, 1995, the Fund's expenses are calculated
without reduction for fees paid indirectly.
<F3> Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to March 1, 1991). If the charge had
been included, the results would have been lower.
<F4> The distributor did not impose a portion of its Class A distribution fee
for the periods indicated. If this fee had been incurred by the Fund, the
net investment loss per share and ratios would have been:
Net investment loss $(0.02) $(0.03) $(0.02) -- -- --
Ratios (to average net assets):
Expenses<F2> 0.83% 0.82% 0.74% -- -- --
Net investment loss (0.18)% (0.16)% (0.21)% -- -- --
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended November 30, 1989 1988 1987 1986 1995 1994 1993<F1>
- -----------------------------------------------------------------------------------------------------------------------------
Class A Class B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $ 8.39 $ 9.05 $ 9.69 $10.68 $10.35 $12.93 $12.91
------ ------ ------ ------ ------ ------ ------
Income from investment
operations<F3> -
Net investment income
(loss) $ 0.09 $ 0.12 $ 0.18 $ 0.20 $(0.11) $(0.09) $(0.01)
Net realized and
unrealized gain (loss)
on investments 3.14 0.64 (0.68) 1.99 3.10 (0.50) 0.03
------ ------ ------ ------ ------ ------ ------
Total from investment
operations $ 3.23 $ 0.76 $(0.50) $ 2.19 $ 2.99 $(0.59) $ 0.02
------ ------ ------ ------ ------ ------ ------
Less distributions
declared to shareholders -
From net investment
income $(0.08) $(0.15) $(0.14) $(0.20) $ -- $ -- $ --
From net realized gain
on investments (0.84) (1.27) -- (2.98) (1.08) (1.99) --
------ ------ ------ ------ ------ ------ ------
Total distributions
declared to
shareholders $(0.92) $(1.42) $(0.14) $(3.18) $(1.08) $(1.99) $ --
------ ------ ------ ------ ------ ------ ------
Net asset value - end
of period $10.70 $ 8.39 $ 9.05 $ 9.69 $12.26 $10.35 $12.93
====== ====== ====== ====== ====== ====== ======
Total return<F5> 42.14% 8.21% (5.57)% 20.30% 32.09% (5.82)% 0.70%<F1>)
Ratios (to average net assets)/Supplemental data:
Expenses<F4> 0.54% 0.58% 0.50% 0.50% 1.63% 1.60% 1.49%<F1>
Net investment
income (loss) 0.91% 1.27% 1.60% 1.62% (0.98)% (0.87)% (0.99)%<F1>
Portfolio turnover 32% 75% 66% 77% 46% 56% 52%
Net assets at end of period
(000,000 omitted) $ 907 $ 735 $ 774 $ 899 $ 14 $ 9 $ 2
<FN>
<F1> For the period from the commencement of offering of Class B shares,
September 7, 1993 to November 30, 1993.
<F2> Annualized.
<F3> #Per share data for the periods subsequent to November 30, 1992 is based on
average shares outstanding.
<F4> For the year ended November 30, 1995, the Fund's expenses are calculated
without reduction for fees paid indirectly.
<F5> Total returns for Class A shares do not include the applicable sales charge
(except for reinvested dividends prior to March 1, 1991). If the charge had
been included, the results would have been lower.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
Massachusetts Investors Growth Stock Fund (the Fund) is 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
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are
not available are valued at last quoted bid prices. Forward contracts are
valued on the basis of valuations furnished by dealers or by a pricing service
with consideration to factors such as maturity, and other market data, without
exclusive reliance upon exchange or over-the-counter prices. Short-term
obligations, which mature in 60 days or less, are valued at amortized cost,
which approximates market value. Non-U.S. dollar denominated short-term
obligations are valued at amortized cost as calculated in the base currency
and translated into U.S. dollars at the closing daily exchange rate.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Dividend income is recorded on the ex-dividend date for
dividends received in cash. Dividend payments received in additional
securities are recorded on the ex-dividend date in an amount equal to the
value of the security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on
the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of
net investment income and net realized gain reported on these financial
statements may differ from that reported on the Fund's tax return, and
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders on Form
1099-DIV. Foreign taxes have been provided for on interest and dividend income
earned on foreign investments in accordance with the applicable country's tax
rates and to the extent unrecoverable are recorded as a reduction of
investment income. Distributions to shareholders are recorded on the ex-
dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains. During the year ended November 30, 1995, $975,142 was
reclassified from accumulated undistributed net investment loss to accumulated
net realized gain on investments due to differences between book and tax
accounting for net investment losses and foreign currency transactions. 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 Class A
and Class B shares. The two classes of shares differ in their respective
shareholder servicing agent, distribution and service fees. All shareholders
bear the common expenses of the Fund pro rata, based on the average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate
of 0.31% of average daily net assets.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain of the 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 $15,984 for the year ended November 30, 1995.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$36,131 as its portion of the sales charge on sales of Class A shares of the
Fund.
The Trustees have adopted separate distribution plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer that enters into a sales agreement with MFD of up to
0.25% per annum of the Fund's average daily net assets attributable to Class A
shares which are attributable to that securities dealer, a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets
attributable to Class A shares, commissions to dealers and payments to MFD
wholesalers for sales at or above a certain dollar level, and other such
distribution-related expenses that are approved by the Fund. MFD is currently
waiving the 0.10% distribution fee for an indefinite period. Fees incurred
under the distribution plan during the year ended November 30, 1995 were 0.19%
of average daily net assets attributable to Class A shares on an annualized
basis.
The Class B distribution plan provides that the Fund will pay MFD a
distribution fee, equal to 0.75% per annum, and a service fee of up to 0.25%
per annum, of the Fund's average daily net assets attributable to Class B
shares. MFD will pay to securities dealers that enter into a sales agreement
with MFD all or a portion of the service fee attributable to Class B shares.
The service fee is intended to be additional consideration for services
rendered by the dealer with respect to Class B shares. MFD retains the service
fee for accounts not attributable to a securities dealer, which amounted to
$1,029 for Class B shares for the year ended November 30, 1995. Fees incurred
under the distribution plan during the year ended November 30, 1995 were 1.00%
of average daily net assets attributable to Class B shares on an annualized
basis.
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a
shareholder redemption within 12 months following the share 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 November 30, 1995 were $0
and $19,739 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 average daily net assets of each class of shares at an
effective annual rate of up to 0.15% and up to 0.22% attributable to Class A
and Class B shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$467,608,545 and $621,710,700, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $822,212,290
============
Gross unrealized appreciation $387,584,231
Gross unrealized depreciation (22,418,556)
------------
Net unrealized appreciation $365,165,675
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
Class A Shares
1995 1994
Year Ended -------------------------- ---------------------------
November 30, Shares Amount Shares Amount
- -------------------------------------------------------------------------------
Shares sold 12,002,572 $ 129,204,725 9,138,166 $ 98,219,747
Shares issued
to shareholders
in reinvestment
of distributions 8,387,440 80,184,283 12,196,320 138,428,629
Shares reacquired (19,312,028) (207,377,260) (15,368,839) (165,721,705)
----------- ------------- ----------- -------------
Net increase 1,077,984 $ 2,011,748 5,965,647 $ 70,926,671
=========== ============= =========== =============
Class B Shares
1995 1994
Year Ended -------------------------- ---------------------------
November 30, Shares Amount Shares Amount
- -------------------------------------------------------------------------------
Shares sold 1,196,877 $12,558,656 2,335,727 $24,852,595
Shares issued
to shareholders
in reinvestment
of distributions 139,032 1,309,677 29,894 338,041
Shares reacquired (1,054,654) (10,694,593) (1,604,821) (17,138,152)
---------- ----------- ---------- -----------
Net increase 281,255 $ 3,173,740 760,800 $ 8,052,484
========== =========== ======= ===========
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the year ended November
30, 1995 was $14,255.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of Massachusetts Investors Growth Stock Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Massachusetts Investors Growth
Stock Fund as of November 30, 1995, the related statement of operations for
the year then ended, the statement of changes in net assets for the years
ended November 30, 1995 and 1994, and the financial highlights for each of the
years in the ten-year period ended November 30, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at November 30, 1995 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Massachusetts
Investors Growth Stock Fund at November 30, 1995, the results of its
operations, the changes in its net assets, and its financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 5, 1996
---------------------------------------------
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.
<PAGE>
MASSACHUSETTS
INVESTORS GROWTH MFS #1 MFS -----------------
STOCK FUND
BULK RATE
500 Boylston Street U.S. POSTAGE
Boston, MA 02116 PAID
PERMIT #55638
BOSTON, MA
-----------------
[MFS Logo]
THE FIRST NAME IN MUTUAL FUNDS
MIG-2 1/96 47M 13/213
