<PAGE>
Annual Report
[LOGO] M F S(SM) for Year Ended
INVESTMENT MANAGEMENT November 30, 1997
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
A Discussion with the Portfolio Manager ................................... 2
Portfolio Manager's Profile ............................................... 4
Fund Facts ................................................................ 5
Performance Summary ....................................................... 5
Portfolio Concentration ................................................... 8
Tax Form Summary .......................................................... 8
Portfolio of Investments .................................................. 9
Financial Statements ...................................................... 14
Notes to Financial Statements ............................................. 21
Independent Auditors' Report .............................................. 27
The MFS Family of Funds(R) ................................................ 28
Trustees and Officers ..................................................... 29
HIGHLIGHTS
o FOR THE 12 MONTHS ENDED NOVEMBER 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 42.91%, CLASS B SHARES 41.77%,
CLASS C SHARES 38.53%, AND CLASS I SHARES 43.21%. (SEE PERFORMANCE SUMMARY
FOR MORE INFORMATION.)
o THE FUND HAS BEEN WELL POSITIONED IN THREE MAJOR SECTORS THAT HAVE DRIVEN
ITS PERFORMANCE: TECHNOLOGY, FINANCIAL SERVICES, AND MEDIA.
o TECHNOLOGY HAS BENEFITED FROM A SWEEPING MOVEMENT BY AMERICAN CORPORATIONS
TO INCREASE PRODUCTIVITY, WHILE FINANCIAL SERVICES AND MEDIA COMPANIES HAVE
BEEN GOING THROUGH A RAPID AND MUCH-NEEDED CONSOLIDATION PROCESS.
o THE FUND HAS A SMALL ALLOCATION TO STOCKS OF JAPANESE COMPANIES THAT FEATURE
DIGITAL (AS OPPOSED TO ANALOG) TECHNOLOGY, IN PRODUCTS SUCH AS CAMCORDERS
AND TELEVISIONS.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still uncomfortably
high. The rapid pace of growth seen in the first quarter slowed to an annual
rate of 3.3% in the second quarter and 3.5% in the third. We believe economic
momentum will carry well into the first quarter of 1998, as the money supply is
increasing at a rapid rate. Because economic growth continues to be impressive,
markets are likely to continue to focus on the Federal Reserve Board's
willingness to raise interest rates.
The extreme volatility seen in the U.S. equity market in October was, we
believe, the consequence of overvaluations that had been evident for some
months. As a result, the stock market has been vulnerable to some type of
correction and has been impacted in the near term by chaotic market conditions
in the Pacific Rim. In the face of all this, however, the equity market
continues to exhibit surprising strength, much of it the result of continued
gains in corporate earnings, a trend that could be an important indicator of the
market's future direction. Certainly the situation throughout Asia bears close
scrutiny because it appears to be clearly deflationary and raises the prospect
of trade wars developing throughout the area. We are not convinced that U.S.
markets have escaped totally from October's volatility. Thus, while the
near-term outlook for profits is generally favorable, we believe equity
valuations have risen to a point where a cautious investment approach seems
warranted, with a need for particular attention to be paid to the effect of
Pacific Rim volatility on the earnings of U.S. companies.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
December 15, 1997
<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGER
[Photo of Christian Felipe]
Christian Felipe
For the 12 months ended November 30, 1997, Class A shares of the Fund provided a
total return of 42.91%, Class B shares 41.77%, Class C shares 38.53%, and Class
I shares 43.21%. These returns, which include the reinvestment of distributions
but exclude the effects of any sales charges, compare to a 28.60% return over
the same period for the Standard & Poor's 500 Composite Index, a popular,
unmanaged index of common stock total return performance.
Q. WHY DO YOU THINK THE FUND HAS PERFORMED SO WELL OVER THE PAST 12 MONTHS?
A. The Fund has been well positioned in three major sectors that have driven
its performance: technology, financial services, and media. Technology has
benefited from a sweeping movement by American corporations to increase
productivity, while financial services and media companies have been going
through a rapid and much-needed consolidation process.
Q. LET'S LOOK AT EACH OF THESE SECTORS, STARTING WITH TECHNOLOGY. WHAT'S GOING
ON THERE?
A. Besides helping companies' productivity, the technology sector has benefited
from the rapid proliferation of personal computers and the dramatic growth
of the Internet. This has led to fast top-line growth for many of the
companies that are well positioned in these markets, such as Microsoft,
Intel, Sun Microsystems, and Oracle Systems. This, in turn, has led to rapid
earnings growth, which the market has begun to recognize. We put a small
part of the Fund in stocks of Japanese companies that now feature digital
(as opposed to analog) technology, in products like camcorders, televisions,
and cameras. For example, a consumer can take a camcorder, record with it,
download the information onto a personal computer, edit it onto a video, and
send it over the Internet so the grandparents can see their grandchildren
taking their first steps. Companies such as Sony and Canon have been at the
leading edge of this area, and those stocks have done great. Looking ahead,
I think the overall prospects for technology companies are still very strong
and that valuations are reasonable, and we are continuing to search for the
best names.
Q. NOW, WHAT ABOUT FINANCIAL SERVICES?
A. These companies have benefited from stable interest rates and the low
inflation rate, which have led to a boom in companies that cater to the
retirement, investment, and savings communities. Companies like Franklin
Resources and Morgan Stanley, Dean Witter, Discover have been great stocks
for the portfolio. We were also fortunate that one of our stocks in this
area, Equitable of Iowa, got bought out by ING Barings, a foreign bank and
investment firm. We've seen a lot of consolidation in this area, too, as
banks and other financial services companies have merged, creating greater
efficiencies of scale and improved valuations.
Q. AND MEDIA?
A. There's been consolidation here, too, thanks to the Telecommunications Act
of 1996, as many television and radio companies, such as LIN Television,
American Radio Systems, and SFX Broadcasting, have merged or been bought
out. The consolidation has also helped some of the other companies in the
portfolio.
Q. GETTING BACK TO TECHNOLOGY, WHEN YOU USE THIS TERM, WHAT KINDS OF COMPANIES
ARE YOU REFERRING TO, AT LEAST AS THEY RELATE TO THE FUND?
A. Our definition of a technology company does not include what we call
commodity plays. On the surface, they look like technology companies; they
make personal computers or disk drives, or they are distributors, or
resellers. We see them as commodity companies, as opposed to companies like
Microsoft and Intel, which we view as the guts and brains of the industry.
We're not suggesting that the commodity companies, the ones that make and
sell personal computers in stores or sell them over the phone or the
Internet, can't be good investments. But we don't believe they control their
own destinies, and they're subject to major competitive inroads, from
foreign manufacturers, for example. Anyone can make a personal computer.
What matters is the sustainability of the business franchise. There is no
other microprocessor company that can compete with Intel, nor is there an
operating system of any significance that can compete with Microsoft
Windows.
Q. IN YOUR LAST REPORT, YOU SAID STOCKS OF HEALTH MAINTENANCE ORGANIZATIONS
(HMOS) HAD UNDERPERFORMED DUE TO POOR PRICING BY THE INDUSTRY. HOW DOES THAT
SITUATION STAND NOW?
A. HMOs continue to be a very difficult area. We've refocused the health care
part of the portfolio away from the service companies toward the product and
pharmaceutical companies such as Bristol-Myers Squibb and Schering Plough.
Q. HAVE THERE BEEN ANY SIGNIFICANT CHANGES IN OTHER FUND HOLDINGS?
A. Not really, except that we've had three or four major stocks get bought out,
in sectors like financial services and media, which I mentioned. Other than
that, there haven't been any major changes to the portfolio. Microsoft and
Franklin Resources are still the two largest positions.
Q. COULD YOU TALK ABOUT ANY SPECIFIC STOCKS THAT PERFORMED MUCH BETTER THAN YOU
EXPECTED, AND WHY YOU THINK THEY DID WELL?
A. Tyco International was one stock that really surprised us. It made some
acquisitions, of ADT, for example, that turned out to add a lot more to
earnings than we had anticipated.
Q. IN GENERAL, HOW WOULD YOU CHARACTERIZE THE BUSINESS AND ECONOMIC ENVIRONMENT
OF THE PAST YEAR, PARTICULARLY AS IT RELATES TO THE FUND?
A. Nearly perfect -- steady growth, nominal inflation, stable interest rates.
We think that will continue. However, there is some cause for concern in the
international markets, like Asia's, where the currency crisis has put
pressure on companies that do business there. Europe continues to be
lackluster in its economic performance. However, while this might cause some
minor changes in the Fund, our emphasis has been on U.S. companies, so it's
not going to make a major difference. At the same time, the yen has
continued to depreciate dramatically; that has favored the Japanese
multinationals, and we've continued to put our money in those companies.
/s/ Christian Felipe
Christian Felipe
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
CHRISTIAN FELIPE JOINED MFS IN 1986 AND WAS NAMED INVESTMENT OFFICER IN
1987, ASSISTANT VICE PRESIDENT -- INVESTMENTS IN 1988, VICE PRESIDENT --
INVESTMENTS IN 1989, AND SENIOR VICE PRESIDENT IN 1996. A GRADUATE OF THE
UNIVERSITY OF CALIFORNIA, LOS ANGELES AND THE UNIVERSITY OF PENNSYLVANIA
WHARTON SCHOOL OF FINANCE AND COMMERCE, HE HAS MANAGED MASSACHUSETTS
INVESTORS GROWTH STOCK FUND SINCE 1995.
<PAGE>
FUND FACTS
OBJECTIVE: THE INVESTMENT OBJECTIVE OF THE FUND IS TO PROVIDE
LONG-TERM GROWTH OF CAPITAL AND FUTURE INCOME RATHER
THAN CURRENT INCOME.
COMMENCEMENT OF INVESTMENT OPERATIONS: JANUARY 1, 1935
CLASS INCEPTION: CLASS A JANUARY 1, 1935
CLASS B SEPTEMBER 7, 1993
CLASS C NOVEMBER 3, 1997
CLASS I JANUARY 2, 1997
SIZE: $1.9 BILLION NET ASSETS AS OF NOVEMBER 30, 1997
PERFORMANCE SUMMARY
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. Class A share performance results
reflect the deduction of the 5.75% maximum sales charge; benchmark comparisons
are unmanaged and do not reflect any fees or expenses. The performance of other
share classes will be greater than or less than the line shown, based on
differences in charges and fees paid by shareholders investing in different
classes. It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 5-year period ended November 30, 1997)
MASSACHUSETTS CONSUMER S&P
INVESTORS GROWTH PRICE 500
STOCK FUND INDEX COMPOSITE
-- CLASS A -- U.S. INDEX
- -------------------------------------------------------------------
11/92 $ 9,400 $10,000 $10,000
11/93 10,700 11,000 10,300
11/94 10,200 11,100 10,500
11/95 13,500 15,200 10,800
11/96 16,700 19,500 11,200
11/97 23,900 25,041 11,409
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended November 30, 1997)
MASSACHUSETTS S&P CONSUMER
INVESTORS GROWTH 500 PRICE
STOCK FUND COMPOSITE INDEX
-- CLASS A INDEX -- U.S.
- -------------------------------------------------------------------
11/87 $ 9,400 $10,000 $10,000
11/89 14,500 16,100 10,900
11/91 17,800 18,700 11,900
11/93 24,100 24,500 12,600
11/95 30,400 33,800 13,300
11/97 53,889 55,611 14,030
AVERAGE ANNUAL TOTAL RETURNS AS OF NOVEMBER 30, 1997
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mass. Investors Growth Stock Fund (Class A)
including 5.75% sales charge (SEC results) +34.70% +30.40% +19.04% +18.34%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class A)
at net asset value +42.91% +33.00% +20.45% +19.05%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class B)
with CDSC (SEC results) +37.77% +31.44% +19.44% +18.64%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class B)
at net asset value +41.77% +32.02% +19.63% +18.64%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class C)
with CDSC (SEC results) +37.53% +31.05% +19.51% +18.68%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class C)
at net asset value +38.53% +31.63% +19.70% +18.68%
- ------------------------------------------------------------------------------------------------------------
Mass. Investors Growth Stock Fund (Class I)
at net asset value +43.21% +33.10% +20.50% +19.07%
- ------------------------------------------------------------------------------------------------------------
Average growth fund* +22.00% +24.80% +16.55% +16.76%
- ------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index# +28.60% +31.05% +20.15% +18.72%
- ------------------------------------------------------------------------------------------------------------
Consumer Price Index#+ + 2.15% + 2.67% + 2.67% + 3.44%
- ------------------------------------------------------------------------------------------------------------
* Source: Lipper Analytical Services, Inc.
# Source: CDA/Wiesenberger.
+ The Consumer Price Index is published by the U.S. Bureau of Labor Statistics and measures the cost of
living (inflation).
</TABLE>
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 5.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase. Class I shares
have no sales charge or Rule 12b-1 fees and are only available to certain
institutional investors.
Class B and Class C share results include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior
to the inception of Class B and Class C shares. Because operating expenses
attributable to Class B and Class C shares are higher than those of Class A
shares, Class B and Class C share performance generally would have been lower
than Class A share performance. The Class A share performance included within
the Class B and Class C share SEC performance has been adjusted to reflect the
CDSC generally applicable to Class B and Class C shares rather than the initial
sales charge generally applicable to Class A shares.
Class I share results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the inception
of Class I shares. Because operating expenses attributable to Class A shares are
greater than those of Class I shares, Class I share performance generally would
have been higher than Class A share performance. The Class A share performance
included within the Class I share performance has been adjusted to reflect the
fact that Class I shares have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details.
<PAGE>
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1997
TOP 10 HOLDINGS (BEGINNING WITH THE LARGEST POSITION IN THE PORTFOLIO)
MICROSOFT CORP. ORACLE SYSTEMS CORP.
Computer software and systems company Developer and manufacturer of
database software
FRANKLIN RESOURCES, INC.
Mutual fund and financial services company RITE AID CORP.
Drug store chain
COMPUTER ASSOCIATES INTERNATIONAL, INC.
Computer software company MCI COMMUNICATIONS CORP.
Telecommunications company
TYCO INTERNATIONAL LTD.
Manufacturer of fire protection, packaging, BMC SOFTWARE, INC.
and electronic equipment Computer software company
CVS CORP. CISCO SYSTEMS, INC.
Drug store chain Computer network developer
LARGEST SECTORS
Technology 31.2%
Leisure 15.8%
Financial Services 15.7%
Other Sectors 15.2%
Retailing 14.8%
Miscellaneous
(Conglomerates, special products/services) 7.3%
For a more complete breakdown, refer to the Portfolio of Investments.
TAX FORM SUMMARY
IN JANUARY 1998, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY
REPORTING THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE
CALENDAR YEAR 1997.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
THE FUND HAS DESIGNATED $252,788,954 AS A LONG-TERM CAPITAL GAIN
DISTRIBUTION.
DIVIDENDS-RECEIVED DEDUCTION
FOR THE YEAR ENDED NOVEMBER 30, 1997, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR
CORPORATIONS WAS 7.0%.
<PAGE>
PORTFOLIO OF INVESTMENTS - November 30, 1997
<TABLE>
<CAPTION>
Stocks - 92.3%
- -----------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 88.0%
Aerospace - 1.4%
Gulfstream Aerospace Corp.* 165,000 $ 4,846,875
United Technologies Corp. 275,000 20,607,813
--------------
$ 25,454,688
- -----------------------------------------------------------------------------------------------------
Apparel and Textiles - 0.5%
Liz Claiborne, Inc. 180,000 $ 9,045,000
- -----------------------------------------------------------------------------------------------------
Banks and Credit Companies - 2.0%
Norwest Corp. 555,000 $ 20,777,813
Washington Mutual, Inc. 45,000 3,110,625
Wells Fargo & Co. 45,000 13,826,250
-------------
$ 37,714,688
- -----------------------------------------------------------------------------------------------------
Building - 0.2%
Sherwin Williams Co. 125,000 $ 3,570,313
- -----------------------------------------------------------------------------------------------------
Business Machines - 1.2%
Affiliated Computer Services, Inc., "A"* 221,000 $ 5,165,875
Sun Microsystems, Inc.* 463,400 16,682,400
--------------
$ 21,848,275
- -----------------------------------------------------------------------------------------------------
Business Services - 1.9%
AccuStaff, Inc.* 150,000 $ 4,434,375
Computer Sciences Corp.* 95,000 7,522,813
CUC International, Inc.* 385,000 11,068,750
DST Systems, Inc.* 135,000 5,003,438
First Data Corp. 285,000 8,069,062
--------------
$ 36,098,438
- -----------------------------------------------------------------------------------------------------
Cellular Telephones - 0.4%
AirTouch Communications, Inc.* 195,000 $ 7,653,750
- -----------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 6.4%
Microsoft Corp.* 850,000 $ 120,275,000
- -----------------------------------------------------------------------------------------------------
Computer Software - Systems - 13.2%
BMC Software, Inc.* 618,700 $ 40,138,163
Cadence Design Systems, Inc.* 1,500,000 37,875,000
Computer Associates International, Inc. 1,795,000 93,452,187
Compuware Corp.* 550,000 19,215,625
Oracle Systems Corp.* 1,645,000 54,799,062
Scopus Technology* 169,900 2,038,800
--------------
$ 247,518,837
- -----------------------------------------------------------------------------------------------------
Consumer Goods and Services - 4.9%
Clorox Co. 100,000 $ 7,762,500
Service Corp. International 125,000 4,570,312
Tyco International Ltd. 2,054,600 80,643,050
--------------
$ 92,975,862
- -----------------------------------------------------------------------------------------------------
Electrical Equipment - 0.7%
General Electric Co. 135,000 $ 9,956,250
Westinghouse Electric Corp. 125,001 3,750,030
--------------
$ 13,706,280
- -----------------------------------------------------------------------------------------------------
Electronics - 1.9%
Analog Devices, Inc.* 120,000 $ 3,765,000
Intel Corp. 175,000 13,584,375
Sony Corp. 200,000 16,700,000
Teradyne, Inc.* 75,000 2,460,938
--------------
$ 36,510,313
- -----------------------------------------------------------------------------------------------------
Entertainment - 8.3%
American Radio Systems Corp., "A"* 123,500 $ 6,144,125
Chancellor Media Corp.* 135,000 8,108,438
Clear Channel Communications, Inc.* 325,000 22,018,750
Cox Radio, Inc. "A"* 160,200 5,426,775
Disney (Walt) Co. 45,000 4,272,188
Harrah's Entertainment, Inc.* 995,000 19,962,187
Hearst-Argyle Television, Inc.* 115,743 3,385,483
ITT Corp.* 66,000 5,007,750
Jacor Communications, Inc., "A"* 265,000 11,593,750
LIN Television Corp.* 591,500 31,719,187
Mirage Resorts, Inc.* 225,000 5,343,750
SFX Broadcasting, Inc., "A"* 110,000 8,267,187
Time Warner, Inc. 68,271 3,976,786
Univision Communications, Inc., "A"* 215,000 14,310,937
Westwood One, Inc.* 100,000 2,937,500
Young Broadcasting, Inc., "A"* 75,000 2,728,125
--------------
$ 155,202,918
- -----------------------------------------------------------------------------------------------------
Financial Institutions - 12.1%
American Express Co. 370,000 $ 29,183,750
Associates First Capital Corp., "A" 565,000 36,301,250
CIT Group, Inc., "A"* 25,000 759,375
Federal National Mortgage Assn. 520,000 27,462,500
Franklin Resources, Inc. 1,200,000 107,850,000
Merrill Lynch & Co., Inc. 155,000 10,879,062
Morgan Stanley, Dean Witter, Discover & Co. 125,000 6,789,063
State Street Corp. 125,000 7,437,500
--------------
$ 226,662,500
- -----------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.2%
PepsiCo., Inc. 80,000 $ 2,950,000
- -----------------------------------------------------------------------------------------------------
Insurance - 0.4%
Lincoln National Corp. 80,000 $ 5,710,000
Torchmark Corp. 50,000 2,040,625
--------------
$ 7,750,625
- -----------------------------------------------------------------------------------------------------
Medical and Health Products - 3.5%
Bristol-Myers Squibb Co. 350,000 $ 32,768,750
Johnson & Johnson 100,000 6,293,750
McKesson Corp. 60,000 6,712,500
Pfizer, Inc. 20,000 1,455,000
Schering Plough Corp. (Pharmaceuticals) 300,000 18,806,250
--------------
$ 66,036,250
- -----------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.8%
Cardinal Health, Inc. 15,000 $ 1,136,250
Health Management Associates, Inc., "A"* 55,000 1,347,500
HEALTHSOUTH Corp.* 325,000 8,531,250
Medtronic, Inc. 25,000 1,193,750
Pacificare Health Systems, Inc., "B"* 16,752 900,420
St. Jude Medical, Inc.* 25,000 740,625
United Healthcare Corp. 400,000 20,825,000
--------------
$ 34,674,795
- -----------------------------------------------------------------------------------------------------
Oils - 0.4%
Texaco, Inc. 125,000 $ 7,062,500
- -----------------------------------------------------------------------------------------------------
Printing and Publishing - 1.6%
Gannett Co., Inc. 405,000 $ 23,515,312
Tribune Co. 122,500 6,905,938
--------------
$ 30,421,250
- -----------------------------------------------------------------------------------------------------
Restaurants and Lodging - 4.7%
Friendly Ice Cream Corp.* 53,200 $ 851,200
HFS, Inc.* 500,000 34,312,500
Hilton Hotels Corp. 598,400 18,625,200
Marriott International, Inc. 130,000 9,416,875
Promus Hotel Corp.* 607,100 25,194,650
Tricon Global Restaurants, Inc.* 23,500 794,594
--------------
$ 89,195,019
- -----------------------------------------------------------------------------------------------------
Stores - 11.4%
AutoZone, Inc.* 100,000 $ 3,000,000
CVS Corp. 1,000,000 66,375,000
General Nutrition Cos., Inc.* 140,000 4,777,500
Gymboree Corp.* 11,550 333,506
Home Depot, Inc. 550,000 30,765,625
Office Depot, Inc.* 1,545,000 36,500,625
PetSmart, Inc. 50,000 390,625
Rite Aid Corp. 785,000 51,613,750
Wal-Mart Stores, Inc. 530,000 21,166,875
--------------
$ 214,923,506
- -----------------------------------------------------------------------------------------------------
Supermarkets - 1.7%
Meyer, Fred, Inc.* 580,000 $ 19,647,500
Safeway, Inc.* 215,000 13,061,250
--------------
$ 32,708,750
- -----------------------------------------------------------------------------------------------------
Telecommunications - 4.2%
Aspect Telecommunications Corp.* 95,000 $ 2,131,562
Bay Networks, Inc.* 60,000 1,803,750
Cisco Systems, Inc.* 455,000 39,243,750
Lucent Technologies, Inc. 425,000 34,053,125
Tellabs, Inc.* 15,000 780,000
--------------
$ 78,012,187
- -----------------------------------------------------------------------------------------------------
Utilities - Electric - 0.1%
Calenergy, Inc.* 57,300 $ 1,905,225
- -----------------------------------------------------------------------------------------------------
Utilities - Telephone - 2.9%
AT&T Corp. 75,000 $ 4,190,625
MCI Communications Corp. 1,075,000 47,232,812
Sprint Corp. 50,000 2,928,125
--------------
$ 54,351,562
- -----------------------------------------------------------------------------------------------------
Total U.S. Stocks $1,654,228,531
- -----------------------------------------------------------------------------------------------------
Foreign Stocks - 4.3%
France - 0.4%
Alcatel Alsthom (Telecommunications) 13,020 $ 1,632,049
Alcatel Alsthom, ADR (Telecommunications) 135,900 3,363,525
Dassault Systemes S.A. (Computer Software) 52,200 1,388,227
Dassault Systemes S.A., ADR (Computer Software) 10,000 260,000
--------------
$ 6,643,801
- -----------------------------------------------------------------------------------------------------
Germany - 0.5%
SAP AG (Computer Software - Systems) 12,500 $ 3,635,204
SAP AG, ADR (Computer Software - Systems)## 50,000 5,050,000
--------------
$ 8,685,204
- -----------------------------------------------------------------------------------------------------
Japan - 1.6%
Canon, Inc. (Office Equipment) 384,000 $ 9,267,513
Sankyo Co. Ltd. (Pharmaceuticals) 85,000 2,710,782
Sony Corp. (Electronics) 219,000 18,704,749
--------------
$ 30,683,044
- -----------------------------------------------------------------------------------------------------
Switzerland - 0.3%
Novartis AG (Pharmaceuticals) 3,000 $ 4,792,426
- -----------------------------------------------------------------------------------------------------
United Kingdom - 1.5%
British Petroleum PLC, ADR (Oils) 349,998 $ 29,049,834
- -----------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 79,854,309
- -----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,157,620,204) $1,734,082,840
- -----------------------------------------------------------------------------------------------------
Bonds - 1.0%
- -----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 1.0%
U.S. Treasury Bonds, due 2/15/27
(Identified Cost, $17,490,234) $17,500 $ 18,738,650
- -----------------------------------------------------------------------------------------------------
Short-Term Obligations - 5.5%
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 12/01/97 - 1/21/98 $20,315 $ 20,237,670
Federal Home Loan Mortgage Corp.,
due 12/04/97 - 12/31/97 49,550 49,430,262
Federal National Mortgage Assn.,
due 12/17/97 - 12/23/97 18,750 18,695,383
General Electric Capital Corp., due 12/01/97 3,215 3,215,000
Tennessee Valley Authority, due 12/16/97 12,000 11,972,800
- -----------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 103,551,115
- -----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,278,661,553) $1,856,372,605
Other Assets, Less Liabilities - 1.2% 22,691,912
- -----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,879,064,517
- -----------------------------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------
NOVEMBER 30, 1997
- --------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,278,661,553) $1,856,372,605
Cash 7,613
Receivable for investments sold 19,928,275
Receivable for Fund shares sold 15,481,652
Dividends and interest receivable 941,406
Other assets 11,137
--------------
Total assets $1,892,742,688
--------------
Liabilities:
Payable for investments purchased $ 11,096,918
Payable for Fund shares reacquired 1,626,762
Payable to affiliates -
Management fee 53,992
Administrative fee 2,806
Shareholder servicing agent fee 26,298
Distribution and service fee 636,726
Accrued expenses and other liabilities 234,669
--------------
Total liabilities $ 13,678,171
--------------
Net assets $1,879,064,517
==============
Net assets consist of:
Paid-in capital $1,011,580,817
Unrealized appreciation on investments and translation
of assets and liabilities
in foreign currencies 577,701,481
Accumulated undistributed net realized gain on
investments and foreign
currency transactions 289,524,736
Accumulated undistributed net investment income 257,483
--------------
Total $1,879,064,517
==============
Shares of beneficial interest outstanding 128,219,411
-----------
Class A shares:
Net asset value per share
(net assets of $1,773,257,605 / 120,811,845 shares of
beneficial interest outstanding) $14.68
======
Offering price per share (100 / 94.25) $15.58
======
Class B shares:
Net asset value and offering price per share
(net assets of $92,942,275 / 6,532,166 shares of
beneficial interest outstanding) $14.23
======
Class C shares:
Net asset value and offering price per share
(net assets of $383,066 / 26,928 shares of beneficial
interest outstanding) $14.23
======
Class I shares:
Net asset value, offering price and redemption price per share
(net assets of $12,481,571 / 848,472 shares of
beneficial interest outstanding) $14.71
======
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,
Class B, and Class C shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- --------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1997
- --------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 7,613,323
Interest 3,750,914
Foreign taxes withheld (98,290)
-------------
Total investment income $ 11,265,947
-------------
Expenses -
Management fee $ 4,290,313
Trustees' compensation 67,479
Shareholder servicing agent fee 1,859,594
Shareholder servicing agent fee (Class A) 138,021
Shareholder servicing agent fee (Class B) 4,689
Distribution and service fee (Class A) 3,287,760
Distribution and service fee (Class B) 490,354
Distribution and service fee (Class C) 149
Administrative fee 170,904
Custodian fee 429,133
Postage 99,426
Legal fees 52,127
Printing 37,811
Auditing fees 34,253
Miscellaneous 358,361
-------------
Total expenses $ 11,320,374
Fees paid indirectly (392,845)
-------------
Net expenses $ 10,927,529
-------------
Net investment income $ 338,418
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 293,425,256
Foreign currency transactions (2,918)
-------------
Net realized gain on investments and foreign
currency transactions $ 293,422,338
-------------
Change in unrealized appreciation (depreciation) -
Investments $ 258,780,170
Translation of assets and liabilities in foreign
currencies (9,571)
-------------
Net unrealized gain on investment and foreign
currency translation $ 258,770,599
-------------
Net realized and unrealized gain on
investments and foreign currency $ 552,192,937
-------------
Increase in net assets from operations $ 552,531,355
=============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1997 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ 338,418 $ (760,467)
Net realized gain on investments and foreign currency
transactions 293,422,338 313,038,586
Net unrealized gain (loss) on investments 258,770,599 (46,507,951)
--------------- ---------------
Increase in net assets from operations $ 552,531,355 $ 265,770,168
--------------- ---------------
Distributions declared to shareholders -
From net realized gain on investments and foreign
currency transactions (Class A) $ (309,700,403) $ (151,666,814)
From net realized gain on investments and foreign
currency transactions (Class B) (5,913,744) (1,895,891)
--------------- ---------------
Total distributions declared to shareholders $ (315,614,147) $ (153,562,705)
--------------- ---------------
Net increase in net assets from Fund share
transactions $ 275,910,431 $ 59,209,253
--------------- ---------------
Total increase in net assets $ 512,827,639 $ 171,416,716
Net assets:
At beginning of period 1,366,236,878 1,194,820,162
--------------- ---------------
At end of period (including accumulated undistributed
net investment income and accumulated net investment
loss of $257,483 and $78,017, respectively) $ 1,879,064,517 $ 1,366,236,878
=============== ===============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.44 $12.51 $10.48 $12.97
------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $ 0.01 $(0.01) $(0.01) $(0.01)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 4.33 2.55 3.12 (0.49)
------ ------ ------ ------
Total from investment operations $ 4.34 $ 2.54 $ 3.11 $(0.50)
------ ------ ------ ------
Less distributions declared to shareholders from net
realized gain on investments and foreign currency
transactions $(3.10) $(1.61) $(1.08) $(1.99)
------ ------ ------ ------
Net asset value - end of period $14.68 $13.44 $12.51 $10.48
====== ====== ====== ======
Total return(+) 42.91% 23.87% 32.91% (5.00)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.71% 0.72% 0.73% 0.72%
Net investment income (loss) 0.05% (0.05)% (0.08)% (0.06)%
Portfolio turnover 93% 107% 46% 56%
Average commission rate### $0.0609 $0.0611 $ -- $ --
Net assets at end of period (000,000 omitted) $ 1,773 $ 1,341 $1,180 $ 977
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
(+) 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 NOVEMBER 30, 1993 1992 1991 1990 1989 1988
- -------------------------------------------------------------------------------------------------------------------------------
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 $12.15 $10.87 $ 8.48 $10.70 $ 8.39 $ 9.05
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $(0.03) $ 0.01 $ 0.05 $ 0.09 $ 0.12
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 1.55 2.07 2.93 (1.02) 3.14 0.64
------ ------ ------ ------ ------ ------
Total from investment operations $ 1.54 $ 2.04 $ 2.94 $(0.97) $ 3.23 $ 0.76
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.03) $(0.05) $(0.08) $(0.15)
From net realized gain on investments
and foreign currency transactions (0.72) (0.76) (0.52) (1.20) (0.84) (1.27)
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.72) $(0.76) $(0.55) $(1.25) $(0.92) $(1.42)
------ ------ ------ ------ ------ ------
Net asset value - end of period $12.97 $12.15 $10.87 $ 8.48 $10.70 $ 8.39
====== ====== ====== ====== ====== ======
Total return(+) 13.43% 19.35% 36.56% (10.27)% 42.14% 8.21%
Ratios (to average net assets)/Supplemental
data:
Expenses 0.71% 0.67% 0.63% 0.53% 0.54% 0.58%
Net investment income (loss) (0.19)% (0.24)% 0.14% 0.55% 0.91% 1.27%
Portfolio turnover 52% 16% 39% 44% 32% 75%
Net assets at end of period
(000,000 omitted) $1,132 $1,070 $ 950 $ 749 $ 907 $ 735
# Per share data for the periods subsequent to November 30, 1992, are based on average shares outstanding.
(+) 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>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1997 1996 1995 1994 1993*
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.12 $12.26 $10.35 $12.93 $12.91
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.09) $(0.11) $(0.11) $(0.09) $(0.01)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 4.21 2.51 3.10 (0.50) 0.03
------ ------ ------ ------ ------
Total from investment operations $ 4.12 $ 2.40 $ 2.99 $(0.59) $ 0.02
------ ------ ------ ------ ------
Less distributions declared to shareholders from $
net realized gain on investments and foreign
currency transactions $(3.01) $(1.54) $(1.08) $(1.99) --
------ ------ ------ ------ ------
Net asset value - end of period $14.23 $13.12 $12.26 $10.35 $12.93
====== ====== ====== ====== ======
Total return 41.77% 22.87% 32.09% (5.82)% 0.70%+
Ratios (to average net assets)/Supplemental data:
Expenses## 1.50% 1.61% 1.63% 1.60% 1.49%+
Net investment loss (0.74)% (0.94)% (0.98)% (0.87)% (0.99)%+
Portfolio turnover 93% 107% 46% 56% 52%
Average commission rate### $0.0609 $0.0611 $ -- $ -- $ --
Net assets at end of period (000,000 omitted) $ 93 $ 25 $ 14 $ 9 $ 2
+ Annualized.
* For the period from the inception of Class B shares, September 7, 1993, through November 30, 1993.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------
PERIOD ENDED NOVEMBER 30, 1997** 1997***
- ----------------------------------------------------------------------------------------------------------
CLASS C CLASS I
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.98 $ 9.86
------ ------
Income from investment operations# -
Net investment income (loss) $(0.01) $ 0.03
Net realized and unrealized gain on investments and
foreign currency transactions 0.26 4.82
------ ------
Total from investment operations $ 0.25 $ 4.85
------ ------
Net asset value - end of period $14.23 $14.71
====== ======
Total return 1.79%++ 49.19%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.54%+ 0.49%+
Net investment income (loss) (0.91)%+ 0.22%+
Portfolio turnover 93% 93%
Net assets at end of period (000 omitted) $ 383 $12,482
Average commission rate $0.0609 $0.0609
+ Annualized.
++ Not annualized.
** For the period from the inception of Class C shares, November 3, 1997, through November 30, 1997.
*** For the period from the inception of Class I shares, January 2, 1997, through November 30, 1997.
# Per share data are based on average shares outstanding.
## The Fund's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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
an open-end management investment company
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues, are valued on the basis of valuations
furnished by dealers or by a pricing service with consideration to factors such
as institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, 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. 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 result from fluctuations in foreign currency exchange rates is not
separately disclosed.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend and interest
payments received in additional securities are recorded on the ex- dividend or
ex-interest date in an amount equal to the value of the security on such date.
Some government securities may be purchased on a "when-issued" or "forward
delivery" basis, which means that the securities will be delivered to the Fund
at a future date, usually beyond customary settlement time.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement which measures the value of cash deposited with the custodian by the
Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. During the year ended November 30, 1997, $2,918 was reclassified from
accumulated undistributed net investment income to accumulated net realized gain
on investments and foreign currency transactions due to differences between book
and tax accounting for currency transactions. This change had no effect on the
net assets or net asset value per share.
Capital gains taxes have been provided on unrealized and realized gains from
securities transactions in countries where such a capital gains tax is
applicable. Realized and unrealized gain is reported net of any capital gains
tax in the Statement of Operations.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares. The classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro rata
based on average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
(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%
Next $300 million of average net assets 0.40%
Average net assets in excess of $500 million 0.20%
Administrator - Effective March 1, 1997, the Fund has an administrative services
agreement with MFS to provide the Fund with certain financial, legal,
shareholder servicing, compliance, and other administrative services. As a
partial reimbursement for the cost of providing these services, the Fund pays
MFS an administrative fee at the following annual percentages of the Fund's
average daily net assets, provided that the administrative fee is not assessed
on Fund assets that exceed $3 billion:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain officers and Trustees of the
Fund are officers or directors of MFS, MFS Fund Distributors, Inc. (MFD), and
MFS Service Center, Inc. (MFSC). The Fund has an unfunded defined benefit plan
for all its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $19,839 for the year ended
November 30, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$158,426 for the year ended November 30, 1997, 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, Class B, and Class C
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 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. The 0.25% per annum service fee is reduced to 0.15% per
annum for shares purchased prior to March 1, 1991. MFD retains the service fee
for accounts not attributable to a securities dealer which amounted to $897,359
for the year ended November 30, 1997. Payment of the 0.10% per annum Class A
distribution fee will commence on such date as the Trustees of the Fund may
determine. Fees incurred under the distribution plan during the year ended
November 30, 1997, 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 and Class C 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 and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be additional consideration for
services rendered by the dealer with respect to Class B and Class C shares. MFD
retains the service fee for accounts not attributable to a securities dealer,
which amounted to $8,109 and $0 for Class B and Class C shares, respectively,
for the year ended November 30, 1997. Fees incurred under the distribution plan
during the year ended November 30, 1997, were 1.00% of average daily net assets
attributable to Class B and Class C 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 such purchase. A contingent
deferred sales charge is imposed on shareholder redemptions of Class B shares in
the event of a shareholder redemption within six years of purchase. A contingent
deferred sales charge is imposed on shareholder redemptions of Class C shares in
the event of a shareholder redemption within 12 months of purchase. MFD receives
all contingent deferred sales charges. Contingent deferred sales charges imposed
during the year ended November 30, 1997, were $15,331, $41,203, and $0 for Class
A, Class B, and Class C 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 0.13%. Prior to January 1, 1997, the fee was 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%, up to 0.22%, and up to 0.15% attributable
to Class A, Class B, and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations aggregated
$1,340,974,543 and $1,413,876,325, respectively. Purchases of U.S. government
securities aggregated $17,490,234.
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 $1,280,667,217
--------------
Gross unrealized appreciation $ 582,301,667
Gross unrealized depreciation (6,596,279)
--------------
Net unrealized appreciation $ 575,705,388
==============
(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:
<PAGE>
<TABLE>
<CAPTION>
Class A Shares
YEAR ENDED NOVEMBER 30, 1997 YEAR ENDED NOVEMBER 30, 1996
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 75,114,877 $ 956,127,239 9,833,859 $ 117,167,335
Shares issued to shareholders
in reinvestment of
distributions 24,285,107 243,865,941 11,391,727 120,223,809
Shares transferred to Class I (729,102) (7,188,941) -- --
Shares reacquired (77,641,256) (983,055,158) (15,793,634) (186,665,355)
------------ -------------- ----------- -------------
Net increase 21,029,626 $ 209,749,081 5,431,952 $ 50,725,789
============ ============== =========== =============
<CAPTION>
Class B Shares
YEAR ENDED NOVEMBER 30, 1997 YEAR ENDED NOVEMBER 30, 1996
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,666,385 $ 107,069,031 2,089,754 $ 24,350,911
Shares issued to shareholders
in reinvestment of
distributions 561,425 5,501,995 171,965 1,783,717
Shares reacquired (4,607,848) (55,387,255) (1,530,126) (17,651,164)
------------ -------------- ----------- -------------
Net decrease 4,619,962 $ 57,183,771 731,593 $ 8,483,464
============ ============== =========== =============
<CAPTION>
Class C Shares
PERIOD ENDED NOVEMBER 30, 1997*
-----------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------
<S> <C> <C>
Shares sold 26,928 $ 375,739
============ ==============
*For the period from the inception of Class C shares, November 3, 1997, through November 30, 1997.
<CAPTION>
Class I Shares
PERIOD ENDED NOVEMBER 30, 1997*
-----------------------------------
SHARES AMOUNT
- -------------------------------------------------------------------
Shares sold 187,228 $ 2,297,029
Shares transferred from Class
A 729,102 7,188,941
Shares reacquired (67,858) (884,130)
------------ --------------
Net increase 848,472 $ 8,601,840
============ ==============
*For the period from the inception of Class I shares January 2, 1997, through November 30, 1997.
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $400 million unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made to temporarily finance the repurchase of Fund shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Fund for the
year ended November 30, 1997, was $1,744.
<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, 1997, the related statement of operations for the year then ended,
the statement of changes in net assets for the years ended November 30, 1997 and
1996, and the financial highlights for each of the years in the ten-year period
ended November 30, 1997. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
November 30, 1997 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, 1997, 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 9, 1998
--------------------------------------------
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 Stock Fund
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and State Street Bank and Trust Company
President; Chairman and Director,
Massachusetts Financial Services AUDITORS
Company Deloitte & Touche LLP
Richard B. Bailey* - Private INVESTOR INFORMATION
Investor; Former Chairman and For MFS stock and bond market outlooks,
Director (until 1991), Massachusetts call toll free: 1-800-637-4458 anytime
Financial Services Company from a touch-tone telephone.
Peter G. Harwood - Private Investor For information on MFS mutual funds,
call your financial adviser or, for an
J. Atwood Ives - Chairman and Chief information kit, call toll free:
Executive Officer, Eastern 1-800-637-2929 any business day from 9
Enterprises a.m. to 5 p.m. Eastern time (or leave a
message anytime).
Lawrence T. Perera - Partner,
Hemenway & Barnes INVESTOR SERVICE
MFS Service Center, Inc.
William J. Poorvu - Adjunct P.O. Box 2281
Professor, Harvard University Boston, MA 02107-9906
Graduate School of Business
Administration For general information, call toll free:
1-800-225-2606 any business day from 8
Charles W. Schmidt - Private Investor a.m. to 8 p.m. Eastern time.
Arnold D. Scott* - Senior Executive For service to speech- or
Vice President, Director and hearing-impaired, call toll free:
Secretary, Massachusetts Financial 1-800-637-6576 any business day from 9
Services Company a.m. to 5 p.m. Eastern time. (To use
this service, your phone must be
Jeffrey L. Shames* - President and equipped with a Telecommunications
Director, Massachusetts Financial Device for the Deaf.)
Services Company
For share prices, account balances, and
Elaine R. Smith - Independent exchanges, call toll free:
Consultant David B. Stone - Chairman, 1-800-MFS-TALK (1-800-637-8255) anytime
North American Management Corp. from a touch-tone telephone.
(investment advisers)
World Wide Web
INVESTMENT ADVISER www.mfs.com
Massachusetts Financial Services
Company [Dalbar Logo] For the fourth year
500 Boylston Street in a row, MFS earned
Boston, MA 02116-3741 a #1 ranking in the DALBAR, Inc.
Broker/Dealer Survey, Main Office
DISTRIBUTOR Operations Service Quality Category. The
MFS Fund Distributors, Inc. firm achieved a 3.42 overall score on a
500 Boylston Street scale of 1 to 4 in the 1997 survey. A
Boston, MA 02116-3741 total of 111 firms responded, offering
input on the quality of service they
PORTFOLIO MANAGER received from 29 mutual fund companies
Christian Felipe* nationwide. The survey contained
questions about service quality in 11
TREASURER categories, including "knowledge of
W. Thomas London* operations contact," "keeping you
informed," and "ease of doing business"
ASSISTANT TREASURERS with the firm.
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
<PAGE>
--------------
MASSACHUSETTS INVESTORS Bulk Rate
GROWTH STOCK FUND U.S. Postage
Paid
500 Boylston Street MFS
Boston, MA 02116-3741 --------------
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INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[DALBAR
LOGO]
TOP-RATED SERVICE
(C)1998 MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116-3741
MIG-2 1/98 81M 13/213/313/813
