<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MASSACHUSETTS
INVESTORS GROWTH
STOCK FUND
SEMIANNUAL REPORT o MAY 31, 1999
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DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 31)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 8
Portfolio of Investments .................................................. 11
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 24
MFS' Year 2000 Readiness Disclosure ....................................... 30
Trustees and Officers ..................................................... 33
MFS(R) ORIGINAL RESEARCH(SM)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
It has been almost two years since financial turmoil began to rock markets in
Asia, Russia, and Latin America. Even developed markets such as Europe and the
United States were not immune. In the U.S. equity market, for example, investors
focused on a narrow group of 50 of the largest-company growth stocks because
they seemed to offer less volatility in uncertain times. Fixed-income investors
also became more concerned about risk, moving money into U.S. Treasury
securities and out of corporate and municipal bonds and mortgage-backed
securities.
The narrowness of the market was just one of three broad issues that dominated
the U.S. equity market until recently. The other two were a slowdown in
corporate earnings growth and high valuations, with stocks of many companies
selling at extremely high prices relative to their earnings.
Although these have been challenging issues, we now see signs that we feel
demonstrate each one is changing for the better. Today, we believe the markets
are presenting more opportunities for investors to diversify, for our portfolio
managers to find good values, and for us to show the benefits of staying with
our long-term objectives and strategies. Investors seem to be regaining
confidence in a wider range of companies. Stocks of some small and mid-sized
companies, as well as some large industrial companies, have begun to perform
better in the past few months than they had for the previous year or so. These
companies appear to have benefited from early signs of stability in emerging
markets and a continuation of economic growth in the United States.
U.S. companies also have produced better earnings. Corporate earnings were, on
average, relatively flat in 1998. However, we expect earnings to grow 12% to 14%
this year because more companies have benefited from the strong economy and from
aggressive consolidation and cost-cutting measures they have taken over the past
several years.
Based on their earnings projections, our analysts estimate that the U.S. stock
market is still about 30% overvalued. While there has been some shift to a wider
group of stocks, many investors are still focusing on the large-company stocks.
As a result, most of the overvaluation is in the 50 largest stocks in the
Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index
of common stock total return performance. That means about 450 stocks are
selling at more attractive prices, particularly given what we see as the
improved earnings outlooks for these and many small and mid-sized companies not
in the S&P 500. These companies also benefit from consolidation, cost cutting,
and global growth. Because they are smaller, they may be able to respond to
changes more quickly, and thus they have the potential to grow faster than the
big companies.
The fixed-income markets, meanwhile, seem to be approaching the level of
relative stability they enjoyed before the Asian turmoil. Some credit for this
stability goes to the Federal Reserve Board (the Fed), which has reassured
investors that it will act to prevent rapid economic growth from causing higher
inflation and reduced purchasing power. Also, once investors saw that the
overseas turmoil had little, if any, effect on the financial strength of most
domestic bond issuers, the major non-Treasury markets -- corporate, municipal,
and mortgage -- began to rebound. Our portfolio managers are now finding more
opportunities to buy bonds with relatively stable prices and attractive yields.
The past two years have challenged investors. However, we believe we are well
positioned for the current environment because our analysts and portfolio
managers continue to rely on MFS(R) Original Research(SM) to help evaluate the
long-term investment potential of each holding being considered for our
portfolios. Also, we believe our discipline of maintaining diversified
portfolios and of staying with our funds' clearly defined investment strategies
can help us offer investment products with the potential to sustain returns over
a variety of market cycles.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
June 17, 1999
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Stephen Pesek]
Stephen Pesek
For the six months ended May 31, 1999, Class A shares of the Fund provided a
total return of 12.69%, Class B shares 12.34%, Class C shares 12.31%, and Class
I shares 12.98%. These returns include the reinvestment of distributions but
exclude the effects of any sales charges.
During the same period, the average growth fund tracked by Lipper Analytical
Services, Inc., an independent firm that reports mutual fund performance,
returned 13.68%. The Fund's returns also compare to a 12.60% return over the
same period for the Standard & Poor's 500 Composite Index (the S&P 500), a
popular, unmanaged index of common stock total return performance.
Q. YOU RECENTLY BECAME THE PORTFOLIO MANAGER OF THE FUND. HOW WOULD YOU
DESCRIBE YOUR INVESTMENT STYLE?
A. I focus on companies that exhibit some kind of sustainable competitive
advantage, strong market share, low production costs, research and
development strength, distribution expertise, and good customer service. In
addition, I look for companies with the potential to benefit from mismatches
in supply and demand. One of the best examples of a mismatch right now is the
cable sector. Five years ago, the top 10 cable operators had a 35% market
share; today, the top 10 companies have about a 75% share. This industry is
on the cusp of several new product rollouts, including advanced analog,
digital, Internet, and telephone products. Because cable lines can carry more
information, cable companies are in a much better position than telephone
companies to deliver these services.
Q. WHAT FACTORS HAVE HAD THE MOST IMPACT ON THE FUND'S RECENT PERFORMANCE?
A. The Fund has been both helped and hurt by technology. On the positive side,
companies in the portfolio such as Cisco Systems and Microsoft have benefited
from the global drive to increase productivity and from the expansion of the
Internet. On the negative side, holdings such as Oracle, BMC Software, and
Computer Associates missed their earnings estimates, and their stocks
declined as a result.
Q. WHY HAVE SOME COMPANIES BEEN HURT?
A. Many software companies have faced uncertainty over the Year 2000 (Y2K)
computer issue. Earlier this year, it looked like many of them would reduce
their spending on computer software and systems to give themselves time to
ensure their existing systems were Y2K ready. Although it now looks like
spending won't be cut as much as people feared, the stocks have been impacted
already. We think the Y2K issue will be behind us by next spring. At that
time, companies such as BMC Software and Computer Associates should be among
the best positioned in what we expect to be a very rapidly growing industry.
Q. HAVE YOU CHANGED THE FUND'S TECHNOLOGY ALLOCATION?
A. Yes. We added to our holdings in semiconductor manufacturing, a cyclical
industry that performs well when global economies are strong. For the past
couple of years, the semiconductor industry had too many manufacturing plants
due to the slowdown in Asia and emerging markets. Now, with those markets
showing signs of recovery, demand is increasing. Semiconductor companies in
the portfolio, including Motorola, Texas Instruments, and Analog Devices,
appear to be well positioned to benefit.
Q. HAVE YOU INCREASED YOUR HOLDINGS IN ANY OTHER SECTORS?
A. Our biggest increase is in telecommunications. We think global
telecommunications fundamentals are very powerful. In 1998, for instance,
over 230 million cellular handsets were manufactured. We estimate that number
will increase 60% this year, to around 370 million. Going forward, we think
the next revolution will be a wave of new wireless communications devices
that will let more people use their cellular phones to communicate on the
Internet or invest online. We believe these trends may lead to greater market
penetration for cellular phones. Among holdings, we have increased our
position in MCI WorldCom, a pre-eminent supplier to and the backbone of
cellular traffic worldwide. We also added to Global Telesystems, a U.S.-based
telecommunications services company that does all its business in Europe, and
to AirTouch Communications, a U.S. wireless and paging services company.
We also added telecommunications equipment suppliers, including Lucent
Technologies and Nortel. Because of the growth of the Internet and the
increase in data transmission, the world's telecommunications capacity is
essentially full. These companies are helping to provide more capacity for
the Internet and for data traffic.
Q. YOU'VE CUT YOUR HEALTH CARE WEIGHTING. WHY?
A. We moved away from health care stocks that we thought were expensive relative
to their earnings and into stocks that we thought offered better values and
earnings outlooks. For example, we added American Home Products and
Bristol-Myers Squibb. Because they have strong management teams and several
new drugs coming to the market in the next few years, their earnings growth
rates appear to be accelerating. Although we are a little cautious regarding
pharmaceutical companies because of Medicare reimbursement cuts, we think the
ones in the portfolio may do well over the long term thanks to their strong
product lines.
We also increased our weighting in health maintenance organizations (HMOs) by
adding CIGNA and United HealthCare. After several years of price constraints,
HMOs are starting to raise prices, which may make them more profitable.
Q. AT THE SAME TIME, YOU REDUCED THE FUND'S FINANCIAL SERVICES WEIGHTING. WHY?
A. There were a couple of reasons. First, these companies met the price targets
we had for them. We don't necessarily sell a stock when it hits our price
target, but financial stocks can be extremely volatile. As long as the stock
market performed well, these companies did well. While our long-term outlook
for the stock market is positive, we think prices of financial services
stocks have peaked in the current market. Therefore, we sold Merrill Lynch.
Second, we're more cautious on financial stocks right now because we think
interest rates have hit bottom. These companies typically don't do as well in
a rising interest-rate environment because people and businesses borrow less.
Q. YOU'VE INCREASED THE FUND'S LEISURE WEIGHTING. WHAT COMPANIES DO YOU LIKE
IN THIS SECTOR?
A. We increased our position in Time Warner, a large provider of cable
programming content, because we believe its management has improved and is
using its capital more prudently to cut costs. We also added Univision. This
cable company has a 90% share of the Hispanic market, which is the
fastest-growing segment of the population and has very attractive
demographics for advertisers.
Q. WHAT'S YOUR OUTLOOK FOR THE REST OF THE YEAR, AND HOW IS THAT OUTLOOK
REFLECTED IN THE FUND'S HOLDINGS?
A. We're cautiously optimistic. We think the market is still expensive relative
to earnings, particularly large-company stocks. But we also have seen strong
performance from a broader range of mid-sized and small-company stocks that
reflects a broadening of the market. We have reduced the Fund's average
market capitalization from what it has been for the past few years. Also,
because we think the global economy is getting stronger, we have increased
the weighting in industrial stocks, adding companies such as AlliedSignal, an
aerospace, automotive, and environmental products manufacturer, and Illinois
Tool Works, a diversified manufacturer of plastic and metal components,
adhesives, and packaging. However, this is still a growth stock fund, so
technology, telecommunications, and health care will continue to be the major
sectors.
/s/ Stephen Pesek
Stephen Pesek
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
current only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
Note to Shareholders: On February 24, 1999, Stephen Pesek succeeded Christian
Felipe as portfolio manager of the Fund.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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STEPHEN PESEK IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND PORTFOLIO
MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND AND THE MASSACHUSETTS
INVESTORS GROWTH STOCK SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS.
HE IS ALSO PORTFOLIO MANAGER OF MFS(R) INSTITUTIONAL LARGE CAP GROWTH FUND,
MFS(R) STRATEGIC GROWTH FUND, AND MFS(R) EMERGING GROWTH SERIES (PART OF MFS(R)
VARIABLE INSURANCE TRUST (SM)).
MR. PESEK JOINED MFS IN 1994 AS A RESEARCH ANALYST FOLLOWING THE PHARMACEUTICAL,
BIOTECHNOLOGY, AND ELECTRONICS INDUSTRIES. HE BECAME A PORTFOLIO MANAGER IN
1996. PRIOR TO JOINING MFS, HE WORKED FOR SEVEN YEARS AT A MAJOR INVESTMENT
MANAGEMENT FIRM AS AN EQUITY ANALYST. HE IS A GRADUATE OF THE UNIVERSITY OF
PENNSYLVANIA AND HAS A MASTER OF BUSINESS ADMINISTRATION DEGREE FROM COLUMBIA
UNIVERSITY. HE IS A CHARTERED FINANCIAL ANALYST.
ALL EQUITY PORTFOLIO MANAGERS BEGAN THEIR CAREERS AT MFS INVESTMENT
MANAGEMENT(R) AS RESEARCH ANALYSTS. OUR PORTFOLIO MANAGERS ARE SUPPORTED BY AN
INVESTMENT STAFF OF OVER 100 PROFESSIONALS UTILIZING MFS(R) ORIGINAL
RESEARCH(SM), A COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING SECURITIES.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other MFS
product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS 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: $8.2 BILLION NET ASSETS AS OF MAY 31, 1999
PERFORMANCE SUMMARY
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in net
asset value, including reinvestment of dividends. (See Notes to Performance
Summary for more information.)
AVERAGE ANNUAL AND CUMMULATIVE TOTAL RATES OF RETURN
THROUGH MAY 31, 1999
<TABLE>
<CAPTION>
CLASS A
6 Months 1 Year 3 Years 5 Years 10 Years/Life
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +12.69% +24.90% +128.64% +244.67% +466.13%
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Average Annual Total Return -- +24.90% + 31.74% + 28.08% + 18.93%
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SEC Results -- +17.72% + 29.16% + 26.57% + 18.23%
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<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years/Life
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +12.34% +24.05% +123.68% +231.69% +441.40%
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Average Annual Total Return -- +24.05% + 30.78% + 27.10% + 18.40%
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SEC Results -- +20.05% + 30.19% + 26.94% + 18.40%
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<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years/Life
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +12.31% +24.04% +126.10% +240.92% +459.97%
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Average Annual Total Return -- +24.04% + 31.25% + 27.80% + 18.80%
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SEC Results -- +23.04% + 31.25% + 27.80% + 18.80%
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<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years/Life
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<S> <C> <C> <C> <C> <C>
Cumulative Total Return +12.98% +25.36% +130.26% +247.10% +470.43%
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Average Annual Total Return -- +25.36% + 32.05% + 28.26% + 19.02%
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</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A share ("A") SEC results include the maximum 5.75% sales charge. Class B
share ("B") SEC results reflect the applicable contingent deferred sales charge
(CDSC), which declines over six years from 4% to 0%. Class C shares ("C") have
no initial sales charge but, like B, have higher annual fees and expenses than
A. C SEC results reflect the 1% CDSC applicable to shares redeemed within 12
months. Class I shares ("I") have no sales charge or Rule 12b-1 fees and are
only available to certain institutional investors.
B and C results include the performance and the operating expenses (e.g., Rule
12b-1 fees) of A for periods prior to the inception of B and C. Because
operating expenses of B and C are higher than those of A, B and C performance
generally would have been lower than A performance. The A performance included
in the B and C SEC performance has been adjusted to reflect the CDSC generally
applicable to B and C rather than the initial sales charge generally applicable
to A.
I results include the performance and the operating expenses (e.g., Rule 12b-1
fees) of A for periods prior to the inception of I. Because operating expenses
of A are greater than those of I, I performance generally would have been higher
than A performance. The A performance included in the I performance has been
adjusted to reflect the fact that I have no initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and waivers
may be rescinded at any time. See the prospectus for details. All results are
historical and assume the reinvestment of dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF MAY 31, 1999
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 23.1%
LEISURE 14.9%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 11.2%
FINANCIAL SERVICES 10.4%
RETAILING 10.0%
TOP 10 STOCK HOLDINGS
TYCO INTERNATIONAL LTD. 5.4% BP AMOCO PLC 1.7%
Security systems, packaging, and British oil and petrochemical company
electronic equipment conglomerate
CISCO SYSTEMS, INC. 1.7%
MICROSOFT CORP. 4.1% Computer network developer
Computer software and systems company
MEDIAONE GROUP, INC. 1.7%
MCI WORLDCOM, INC. 3.0% Telecommunications company
Telecommunications company
MOTOROLA, INC. 1.7%
TIME WARNER, INC. 2.9% Telecommunications and semiconductor
Publishing and entertainment company company
KROGER CO. 1.6%
CVS CORP. 2.1% Supermarket company
Drug store chain
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 1999
Stocks - 92.3%
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ISSUER SHARES VALUE
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U.S. Stocks - 88.7%
Advertising - 1.1%
Interpublic Group of Cos., Inc. 675,000 $ 51,131,250
Young & Rubicam, Inc. 958,900 36,677,925
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$ 87,809,175
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Aerospace - 2.6%
AlliedSignal, Inc. 679,800 $ 39,470,888
Gulfstream Aerospace Corp.* 804,400 49,671,700
Raytheon Co., "A" 665,000 44,180,937
United Technologies Corp. 1,300,000 80,681,250
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$ 214,004,775
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Banks and Credit Companies - 1.1%
Bank of New York Co., Inc. 950,000 $ 33,962,500
Wells Fargo Co. 1,400,000 56,000,000
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$ 89,962,500
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Broadcasting - 1.5%
AT&T Corp. - Liberty Media Group* 969,700 $ 64,424,444
Infinity Broadcasting Corp.* 2,315,700 59,195,081
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$ 123,619,525
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Business Machines - 5.1%
Affiliated Computer Services, Inc., "A"* 1,925,000 $ 83,496,875
Motorola, Inc. 1,520,000 125,875,000
Sun Microsystems, Inc.* 1,050,000 62,737,500
Texas Instruments, Inc. 637,431 69,719,016
Xerox Corp. 1,364,300 76,656,606
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$ 418,484,997
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Business Services - 2.5%
Computer Sciences Corp.* 1,000,000 $ 64,687,500
DST Systems, Inc.* 772,200 41,698,800
First Data Corp. 2,300,200 103,365,237
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$ 209,751,537
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Computer Software - Personal Computers - 3.8%
Microsoft Corp.* 3,873,700 $ 312,559,169
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Computer Software - Services - 0.6%
EMC Corp.* 535,000 $ 53,299,375
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Computer Software - Systems - 5.0%
BMC Software, Inc.* 2,348,000 $ 116,079,250
Cadence Design Systems, Inc.* 2,630,649 33,869,606
Computer Associates International, Inc. 1,300,000 61,506,250
Compuware Corp.* 2,790,900 86,692,331
Oracle Corp.* 2,000,000 49,625,000
SunGard Data Systems, Inc.* 1,287,400 45,059,000
Synopsys, Inc.* 296,200 13,143,875
VERITAS Software Corp.* 100,000 8,825,000
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$ 414,800,312
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Construction Services - 0.1%
Martin Marietta Materials, Inc. 120,000 $ 7,275,000
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Consumer Goods and Services - 7.2%
Colgate-Palmolive Co. 200,000 $ 19,975,000
Galileo International, Inc. 1,356,500 61,042,500
Gillette Co. 786,700 40,121,700
Newell Rubbermaid, Inc. 1,600,000 64,800,000
Tyco International Ltd. 4,710,400 411,571,200
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$ 597,510,400
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Containers - 0.5%
Sealed Air Corp.* 635,500 $ 39,480,438
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Electrical Equipment - 2.3%
Emerson Electric Co. 1,154,390 $ 73,736,661
General Electric Co. 1,049,900 106,761,706
Honeywell, Inc. 94,000 8,894,750
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$ 189,393,117
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Electronics - 4.2%
Altera Corp.* 1,576,600 $ 54,885,388
Analog Devices, Inc.* 2,610,000 100,321,875
Applied Materials, Inc.* 742,300 40,780,106
Atmel Corp.* 1,875,000 37,031,250
LSI Logic Corp.* 2,400,000 88,950,000
Teradyne, Inc.* 450,000 23,765,625
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$ 345,734,244
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Entertainment - 7.9%
CBS Corp.* 1,500,101 $ 62,629,217
Clear Channel Communications, Inc.* 1,080,600 71,387,137
Comcast Corp., "A" 1,000,200 38,507,700
Cox Radio, Inc., "A"* 223,300 11,932,594
Gemstar International Group Ltd.* 315,330 19,491,336
Harrah's Entertainment, Inc.* 2,300,000 49,737,500
MediaOne Group, Inc.* 1,719,200 127,005,900
Mirage Resorts, Inc.* 600,000 12,300,000
Time Warner, Inc. 3,227,200 219,651,300
Univision Communications, Inc., "A"* 635,000 37,663,437
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$ 650,306,121
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Financial Institutions - 5.1%
American Express Co. 539,300 $ 65,356,418
Associates First Capital Corp., "A" 2,016,755 82,686,955
Citigroup, Inc. 1,590,000 105,337,500
Federal Home Loan Mortgage Corp. 829,900 48,393,544
Morgan Stanley Dean Witter & Co. 961,000 92,736,500
Providian Financial Corp. 312,900 30,018,844
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$ 424,529,761
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Food and Beverage Products - 0.8%
Anheuser-Busch Cos., Inc. 707,000 $ 51,655,187
Nabisco Holdings Corp., "A" 248,700 10,414,313
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$ 62,069,500
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Insurance - 2.8%
American International Group, Inc. 741,600 $ 84,774,150
Aon Corp. 476,700 20,498,100
CIGNA Corp. 1,050,000 97,912,500
Lincoln National Corp. 284,700 28,968,225
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$ 232,152,975
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Manufacturing - 0.9%
Danaher Corp. 561,200 $ 33,917,525
Illinois Tool Works, Inc. 490,900 37,676,575
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$ 71,594,100
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Medical and Health Products - 4.2%
American Home Products Corp. 1,840,000 $ 106,030,000
Bausch & Lomb, Inc. 680,100 51,942,638
Becton, Dickinson & Co. 854,500 33,111,875
Bristol-Myers Squibb Co. 1,500,000 102,937,500
Pharmacia & Upjohn, Inc. 770,300 42,703,506
Warner-Lambert Co. 122,900 7,619,800
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$ 344,345,319
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Medical and Health Technology and Services - 4.0%
Cardinal Health, Inc. 1,164,300 $ 70,294,613
Guidant Corp. 1,110,100 55,505,000
HEALTHSOUTH Corp.* 3,000,000 40,125,000
Medtronic, Inc. 845,100 60,002,100
United HealthCare Corp. 1,616,950 94,187,337
Wellpoint Health Networks, Inc. 108,500 8,944,469
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$ 329,058,519
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Oil Services - 0.8%
Baker Hughes, Inc. 225,000 $ 7,003,125
Burlington Resources, Inc. 723,100 31,048,106
Cooper Cameron Corp.* 57,600 2,084,400
Schlumberger Ltd. 381,500 22,961,531
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$ 63,097,162
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Oils - 1.3%
Apache Corp. 1,210,500 $ 43,578,000
Mobil Corp. 600,000 60,750,000
--------------
$ 104,328,000
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Pollution Control - 0.6%
Republic Services, Inc.* 2,000,000 $ 47,000,000
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Railroads - 0.5%
Kansas City Southern Industries, Inc. 786,600 $ 44,246,250
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Restaurants and Lodging - 1.9%
Cendant Corp.* 1,576,000 $ 29,057,500
McDonald's Corp. 1,800,000 69,300,000
Promus Hotel Corp.* 1,205,700 30,142,500
Wendy's International, Inc. 1,152,200 31,397,450
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$ 159,897,450
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Special Products and Services - 1.0%
Carnival Corp. 957,400 $ 39,253,400
Royal Caribbean Cruises Ltd. 1,150,000 44,993,750
--------------
$ 84,247,150
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Stores - 7.2%
CVS Corp. 3,500,000 $ 161,000,000
Dayton Hudson Corp. 977,200 61,563,600
Lowe's Cos., Inc. 1,240,000 64,402,500
Office Depot, Inc.* 2,886,300 60,251,513
Rite Aid Corp. 3,990,000 99,750,000
TJX Cos., Inc. 2,540,000 76,200,000
Wal-Mart Stores, Inc. 1,606,100 68,460,012
--------------
$ 591,627,625
- -------------------------------------------------------------------------------
Supermarkets - 2.0%
Kroger Co.* 2,068,200 $ 121,118,962
Safeway, Inc.* 993,100 46,179,150
--------------
$ 167,298,112
- -------------------------------------------------------------------------------
Telecommunications - 8.3%
Adelphia Communications Corp. "A"* 40,400 $ 3,050,200
AirTouch Communications, Inc.* 440,000 44,220,000
Cablevision Systems Corp.* 300,000 23,662,500
CenturyTel, Inc.* 449,400 17,217,637
Cisco Systems, Inc.* 1,175,000 128,075,000
Corning, Inc. 100,000 5,462,500
Global TeleSystems Group, Inc.* 775,000 58,900,000
Intermedia Communications, Inc.* 116,200 2,941,313
Lucent Technologies, Inc. 685,800 39,004,875
MCI WorldCom, Inc.* 2,668,200 230,465,775
Nortel Networks Corp. 775,000 58,125,000
NTL, Inc.* 85,600 8,083,850
QUALCOMM, Inc.* 137,500 13,371,875
Scientific-Atlanta, Inc. 200,000 7,062,500
Tellabs, Inc.* 811,700 47,484,450
--------------
$ 687,127,475
- -------------------------------------------------------------------------------
Transportation - 0.6%
FDX Corp.* 835,800 $ 46,021,238
- -------------------------------------------------------------------------------
Utilities - Gas - 0.3%
Williams Cos., Inc. 455,100 $ 23,579,869
- -------------------------------------------------------------------------------
Utilities - Telephone - 0.9%
Frontier Corp. 1,445,600 $ 76,074,700
- -------------------------------------------------------------------------------
Total U.S. Stocks $7,312,285,890
- -------------------------------------------------------------------------------
Foreign Stocks - 3.6%
Germany - 0.6%
Mannesmann AG (Conglomerate) 352,800 $ 48,176,374
- -------------------------------------------------------------------------------
Ireland - 0.4%
Elan Corp. PLC, ADR (Health Products)* 618,100 $ 33,377,400
- -------------------------------------------------------------------------------
Japan - 0.5%
NTT Mobile Communication Network, Inc.
(Telecommunications) 700 $ 38,296,640
- -------------------------------------------------------------------------------
Sweden - 0.5%
Ericsson LM, ADR (Telecommunication Equipment) 1,620,000 $ 43,638,750
- -------------------------------------------------------------------------------
United Kingdom - 1.6%
BP Amoco PLC, ADR (Oils) 1,220,500 $ 130,746,062
- -------------------------------------------------------------------------------
Total Foreign Stocks $ 294,235,226
- -------------------------------------------------------------------------------
Total Stocks (Identified Cost, $6,739,574,787) $7,606,521,116
- -------------------------------------------------------------------------------
Short-Term Obligations - 7.2%
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- -------------------------------------------------------------------------------
Archer Daniels Midland Co., due 6/09/99 $ 25,000 $ 24,973,333
CIT Group Holdings, Inc., due 6/01/99 35,000 35,000,000
Federal Home Loan Bank, due 6/16/99 - 7/02/99 81,800 81,557,845
Federal Home Loan Mortgage Corp.,
due 6/04/99 - 7/22/99 177,650 177,014,981
Federal National Mortgage Assn., due 6/02/99 -
8/19/99 271,800 270,682,602
- -------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 589,228,761
- -------------------------------------------------------------------------------
Other Short-Term Obligations - 9.7%
- -------------------------------------------------------------------------------
SHARES
- -------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio,
at Cost 798,341,027 $ 798,341,027
- -------------------------------------------------------------------------------
Total Investments (Identified Cost, $8,127,144,575) $8,994,090,904
Other Assets, Less Liabilities - (9.2)% (755,113,374)
- -------------------------------------------------------------------------------
Net Assets - 100.0% $8,238,977,530
- -------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
MAY 31, 1999
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $8,127,144,575) $8,994,090,904
Cash 527,639
Foreign currency, at value (identified cost, $17,256,755) 17,418,153
Receivable for Fund shares sold 76,334,301
Receivable for investments sold 214,145,784
Dividends and interest receivable 4,754,125
Other assets 35,182
--------------
Total assets $9,307,306,088
--------------
Liabilities:
Payable for Fund shares reacquired $ 9,985,648
Payable for investments purchased 254,851,547
Collateral for securities loaned, at value 798,341,027
Payable to affiliates -
Management fee 293,062
Shareholder servicing agent fee 88,698
Distribution and service fee 4,330,135
Administrative fee 4,110
Accrued expenses and other liabilities 434,331
--------------
Total liabilities $1,068,328,558
--------------
Net assets $8,238,977,530
==============
Net assets consist of:
Paid-in capital $6,701,609,068
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 866,937,583
Accumulated undistributed net realized gain on
investments and foreign currency transactions 676,951,525
Accumulated net investment loss (6,520,646)
--------------
Total $8,238,977,530
==============
Shares of beneficial interest outstanding 507,117,124
===========
Class A shares:
Net asset value per share
(net assets of $5,163,896,866 / 311,875,106 shares of
beneficial interest outstanding) $16.56
======
Offering price per share (100 / 94.25 of net asset
value per share) $17.57
======
Class B shares:
Net asset value and offering price per share (net assets of
$2,379,811,071 / 151,198,138 shares of
beneficial interest outstanding) $15.74
======
Class C shares:
Net asset value and offering price per share
(net assets of $622,684,847 / 39,671,652 shares of
beneficial interest outstanding) $15.70
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $72,584,746 / 4,372,228 shares of
beneficial interest outstanding) $16.60
======
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 (Unaudited)
- ------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 1999
- ------------------------------------------------------------------------------
Net investment loss:
Income -
Dividends $ 15,485,456
Interest 14,261,400
Foreign taxes withheld (204,237)
-------------
Total expenses $ 29,542,619
-------------
Expenses -
Management fee $ 10,800,984
Trustees' compensation 65,870
Shareholder servicing agent fee 3,523,809
Distribution and service fee (Class A) 7,521,458
Distribution and service fee (Class B) 8,791,163
Distribution and service fee (Class C) 2,186,612
Administrative fee 155,285
Custodian fee 524,829
Printing 97,064
Postage 274,355
Auditing fees 16,750
Legal fees 5,436
Miscellaneous 2,042,413
-------------
Total expenses $ 36,006,028
Fees paid indirectly (447,616)
-------------
Net expenses $ 35,558,412
-------------
Net investment loss $ (6,015,793)
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $ 686,069,622
Foreign currency transactions 12,369
-------------
Net realized gain on investments and foreign
currency transactions $ 686,081,991
-------------
Change in unrealized depreciation -
Investments $ (78,524,549)
Translation of assets and liabilities in foreign
currencies (174,372)
-------------
Net unrealized loss on investments and foreign
currency translation $ (78,698,921)
-------------
Net realized and unrealized gain on investments
and foreign currency $ 607,383,070
-------------
Increase in net assets from operations $ 601,367,277
=============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1999 NOVEMBER 30, 1998
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (6,015,793) $ 839,474
Net realized gain on investments and foreign currency
transactions 686,081,991 417,739,657
Net unrealized gain (loss) on investments and foreign
currency translation (78,698,921) 367,935,023
--------------- ---------------
Increase in net assets from operations $ 601,367,277 $ 786,514,154
--------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ (1,150,456) $ (801,128)
From net investment income (Class C) -- (3,421)
From net investment income (Class I) (164,151) (27,146)
From net realized gain on investments and foreign
currency transactions (Class A) (286,212,079) (273,013,152)
From net realized gain on investments and foreign
currency transactions (Class B) (102,582,982) (16,675,701)
From net realized gain on investments and foreign
currency transactions (Class C) (21,354,752) (287,027)
From net realized gain on investments and foreign
currency transactions (Class I) (4,699,676) (1,756,440)
--------------- ---------------
Total distributions declared to shareholders $ (416,164,096) $ (292,564,015)
--------------- ---------------
Net increase in net assets from Fund share transactions $ 3,412,644,104 $ 2,268,115,589
--------------- ---------------
Total increase in net assets $ 3,597,847,285 $ 2,762,065,728
Net assets:
At beginning of period 4,641,130,245 1,879,064,517
--------------- ---------------
At end of period (including accumulated net investment loss of
$6,520,646 and accumulated undistributed net investment income
of $809,754, respectively) $ 8,238,977,530 $ 4,641,130,245
=============== ===============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ----------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
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 $ 16.06 $ 14.68 $ 13.44 $ 12.51 $ 10.48 $ 12.97
-------- -------- -------- -------- -------- --------
Income from investment operations# -
Net investment income (loss) $ -- $ 0.02 $ 0.01 $ (0.01) $ (0.01) $ (0.01)
Net realized and unrealized
gain (loss) on investments
and foreign currency 1.90 3.63 4.33 2.55 3.12 (0.49)
-------- -------- -------- -------- -------- --------
Total from investment
operations $ 1.90 $ 3.65 $ 4.34 $ 2.54 $ 3.11 $ (0.50)
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders -
From net investment income $ (0.01) $ (0.01) $ -- $ -- $ -- $ --
From net realized gain on
investments and foreign
currency transactions (1.39) (2.26) (3.10) (1.61) (1.08) (1.99)
-------- -------- -------- -------- -------- --------
Total distributions
declared to shareholders $ (1.40) $ (2.27) $ (3.10) $ (1.61) $ (1.08) $ (1.99)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 16.56 $ 16.06 $ 14.68 $ 13.44 $ 12.51 $ 10.48
======== ======== ======== ======== ======== ========
Total return(+) 12.69%++ 30.24% 42.91% 23.87% 32.91% (5.00)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.88%+ 0.79% 0.71% 0.72% 0.73% 0.72%
Net investment income (loss) 0.04%+ 0.15% 0.05% (0.05)% (0.08)% (0.06)%
Portfolio turnover 84% 62% 93% 107% 46% 56%
Net assets at end of period (000,000 omitted) $ 5,164 $ 3,283 $ 1,773 $ 1,341 $ 1,180 $ 997
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED ----------------------------------------------------------
MAY 31, 1999 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 15.37 $ 14.23 $ 13.12 $ 12.26 $ 10.35 $ 12.93
-------- -------- -------- -------- -------- --------
Income from investment operations# -
Net investment loss $ (0.05) $ (0.07) $ (0.09) $ (0.11) $ (0.11) $ (0.09)
Net realized and unrealized
gain (loss) on investments
and foreign currency 1.81 3.47 4.21 2.51 3.10 (0.50)
-------- -------- -------- -------- -------- --------
Total from investment operations $ 1.76 $ 3.40 $ 4.12 $ 2.40 $ 2.99 $ (0.59)
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders from
net realized gain on investments and foreign
currency transactions $ (1.39) $ (2.26) $ (3.01) $ (1.54) $ (1.08) $ (1.99)
-------- -------- -------- -------- -------- --------
Net asset value - end of period $ 15.74 $ 15.37 $ 14.23 $ 13.12 $ 12.26 $ 10.35
======== ======== ======== ======== ======== ========
Total return 12.34%++ 29.29% 41.77% 22.87% 32.09% (5.82)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.53%+ 1.48% 1.50% 1.61% 1.63% 1.60%
Net investment loss (0.61)%+ (0.54)% (0.74)% (0.94)% (0.98)% (0.87)%
Portfolio turnover 84% 62% 93% 107% 46% 56%
Net assets at end of period
(000,000 omitted) $ 2,380 $ 1,081 $ 93 $ 25 $ 14 $ 9
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. For fiscal years ending after September 1, 1995, the Fund's
expenses are calculated without reduction for this expense offset arrangement.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SIX MONTHS ENDED NOVEMBER 30, NOVEMBER 30,
MAY 31, 1999 1998 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $15.33 $14.23 $13.98
------ ------ ------
Income from investment operations# -
Net investment loss $(0.05) $(0.07) $(0.01)
Net realized and unrealized gain on investments and
foreign currency 1.81 3.46 0.26
------ ------ ------
Total from investment operations $ 1.76 $ 3.39 $ 0.25
------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.03) $ --
From net realized gain on investments and foreign
currency transactions (1.39) (2.26) --
------ ------ ------
Total distributions declared to shareholders $(1.39) $(2.29) $ --
------ ------ ------
Net asset value - end of period $15.70 $15.33 $14.23
====== ====== ======
Total return 12.31%++ 29.27% 1.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.53%+ 1.48% 1.54%+
Net investment loss (0.61)%+ (0.54)% (0.91)%+
Portfolio turnover 84% 62% 93%
Net assets at end of period (000 omitted) $622,685 $223,256 $383
* For the period from the inception of Class C, November 3, 1997, through November 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without reduction for this
expense offset arrangement.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SIX MONTHS ENDED NOVEMBER 30, NOVEMBER 30,
MAY 31, 1999 1998 1997*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $16.10 $14.71 $ 9.86
------ ------ ------
Income from investment operations# -
Net investment income $ 0.03 $ 0.07 $ 0.03
Net realized and unrealized gain on investments and
foreign currency 1.90 3.61 4.82
------ ------ ------
Total from investment operations $ 1.93 $ 3.68 $ 4.85
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $(0.03) $ --
From net realized gain on investments and foreign
currency transactions (1.39) (2.26) --
------ ------ ------
Total distributions declared to shareholders $(1.43) $(2.29) $ --
------ ------ ------
Net asset value - end of period $16.60 $16.10 $14.71
====== ====== ======
Total return 12.98%++ 30.56% 49.19%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.53%+ 0.49% 0.49%+
Net investment income 0.39%+ 0.45% 0.22%+
Portfolio turnover 84% 62% 93%
Net assets at end of period (000 omitted) $72,585 $54,406 $12,482
* For the period from the inception of Class I, January 2, 1997, through November 30, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Fund has an expense offset arrangement which reduces the Fund's custodian fee based upon the amount of cash maintained
by the Fund with its custodian and dividend disbursing agent. The Fund's expenses are calculated without reduction for this
expense offset arrangement.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(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 results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Security Loans - The Fund may lend its securities to member banks of the Federal
Reserve System and to member firms of the New York Stock Exchange or
subsidiaries thereof. State Street Bank and Trust Company ("State Street"), as
agent, loans the securities to certain brokers (the "Borrowers") approved by the
Fund. The loans are collateralized at all times by cash and U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street provides the Fund with indemnification against Borrower
default. The Fund bears the risk of loss with respect to the investment of cash
collateral.
At May 31, 1999, the value of securities loaned was $783,640,224. These loans
were collateralized by cash of $798,341,027 and U.S. Treasury securities with a
value of $566,357. Cash collateral is invested in short-term securities, which
are included in the Portfolio of Investments. A portion of the income generated
upon investment of the collateral is remitted to the Borrowers, and the
remainder is allocated between the Fund and State Street in its capacity as
lending agent. On loans collateralized by U.S. Treasury securities, a fee is
received from the Borrower, and is allocated between the Fund and State Street.
Income from securities lending is included in interest income on the Statement
of Operations. The dividend and interest income earned on the securities loaned
is accounted for in the same manner as other dividend and interest income.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All discount is
accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend 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.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by the Fund. This
amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code, which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on average
daily net assets of each class, without distinction between share classes.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares will convert to Class A
shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.33% of the Fund's 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 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 $21,938 for the six months
ended May 31, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$3,320,684 for the six months ended May 31, 1999, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, 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 paid 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
(0.15% per annum on assets attributable to Class A shares sold prior to March 1,
1991) which are attributable to that securities dealer and a distribution fee to
MFD of up to 0.10% per annum of the Fund's average daily net assets attributable
to Class A shares. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $646,501 for the six months ended May 31,
1999. Fees incurred under the distribution plan during the six months ended May
31, 1999, were 0.35% 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 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 $10,437 and $222 for Class B and Class C shares, respectively, for
the six months ended May 31, 1999. Fees incurred under the distribution plan
during the six months ended May 31, 1999, were 1.00% and 1.00% of average daily
net assets attributable to Class B and Class C shares, respectively, on an
annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the six months ended May 31,
1999, were $108,248, $1,311,254, and $144,083 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 Fund's average daily net assets at an effective annual rate of
0.10%. Prior to April 1, 1999, the fee was calculated as a percentage of the
Fund's average daily net assets at an effective annual rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
PURCHASES SALES
- -------------------------------------------------------------------------------
U.S. government securities $ 79,313,057 $ 174,103,386
-------------- --------------
Investments (non-U.S. government securities) $7,869,935,093 $4,847,821,507
-------------- --------------
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Fund, as computed on a federal income tax basis, are as
follows:
Aggregate cost $8,127,144,575
--------------
Gross unrealized appreciation $1,064,086,428
Gross unrealized depreciation (197,140,099)
--------------
Net unrealized appreciation $ 866,946,329
==============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were
as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 168,335,809 $2,770,465,900 275,022,311 $3,940,853,660
Shares issued to shareholders in
reinvestment of distributions 13,606,983 203,837,537 18,083,385 214,835,976
Shares reacquired (74,520,075) (1,229,540,599) (209,465,152) (3,022,891,589)
----------- -------------- ------------ --------------
Net increase 107,422,717 $1,744,762,838 83,640,544 $1,132,798,047
=========== ============== ============ ==============
<CAPTION>
Class B Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 84,737,224 $1,329,941,159 75,913,460 $1,061,361,969
Shares issued to shareholders in
reinvestment of distributions 6,060,744 86,549,378 1,300,174 14,891,503
Shares reacquired (9,910,709) (155,886,811) (13,434,921) (183,527,261)
----------- -------------- ------------ --------------
Net increase 80,887,259 $1,260,603,726 63,778,713 $ 892,726,211
=========== ============== ============ ==============
<CAPTION>
Class C Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 29,040,864 $ 454,497,639 17,494,795 $ 244,917,711
Shares issued to shareholders in
reinvestment of distributions 986,773 14,051,793 18,859 217,382
Shares reacquired (4,917,586) (77,213,170) (2,978,981) (39,962,938)
----------- -------------- ------------ --------------
Net increase 25,110,051 $ 391,336,262 14,534,673 $ 205,172,155
=========== ============== ============ ==============
<CAPTION>
Class I Shares
SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 924,631 $ 15,279,238 2,608,884 $ 38,891,794
Shares issued to shareholders in
reinvestment of distributions 266,753 3,995,963 150,140 1,783,665
Shares reacquired (198,094) (3,333,923) (228,559) (3,256,283)
----------- -------------- ------------ --------------
Net increase 993,290 $ 15,941,278 2,530,465 $ 37,419,176
=========== ============== ============ ==============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $720 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 six
months ended May 31, 1999, was $26,481.
<PAGE>
<TABLE>
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
<S> <C>
TRUSTEES SECRETARY
Richard B. Bailey* - Private Investor; Stephen E. Cavan*
Former Chairman and Director (until 1991),
MFS Investment Management ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Peter G. Harwood - Private Investor
CUSTODIAN
J. Atwood Ives - Chairman and Chief Executive State Street Bank and Trust Company
Officer, Eastern Enterprises (diversified
services company) INVESTOR INFORMATION
For MFS stock and bond market outlooks,
Lawrence T. Perera - Partner, Hemenway call toll free: 1-800-637-4458 anytime from
& Barnes (attorneys) a touch-tone telephone.
William J. Poorvu - Adjunct Professor, For information on MFS mutual funds, call
Harvard University Graduate School of your financial adviser or, for an information
Business Administration kit, call toll free: 1-800-637-2929 any
business day from 9 a.m. to 5 p.m. Eastern
Charles W.Schmidt - Private Investor time (or leave a message anytime).
Arnold D. Scott* - Senior Executive INVESTOR SERVICE
Vice President, Director, and Secretary, MFS Service Center, Inc.
MFS Investment Management P.O. Box 2281
Boston, MA 02107-9906
Jeffrey L. Shames* - Chairman, Chief
Executive Officer, and Director, For general information, call toll free:
MFS Investment Management 1-800-225-2606 any business day from
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 and Director, call toll free: 1-800-637-6576 any business
North American Management Corp. day from 9 a.m. to 5 p.m. Eastern time. (To
(investment advisers) use this service, your phone must be equipped
with a Telecommunications Device for the
INVESTMENT ADVISER Deaf.)
Massachusetts Financial Services Company
500 Boylston Street For share prices, account balances, and
Boston, MA 02116-3741 exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
DISTRIBUTOR telephone.
MFS Fund Distributors, Inc.
500 Boylston Street WORLD WIDE WEB
Boston, MA 02116-3741 www.mfs.com
PORTFOLIO MANAGER
Stephen Pesek*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
----------------
MASSACHUSETTS INVESTORS Bulk Rate
GROWTH STOCK FUND U.S. Postage
Paid
MFS
----------------
[Logo] M F S(R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
500 Boylston Street
Boston, MA 02116-3741
(c)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MIG-3 7/99 400M 13/213/313/813
