<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MASSACHUSETTS
INVESTORS GROWTH
STOCK FUND
ANNUAL REPORT O NOVEMBER 30, 1998
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DIVERSIFYING YOUR INVESTMENT PORTFOLIO (see page 36)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 3
Performance Summary ....................................................... 7
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 19
Notes to Financial Statements ............................................. 26
Independent Auditors' Report .............................................. 32
MFS(R) Prepares for the Year 2000 ......................................... 34
Trustees and Officers ..................................................... 37
MFS CELEBRATES ITS DIAMOND ANNIVERSARY!
MARCH 21, 1999, MARKS THE 75TH ANNIVERSARY OF MFS' INVENTION OF
THE MUTUAL FUND. THE MUTUAL FUND INDUSTRY HAS BROUGHT THE POWER
OF INVESTING TO EVERY AMERICAN, OFFERING THEM THE OPPORTUNITY FOR
COLLEGE DEGREES, HOME OWNERSHIP, AND COMFORTABLE RETIREMENT.
IMAGINE TODAY'S WORLD WITHOUT MUTUAL
FUNDS. WE COULDN'T. AND WHILE THE MFS 75 YEARS
YEARS AHEAD WILL BRING A NUMBER OF [graphic omitted]
CHALLENGES, OUR 75 YEARS OF EXPERIENCE EXPERIENCE THE FUTURE(SM)
WILL HELP GUIDE A NEW GENERATION OF
INVESTORS INTO THE FUTURE.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- ------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
In 1999, MFS celebrates its 75th anniversary. The nation's first mutual fund --
our Massachusetts Investors Trust (MIT) -- was introduced to the public on March
21, 1924. Since then, MFS Investment Management(R), the company that grew out of
that original fund, has helped guide shareholders through many economic and
investment cycles, primarily by focusing on the long-term opportunities created
by an expanding global economy. As of November 30, 1998, MFS manages over $90
billion, and the firm's 2,000 people serve 3.9 million investors and their
financial advisers worldwide. Meanwhile, MIT's assets have grown to over $10
billion, and 56 mutual funds are offered in the MFS Family of Funds(R).
One of the elements in the success of MIT did not exist before our founders
invented it in 1924. That is daily redemption. This innovation means that if you
want to sell your investment in any MFS mutual fund, you have the security of
knowing that you may do so immediately by exchanging into another MFS fund. Or,
if you need your money for other purposes, it can quickly be wired or mailed to
you. This daily redemption feature, through which new shares were created when
people invested in MIT and were redeemed when people sold, brought another
important change to the industry. Now, the price of a mutual fund's shares
wasn't determined by supply and demand, but by the value of the securities owned
by each portfolio.
Another factor in our growth was the development of one of the industry's
first in-house research departments in 1932. Unlike companies that rely on
Wall Street research reports, which can be used by many investors at the same
time, MIT's managers built its long-term track record by visiting companies,
talking to managers and competitors, and "kicking the tires" so they could
judge the quality and potential of each company's products and services for
themselves. Today, MFS has more than 100 full-time portfolio managers, stock
analysts, and credit analysts who track the equity and bond markets. That
number includes over 35 equity analysts who specialize in industries such as
aviation, media, technology, automobiles, and utilities.
While MIT introduced liquidity, that was not our only invention. We also
established the nation's first global bond fund, first high-yield municipal
bond fund, and first high-yield municipal closed-end bond fund.
We are proud of the record of MIT and of the funds in the MFS Family of Funds,
but we are also proud of our long-standing relationship with financial
advisers. Not only do we believe investors can benefit from the advice of
these experts but, as was shown during the market volatility of 1998, people
who work with financial advisers are less likely to abandon their carefully
designed, long-term investment strategies.
Our ability to service your investment and information needs is also extremely
important to us. The MFS Service Center handles millions of transactions and
phone calls every year. Supporting the work of financial advisers, promptly
sending out statements and confirmations, and answering hundreds of investors'
questions every day are crucial elements in maintaining long-term relationships
with our fund shareholders. That link to our investors has also been enhanced by
our site on the World Wide Web: WWW.MFS.COM. Since 1996, this site has given
investors and the general public access to up-to- date information about MFS
products and services, as well as market outlooks and retirement information.
The site has rapidly become one of our primary vehicles for communicating with
our investors and educating the public about mutual funds in general and MFS in
particular.
If there is a common thread running through these milestones, it is our
always-increasing commitment to providing you with the best possible
investment management and shareholder service, just as we have done for the
past 75 years.
As we celebrate this anniversary, it is also a time for MFS to look ahead
and build on our 75 years of innovation and experience to help meet your
investment needs in the next century. 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)
December 15, 1998
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
[Photo of Christian A. Felipe]
Christian A. Felipe
For the 12 months ended November 30, 1998, Class A shares of the Fund provided
a total return of 30.24%, Class B shares 29.29%, Class C shares 29.27%, and
Class I shares 30.56%. These returns, which include the reinvestment of
distributions but exclude the effects of any sales charges, compare to a
23.52% 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. HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT THIS YEAR?
A. Prices in the equity markets were quite extended during the first half of
the year. When the Asian and Russian crises worsened, the markets sold off.
Then, when the Federal Reserve Board began easing interest rates in the
fall, prices rapidly started to rise again.
Q. DO YOU THINK THE RECOVERY WE'VE HAD SINCE OCTOBER HAS BEEN A LITTLE TOO FAST?
A. Yes. The valuations and earnings estimates for many stocks are still quite
high, as we've seen in the numerous recent earnings disappointments.
So, in general, if you just look at the S&P 500, I think the market
is overvalued.
Q. HOW ARE YOU MANAGING THE FUND GIVEN THIS WEAK EARNINGS ENVIRONMENT?
A. Mainly we're avoiding companies that we don't think are going to make their
earnings estimates and looking for companies that can. For example, we're
still finding potentially strong profits in technology, retailing and,
recently, cable.
Q. CAN YOU TALK ABOUT SOME THINGS THAT HAVE CONTRIBUTED TO THE FUND'S
PERFORMANCE THIS YEAR?
A. In addition to owning shares in several companies that have grown their
earnings faster than the market, we've had a lot of takeovers among the
Fund's holdings. For example, AMP was taken over by Tyco, Fred Meyer by
Kroger, Jacor by Clear Channel Communications, and HBO by McKesson. These
takeovers went a long way toward boosting the Fund's performance.
Q. ONE OF YOUR TECHNOLOGY HOLDINGS, ORACLE, HAD A VERY GOOD PROFIT REPORT IN
DECEMBER. DO YOU THINK WE'LL SEE SIMILAR REPORTS FROM OTHER TECHNOLOGY
COMPANIES?
A. We could. The Internet is changing everything and has given companies like
Oracle, Microsoft, Cisco, Sun Microsystems, and Lucent a new lease on life.
Q. EARLIER, YOU MENTIONED CABLE AS A NEW AREA FOR THE FUND. COULD YOU TALK ABOUT
THAT?
A. We're focusing on some of the newer aspects of the cable industry that we
think will take up more of the consumer's dollar. That means companies
supplying the cable infrastructure for Internet access and cable telephony,
such as MediaOne and Time Warner. We're also buying companies that supply
broadband services to the cable market. These include companies like 3Com
for modems, Tellabs for cable telephony, and Amdocs for billing.
Q. WHAT ABOUT FINANCIAL SERVICES, ANOTHER BIG SECTOR FOR THE FUND?
A. Several financial services stocks were hurt by hedge fund liquidations, but
most of our holdings, including Morgan Stanley and Associates First
Capital, were not. Morgan was the best performer among the major
underwriters. The company has good risk-control systems and has remained
conservative. Associates First Capital, a consumer finance company, has
grown its earnings in excess of 17% every year for over 20 years, and we
think the company should have no problem doing it again next year. It
recently spun off from the Ford Motor Corp., and we think its recent
acquisitions of Avco Financial and SPS Transactions Services could help it
grow its earnings over the next three to five years.
Q. DO YOU HAVE MUCH INTERNATIONAL EXPOSURE?
A. We've cut way back there, almost completely eliminating Japan. When the yen
started going up, we felt Japanese companies' competitive advantage had
deteriorated.
Q. DO YOU SEE PROFITS PICKING UP IN THE NEAR FUTURE?
A. For the market in general, no. For the companies in the Fund, yes. There
are still a lot of weak companies out there, and we believe the Fund is
positioned to outperform them. We think the companies in the Fund, led by
technology, retailing, cable, and financial services, will grow earnings by
15% or 20% next year, which we think will be well ahead of the S&P 500.
/s/ Christian A. Felipe
Christian A. Felipe
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and
other conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
- --------------------------------------------------------------------------------
CHRISTIAN A. FELIPE IS A SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND PORTFOLIO MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND, MFS(R)
STRATEGIC GROWTH FUND, AND THE MASSACHUSETTS INVESTORS GROWTH STOCK SERIES
OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS.
MR. FELIPE JOINED THE MFS RESEARCH DEPARTMENT IN 1986. HE WAS NAMED INVESTMENT
OFFICER IN 1987, ASSISTANT VICE PRESIDENT -- INVESTMENTS IN 1988, VICE PRESIDENT
- -- INVESTMENTS IN 1989, AND SENIOR VICE PRESIDENT IN 1996.
MR. FELIPE IS A GRADUATE OF THE UNIVERSITY OF CALIFORNIA, LOS ANGELES, AND THE
UNIVERSITY OF PENNSYLVANIA WHARTON SCHOOL OF FINANCE AND COMMERCE.
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: $4.6 BILLION NET ASSETS AS OF NOVEMBER 30, 1998
PERFORMANCE SUMMARY
The following information illustrates the historical performance of the Fund's
original share class in comparison to various market indicators. Performance
results include the deduction of the maximum applicable sales charge and
reflect the percentage change in net asset value, including reinvestment of
dividends. Benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown. (See Notes to Performance Summary for more information.)
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, 1998)
Massachusetts
Investors Growth
Stock Fund S&P 500 Consumer Price
-- Class A Composite Index Index -- U.S.
11/93 $ 9,426 $10,000 $10,000
11/94 8,955 10,105 10,268
11/95 11,902 13,841 10,531
11/96 14,743 17,698 10,878
11/97 21,070 22,744 11,077
11/98 27,441 28,125 11,262
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended November 30, 1998)
Massachusetts
Investors Growth
Stock Fund S&P 500 Consumer Price
-- Class A Composite Index Index -- U.S.
11/88 $ 9,427 $10,000 $10,000
11/90 12,035 12,630 11,122
11/92 19,619 18,007 11,804
11/94 21,142 20,033 12,444
11/96 34,807 35,087 13,184
11/98 64,786 55,760 13,649
AVERAGE ANNUAL TOTAL RETURNS THROUGH NOVEMBER 30, 1998
CLASS A
10 Years/
1 Year 3 Years 5 Years Life
- --------------------------------------------------------------------------------
Average Annual Total Return +30.24% +32.11% +23.83% +21.26%
- --------------------------------------------------------------------------------
SEC Results +22.75% +29.53% +22.37% +20.54%
- --------------------------------------------------------------------------------
CLASS B
10 Years/
1 Year 3 Years 5 Years Life
- --------------------------------------------------------------------------------
Average Annual Total Return +29.29% +31.08% +22.88% +20.76%
- --------------------------------------------------------------------------------
SEC Results +25.29% +30.50% +22.70% +20.76%
- --------------------------------------------------------------------------------
CLASS C
10 Years/
1 Year 3 Years 5 Years Life
- --------------------------------------------------------------------------------
Average Annual Total Return +29.27% +31.77% +23.64% +21.17%
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SEC Results +28.27% +31.77% +23.64% +21.17%
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CLASS I
10 Years/
1 Year 3 Years 5 Years Life
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Average Annual Total Return +30.56% +32.31% +23.94% +21.31%
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COMPARATIVE INDICES
10 Years/
1 Year 3 Years 5 Years Life
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Average growth fund* +14.32% +18.98% +17.48% +16.16%
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Standard & Poor's 500 Composite
Index+ +23.52% +26.66% +22.98% +18.75%
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Consumer Price Index+# + 1.67% + 2.26% + 2.41% + 3.16%
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+ Source: CDA/Wiesenberger.
* Source: Lipper Analytical Services, Inc.
# The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
<PAGE>
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.
<PAGE>
RESULTS OF SHAREHOLDER MEETING
At a special meeting of shareholders of Massachusetts Investors Growth Stock
Fund (the "Fund"), which was held on Wednesday, October 15, 1998, the
following items were voted on by shareholders (67% of the shares voting on an
item must vote "for" in order for that item to be approved):
Item 1. To approve a new investment advisory agreement between Massachusetts
Financial Services and the Fund.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 100,900,267.00 77.01%
Against 12,684,147.00 9.68%
Abstain 6,643,075.00 5.07%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 2A. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning investment in other investment companies.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 99,310,107.00 75.79%
Against 13,329,953.00 10.17%
Abstain 7,587,429.00 5.79%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 2B. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning transactions with affiliates.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 98,548,278.00 75.21%
Against 13,761,820.00 10.50%
Abstain 7,917,391.00 6.04%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 99.99%
Item 2C. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning purchasing securities on margin.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 91,822,478.00 70.08%
Against 20,504,845.00 15.65%
Abstain 7,900,166.00 6.03%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 2D. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning short sales.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 92,728,044.00 70.77%
Against 19,417,094.00 14.82%
Abstain 8,082,350.00 6.17%
Broker Non-Vote 10,801,408.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 2E. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning certain types of options.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 94,166,851.00 71.87%
Against 17,396,309.00 13.28%
Abstain 8,664,329.00 6.61%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 2F. To approve the elimination of certain fundamental investment policies
as set forth on appendix c to the proxy statement. Eliminate the
restriction concerning investment in unseasoned issuers.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 93,133,084.00 71.08%
Against 18,838,591.00 14.38%
Abstain 8,255,814.00 6.30%
Broker Non-Vote 10,801,407.00 8.24%
-------------- ------
TOTAL 131,028,896.00 100.00%
Item 3. Ratification of selection of accountants.
SHARES VOTED % OF VOTED
---------------------------------------------------------------------
For 121,908,850.00 93.04%
Against 3,300,300.00 2.52%
Abstain 5,819,746.00 4.44%
-------------- ------
TOTAL 131,028,896.00 100.00%
<PAGE>
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1998
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 28.5%
FINANCIAL SERVICES 15.6%
RETAILING 14.4%
LEISURE 13.9%
CONGLOMERATES, SPECIAL PRODUCTS/SERVICES 8.3%
<TABLE>
TOP 10 STOCK HOLDINGS
<S> <C>
MICROSOFT CORP. 6.0% BMC SOFTWARE, INC. 3.3%
Computer software and systems company Computer software company
ASSOCIATES FIRST CAPITAL CORP. 5.8% RITE AID CORP. 3.2%
Consumer finance company Drug store chain
TYCO INTERNATIONAL LTD. 4.3% COMPUTER ASSOCIATES INTERNATIONAL, INC. 3.1%
Security systems, packaging, and electronic Computer software company
equipment conglomerate
WAL-MART STORES, INC. 2.8%
CVS CORP. 3.8% Retail chain
Drug store chain
CISCO SYSTEMS, INC. 2.6%
ORACLE CORP. 3.7% Computer network developer
Database software developer and manufacturer
</TABLE>
Portfolio information is as of November 30, 1998. The portfolio is actively
managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- November 30, 1998
Stocks - 86.2%
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ISSUER SHARES
- --------------------------------------------------------------------------------
U.S. Stocks - 84.4%
Advertising - 0.1%
Young & Rubicam, Inc.* 200,000 $ 5,975,000
- --------------------------------------------------------------------------------
Aerospace - 3.5%
Gulfstream Aerospace Corp.* 1,525,000 $ 78,346,875
United Technologies Corp. 795,000 85,214,063
--------------
$ 163,560,938
- --------------------------------------------------------------------------------
Banks and Credit Companies - 1.3%
Firstar Corp. 205,200 $ 15,030,900
Fleet Financial Group, Inc. 125,000 5,210,937
Mellon Bank Corp. 25,000 1,576,563
State Street Corp. 235,000 16,126,875
Wells Fargo & Co. 675,000 24,300,000
--------------
$ 62,245,275
- --------------------------------------------------------------------------------
Business Machines - 2.5%
Affiliated Computer Services, Inc., "A"* 1,142,100 $ 43,756,706
Sun Microsystems, Inc.* 1,000,000 74,062,500
--------------
$ 117,819,206
- --------------------------------------------------------------------------------
Business Services - 1.4%
Ceridian Corp.* 200,000 $ 13,012,500
Computer Sciences Corp. 146,100 8,345,963
DST Systems, Inc.* 525,000 28,415,625
Fiserv, Inc.* 195,000 8,616,562
Modis Professional Services, Inc.* 500,000 5,968,750
--------------
$ 64,359,400
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 5.3%
Microsoft Corp.* 2,000,000 $ 244,000,000
- --------------------------------------------------------------------------------
Computer Software - Services - 0.6%
EMC Corp.* 395,000 $ 28,637,500
- --------------------------------------------------------------------------------
Computer Software - Systems - 12.4%
BMC Software, Inc.* 2,600,000 $ 132,762,500
Cadence Design Systems, Inc.* 2,160,000 60,750,000
Computer Associates International, Inc. 2,850,000 126,112,500
Compuware Corp.* 1,555,000 96,798,750
Network Associates, Inc.* 250,000 12,718,750
Oracle Corp.* 4,315,000 147,788,750
--------------
$ 576,931,250
- --------------------------------------------------------------------------------
Consumer Goods and Services - 4.4%
Clorox Co. 120,000 $ 13,327,500
Dial Corp. 300,000 7,875,000
Service Corp. International 200,000 7,475,000
Tyco International Ltd. 2,650,000 174,403,125
--------------
$ 203,080,625
- --------------------------------------------------------------------------------
Electrical Equipment - 1.5%
Emerson Electric Co. 225,000 $ 14,625,000
General Electric Co. 615,000 55,657,500
--------------
$ 70,282,500
- --------------------------------------------------------------------------------
Electronics - 2.4%
Altera Corp.* 100,000 $ 4,906,250
AMP, Inc. 500,000 24,187,500
Analog Devices, Inc.* 99,400 2,031,488
Intel Corp. 740,000 79,642,500
--------------
$ 110,767,738
- --------------------------------------------------------------------------------
Entertainment - 7.3%
CBS Corp. 2,300,001 $ 68,568,780
Chancellor Media Corp.* 75,000 2,826,563
Citadel Communications Corp.* 391,700 9,400,800
Clear Channel Communications, Inc.* 515,000 24,076,250
Cox Radio, Inc., "A"* 223,300 8,527,269
Disney (Walt) Co. 50,100 1,612,594
Fox Entertainment Group, Inc.* 305,300 7,212,712
Gemstar International Group Ltd.* 75,000 4,556,250
Harrah's Entertainment, Inc.* 1,525,000 23,732,812
Jacor Communications, Inc.* 1,192,525 69,390,048
MediaOne Group, Inc.* 550,000 22,275,000
Mirage Resorts, Inc.* 1,600,000 23,800,000
Time Warner, Inc. 475,000 50,231,250
Univision Communications, Inc., "A"* 686,600 19,224,800
Young Broadcasting, Inc., "A"* 100,000 3,562,500
--------------
$ 338,997,628
- --------------------------------------------------------------------------------
Financial Institutions - 10.8%
American Express Co. 245,000 $ 24,515,312
Associates First Capital Corp., "A" 3,005,100 234,022,162
CIT Group, Inc., "A" 233,200 6,544,175
Federal Home Loan Mortgage Corp. 525,000 31,762,500
Federal National Mortgage Assn. 1,125,000 81,843,750
Federated Investors, Inc., "A" 250,000 4,203,125
Franklin Resources, Inc. 1,000,000 42,750,000
Heller Financial, Inc., "A" 55,000 1,440,313
Merrill Lynch & Co., Inc. 45,000 3,375,000
Morgan Stanley, Dean Witter & Co. 1,000,000 69,750,000
--------------
$ 500,206,337
- --------------------------------------------------------------------------------
Food and Beverage Products - 0.3%
Anheuser Busch Cos., Inc. 150,520 $ 9,125,275
Hershey Foods Corp. 50,000 3,362,500
--------------
$ 12,487,775
- --------------------------------------------------------------------------------
Insurance - 1.2%
Allstate Corp. 765,000 $ 31,173,750
American International Group, Inc. 65,000 6,110,000
Lincoln National Corp. 199,300 16,678,919
MONY Group, Inc.* 19,000 587,812
--------------
$ 54,550,481
- --------------------------------------------------------------------------------
Medical and Health Products - 3.9%
Abbott Laboratories, Inc. 235,000 $ 11,280,000
American Home Products Co. 280,000 14,910,000
Bristol-Myers Squibb Co. 265,000 32,479,062
Johnson & Johnson Co. 35,000 2,843,750
McKesson Corp. 145,000 10,322,188
Pfizer, Inc. 345,000 38,510,625
Schering Plough Corp. 635,000 67,548,125
Warner-Lambert Co. 50,000 3,775,000
--------------
$ 181,668,750
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.3%
Guidant Corp. 50,000 $ 4,290,625
HBO & Co. 350,000 8,728,125
Health Management Associates, Inc., "A"* 225,000 4,879,688
HEALTHSOUTH Corp.* 2,935,000 39,439,062
Lincare Holdings, Inc.* 75,000 2,587,500
United Healthcare Corp. 1,000,000 45,125,000
--------------
$ 105,050,000
- --------------------------------------------------------------------------------
Oils - 0.4%
Conoco, Inc., "A"* 300,000 $ 7,106,250
Exxon Corp. 175,000 13,135,938
--------------
$ 20,242,188
- --------------------------------------------------------------------------------
Printing and Publishing - 1.2%
Gannett Co., Inc. 725,000 $ 46,807,813
Pulitzer Publishing Co. 70,000 5,687,500
Tribune Co. 35,000 2,244,375
--------------
$ 54,739,688
- --------------------------------------------------------------------------------
Restaurants and Lodging - 3.0%
Cendant Corp.* 1,600,000 $ 30,400,000
Hilton Hotels Corp. 575,000 12,506,250
Marriott International, Inc., "A" 325,000 9,546,875
McDonalds Corp. 200,000 14,012,500
Promus Hotel Corp.* 2,150,000 71,756,250
--------------
$ 138,221,875
- --------------------------------------------------------------------------------
Stores - 11.1%
CVS Corp. 3,080,000 $ 152,075,000
Home Depot, Inc. 895,000 44,526,250
Liz Claiborne, Inc. 90,000 3,048,750
Office Depot, Inc.* 1,715,000 55,737,500
Rite Aid Corp. 2,810,000 130,313,750
Staples, Inc.* 215,000 7,511,562
TJX Cos., Inc. 300,000 7,687,500
Wal-Mart Stores, Inc. 1,490,000 112,215,625
--------------
$ 513,115,937
- --------------------------------------------------------------------------------
Supermarkets - 1.4%
Kroger Co.* 100,000 $ 5,306,250
Meyer (Fred), Inc.* 1,200,000 61,050,000
--------------
$ 66,356,250
- --------------------------------------------------------------------------------
Telecommunications - 6.1%
3Com Corp.* 175,000 $ 6,770,312
AirTouch Communications, Inc.* 100,000 5,718,750
Alltel Corp. 135,000 7,155,000
Amdocs Ltd.* 208,700 3,208,763
Aspect Telecommunications Corp.* 100,800 1,908,900
Century Telephone Enterprises, Inc. 175,000 9,975,000
Cisco Systems, Inc.* 1,410,000 106,278,750
Lucent Technologies, Inc. 260,000 22,376,250
MCI WorldCom, Inc.* 1,636,460 96,551,140
Qwest Communications International, Inc.* 100,000 4,000,000
Tellabs, Inc.* 335,000 18,110,937
Uniphase Corp.* 50,000 2,709,375
--------------
$ 284,763,177
- --------------------------------------------------------------------------------
Total U.S. Stocks $3,918,059,518
- --------------------------------------------------------------------------------
Foreign Stocks - 1.8%
France - 0.1%
Alcatel Alsthom Compagnie (Telecommunications) 44,420 $ 5,871,654
- --------------------------------------------------------------------------------
Germany - 0.2%
Galileo International, Inc.
(Consumer Goods and Services) 175,000 $ 7,000,000
- --------------------------------------------------------------------------------
Japan - 0.1%
Canon, Inc. (Special Products and Services) 25,000 $ 552,172
Olympus Optical Co. (Conglomerate) 148,000 1,620,008
--------------
$ 2,172,180
- --------------------------------------------------------------------------------
Switzerland - 0.3%
Julius Baer Holdings (Banks and Credit Cos.) 2,350 $ 7,620,803
Nestle S.A. (Food and Beverage Products) 2,900 6,020,474
--------------
$ 13,641,277
- --------------------------------------------------------------------------------
United Kingdom - 1.1%
British Petroleum PLC, ADR (Oils) 500,000 $ 46,062,500
Glaxo Wellcome PLC, ADR (Medical and Health
Products) 40,000 2,540,000
Orange PLC, ADR (Telecommunications)* 10,000 513,750
Reuters Group PLC, ADR (Business Services) 10,000 575,000
Sema Group PLC (Computer Software - Systems) 400,000 3,263,439
--------------
$ 52,954,689
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 81,639,800
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $3,061,297,649) $3,999,699,318
- --------------------------------------------------------------------------------
Preferred Stocks - 0.1%
- --------------------------------------------------------------------------------
Insurance - 0.1%
Lincoln National Corp. (Identified Cost,
$5,836,997) 275,000 $ 5,843,750
- --------------------------------------------------------------------------------
Convertible Preferred Stocks - 0.6%
- --------------------------------------------------------------------------------
Agriculture - 0.1%
Monsanto Co., 6.5% 128,100 $ 5,796,525
- --------------------------------------------------------------------------------
Entertainment - 0.2%
MediaOne Group, Inc., 6.25% 149,700 $ 8,401,913
- --------------------------------------------------------------------------------
Utilities - Electric - 0.3%
Houston Industries, Inc., 7.00% 160,000 $ 14,720,000
- --------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Identified Cost,
$25,499,718) $ 28,918,438
- --------------------------------------------------------------------------------
Bonds - 0.8%
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
U.S. Treasury Obligations - 0.8%
U.S. Treasury Bonds, 6.125s, 2027 $ 4,800 $ 5,412,768
U.S. Treasury Bonds, 6.375s, 2027 10,000 11,579,700
U.S. Treasury Bonds, 6.625s, 2027 17,500 20,825,000
- --------------------------------------------------------------------------------
Total Bonds (Identified Cost, $34,012,334) $ 37,817,468
- --------------------------------------------------------------------------------
Short-Term Obligations - 13.2%
- --------------------------------------------------------------------------------
du Pont (E. I.) de Nemours & Co., due 1/22/99 $ 32,400 $ 32,156,640
Federal Agricultural Mortgage Corp.,
due 1/19/99 10,330 10,259,839
Federal Farm Credit Bank,
due 12/01/98 - 12/08/98 49,000 48,964,930
Federal Home Loan Bank, due 12/30/98 25,000 24,902,930
Federal Home Loan Mortgage Corp.,
due 12/02/98 - 1/15/99 352,166 351,106,562
Federal National Mortgage Assn.,
due 12/14/98 - 1/20/99 79,100 78,770,253
General Electric Capital Corp., due 12/01/98 30,000 30,000,000
Metropolitan Life Funding, Inc., due 1/12/99 34,000 33,796,510
Student Loan Marketing Assn., due 12/01/98 340 340,000
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 610,297,664
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $3,736,944,362) $4,682,576,638
Other Assets, Less Liabilities - (0.9)% (41,446,393)
- --------------------------------------------------------------------------------
Net Assets - 100.0% $4,641,130,245
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
NOVEMBER 30, 1998
- -----------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $3,736,944,362) $4,682,576,638
Receivable for investments sold 8,055,823
Receivable for Fund shares sold 35,093,900
Dividends and interest receivable 2,337,812
Other assets 12,290
--------------
Total assets $4,728,076,463
--------------
Liabilities:
Due to custodian $ 130,876
Payable for investments purchased 47,858,205
Payable for Fund shares reacquired 36,271,172
Payable to affiliates -
Management fee 129,817
Shareholder servicing agent fee 44,134
Distribution and service fee 1,995,639
Accrued expenses and other liabilities 516,375
--------------
Total liabilities $ 86,946,218
--------------
Net assets $4,641,130,245
==============
Net assets consist of:
Paid-in capital $3,288,964,964
Unrealized appreciation on investments and translation
of assets and liabilities into foreign currencies 945,636,504
Accumulated undistributed net realized gain on
investments and foreign currency transactions 405,719,023
Accumulated undistributed net investment income 809,754
--------------
Total $4,641,130,245
==============
Shares of beneficial interest outstanding 292,703,807
===========
Class A shares:
Net asset value per share
(net assets of $3,282,797,379 / 204,452,389 shares of
beneficial interest outstanding) $16.06
======
Offering price per share (100 / 94.25 of net asset
value per share) $17.04
======
Class B shares:
Net asset value and offering price per share
(net assets of $1,080,671,605 / 70,310,879 shares of
beneficial interest outstanding) $15.37
======
Class C shares:
Net asset value and offering price per share
(net assets of $223,255,562 / 14,561,601 shares of
beneficial interest outstanding) $15.33
======
Class I shares:
Net asset value, offering price, and redemption price
per share
(net assets of $54,405,699 / 3,378,938 shares of
beneficial interest outstanding) $16.10
======
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, 1998
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 14,302,850
Interest 13,809,216
Foreign taxes withheld (314,846)
------------
Total investment income $ 27,797,220
------------
Expenses -
Management fee $ 7,567,175
Trustees' compensation 85,035
Shareholder servicing agent fee 3,415,001
Distribution and service fee (Class A) 8,038,108
Distribution and service fee (Class B) 4,631,135
Distribution and service fee (Class C) 743,058
Administrative fee 320,373
Custodian fee 568,053
Printing 128,135
Postage 216,381
Auditing fees 33,235
Legal fees 87,561
Miscellaneous 1,617,432
------------
Total expenses $ 27,450,682
Fees paid indirectly (492,936)
------------
Net expenses $ 26,957,746
------------
Net investment income $ 839,474
------------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) -
Investment transactions $417,676,493
Foreign currency transactions 63,164
------------
Net realized gain on investments and foreign
currency transactions $417,739,657
------------
Change in unrealized appreciation -
Investments $367,921,224
Translation of assets and liabilities in foreign currencies 13,799
------------
Net unrealized gain on investments and foreign currency
translation $367,935,023
------------
Net realized and unrealized gain on investments and
foreign currency $785,674,680
------------
Increase in net assets from operations $786,514,154
============
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 839,474 $ 338,418
Net realized gain on investments and foreign currency
transactions 417,739,657 293,422,338
Net unrealized gain on investments and foreign
currency translation 367,935,023 258,770,599
-------------- --------------
Increase in net assets from operations $ 786,514,154 $ 552,531,355
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (801,128) $ --
From net investment income (Class C) (3,421) --
From net investment income (Class I) (27,146) --
From net realized gain on investments and foreign
currency transactions (Class A) (273,013,152) (309,700,403)
From net realized gain on investments and foreign
currency transactions (Class B) (16,675,701) (5,913,744)
From net realized gain on investments and foreign
currency transactions (Class C) (287,027) --
From net realized gain on investments and foreign
currency transactions (Class I) (1,756,440) --
-------------- --------------
Total distributions declared to shareholders $ (292,564,015) $ (315,614,147)
-------------- --------------
Net increase in net assets from Fund share transactions $2,268,115,589 $ 275,910,431
-------------- --------------
Total increase in net assets $2,762,065,728 $ 512,827,639
Net assets:
At beginning of period 1,879,064,517 1,366,236,878
-------------- --------------
At end of period (including accumulated undistributed
net investment income of $809,754 and $257,483,
respectively) $4,641,130,245 $1,879,064,517
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $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 3.63 4.33 2.55 3.12 (0.49)
------ ------ ------ ------ ------
Total from investment operations $ 3.65 $ 4.34 $ 2.54 $ 3.11 $(0.50)
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.01) $ -- $ -- $ -- $ --
From net realized gain on investments and
foreign currency transactions (2.26) (3.10) (1.61) (1.08) (1.99)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(2.27) $(3.10) $(1.61) $(1.08) $(1.99)
------ ------ ------ ------ ------
Net asset value - end of period $16.06 $14.68 $13.44 $12.51 $10.48
====== ====== ====== ====== ======
Total return(+) 30.24% 42.91% 23.87% 32.91% (5.00)%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.79% 0.71% 0.72% 0.73% 0.72%
Net investment income (loss) 0.15% 0.05% (0.05)% (0.08)% (0.06)%
Portfolio turnover 62% 93% 107% 46% 56%
Net assets at end of period (000,000
omitted) $3,283 $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 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.
(+) 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>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.23 $13.12 $12.26 $10.35 $12.93
------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.07) $(0.09) $(0.11) $(0.11) $(0.09)
Net realized and unrealized gain (loss)
on investments and foreign currency 3.47 4.21 2.51 3.10 (0.50)
------ ------ ------ ------ ------
Total from investment operations $ 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 $(2.26) $(3.01) $(1.54) $(1.08) $(1.99)
------ ------ ------ ------ ------
Net asset value - end of period $15.37 $14.23 $13.12 $12.26 $10.35
====== ====== ====== ====== ======
Total return 29.29% 41.77% 22.87% 32.09% (5.82)%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.48% 1.50% 1.61% 1.63% 1.60%
Net investment loss (0.54)% (0.74)% (0.94)% (0.98)% (0.87)%
Portfolio turnover 62% 93% 107% 46% 56%
Net assets at end of period (000,000 omitted) $1,081 $93 $25 $14 $9
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, 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.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997*
- --------------------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $14.23 $13.98
------ ------
Income from investment operations# -
Net investment loss $(0.07) $(0.01)
Net realized and unrealized gain on investments and
foreign currency 3.46 0.26
------ ------
Total from investment operations $ 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 (2.26) --
------ ------
Total distributions declared to shareholders $(2.29) $ --
------ ------
Net asset value - end of period $15.33 $14.23
====== ======
Total return 29.27% 1.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.48% 1.54%+
Net investment loss (0.54)% (0.91)%+
Portfolio turnover 62% 93%
Net assets at end of period (000 omitted) $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.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997**
- --------------------------------------------------------------------------------------------------------------
CLASS I
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.71 $ 9.86
------ ------
Income from investment operations# -
Net investment income $ 0.07 $ 0.03
Net realized and unrealized gain on investments and
foreign currency 3.61 4.82
------ ------
Total from investment operations $ 3.68 $ 4.85
------ ------
Less distributions declared to shareholders -
From net investment income $(0.03) $ --
From net realized gain on investments and foreign currency
transactions (2.26) --
------ ------
Total distributions declared to shareholders $(2.29) $ --
------ ------
Net asset value - end of period $16.10 $14.71
====== ======
Total return 30.56% 49.19%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.49% 0.49%+
Net investment income 0.45% 0.22%+
Portfolio turnover 62% 93%
Net assets at end of period (000 omitted) $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.
</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 results 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 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. Some 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 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 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 net realized gains. During
the year ended November 30, 1998, accumulated undistributed net investment
income increased by $544,492, accumulated undistributed net realized gain on
investments and foreign currency transactions decreased by $9,813,050 and paid
in capital increased by $9,268,558. This change had no effect on the net
assets or net asset value per share.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on 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. Effective
November 1, 1998, the management fee is computed daily and paid monthly at an
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
$25,351 for the year ended November 30, 1998.
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
$2,584,659 for the year ended November 30, 1998, 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 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. At the direction of the Trustees,
effective April 1, 1998, the 0.10% per annum Class A distribution fee is being
paid by the Fund. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $1,700,757 for the year ended November
30, 1998. Fees incurred under the distribution plan during the year ended
November 30, 1998, were 0.32% 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 $19,745 and $1,153 for
Class B and Class C shares, respectively, for the year ended November 30,
1998. Fees incurred under the distribution plan during the year ended November
30, 1998, were 1.00% of average daily net assets attributable to Class B and
Class C shares 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
redemption's of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the year ended November 30,
1998, were $22,944, $489,100, and $44,180 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 0.1125%. Prior to January 1, 1998, the fee was calculated as a
percentage of the average Fund's daily net assets at an effective annual rate
of 0.13%.
(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 $ 90,250,328 $ --
-------------- --------------
Investments (non-U.S. government
securities) $3,164,769,829 $1,721,113,445
-------------- --------------
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 $3,746,028,473
--------------
Gross unrealized appreciation $1,045,450,227
Gross unrealized depreciation (108,902,062)
--------------
Net unrealized appreciation $ 936,548,165
==============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
YEAR ENDED NOVEMBER 30, 1998 YEAR ENDED NOVEMBER 30, 1997
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 275,022,311 $ 3,940,853,660 75,114,877 $ 956,127,239
Shares issued to shareholders
in reinvestment of
distributions 18,083,385 214,835,976 24,285,107 243,865,941
Share transferred to Class I -- -- (729,102) (7,188,941)
Shares reacquired (209,465,152) (3,022,891,589) (77,641,256) (983,055,158)
------------ ---------------- ----------- -------------
Net increase 83,640,544 $ 1,132,798,047 21,029,626 $ 209,749,081
============ ================ =========== =============
<CAPTION>
Class B Shares
YEAR ENDED NOVEMBER 30, 1998 YEAR ENDED NOVEMBER 30, 1997
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 75,913,460 $ 1,061,361,969 8,666,385 $ 107,069,031
Shares issued to shareholders
in reinvestment of
distributions 1,300,174 14,891,503 561,425 5,501,995
Shares reacquired (13,434,921) (183,527,261) (4,607,848) (55,387,255)
------------ ---------------- ----------- -------------
Net increase 63,778,713 $ 892,726,211 4,619,962 $ 57,183,771
============ ================ =========== =============
<CAPTION>
Class C Shares
YEAR ENDED NOVEMBER 30, 1998 PERIOD ENDED NOVEMBER 30, 1997*
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 17,494,795 $ 244,917,711 26,928 $ 375,739
Shares issued to shareholders
in reinvestment of
distributions 18,859 217,382 -- --
Shares reacquired (2,978,981) (39,962,938) -- --
------------ ---------------- ----------- -------------
Net increase 14,534,673 $ 205,172,155 26,928 $ 375,739
============ ================ =========== =============
* For the period from the inception of Class C, November 3, 1997, through November 30, 1997.
<CAPTION>
Class I Shares
YEAR ENDED NOVEMBER 30, 1998 PERIOD ENDED NOVEMBER 30, 1997**
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,608,884 $ 38,891,794 187,228 $ 2,297,029
Shares issued to shareholders
in reinvestment of
distributions 150,140 1,783,665 -- --
Share transferred from Class A -- -- 729,102 7,188,941
Shares reacquired (228,559) (3,256,283) (67,858) (884,130)
------------ ---------------- ----------- -------------
Net increase 2,530,465 $ 37,419,176 848,472 $ 8,601,840
============ ================ =========== =============
** For the period from the inception of Class I, January 2, 1997, through November 30, 1997.
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $805 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, 1998, was $24,374.
<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, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for the years ended November 30, 1998 and
1997, and the financial highlights for each of the years in the five-year period
ended November 30, 1998. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at November
30, 1998 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, 1998, 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 8, 1999
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 1999, SHAREHOLDERS WERE MAILED A FORM 1099 REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR
1998.
THE FUND HAS DESIGNATED $197,040,906 AS A CAPITAL GAIN DIVIDEND.
FOR THE YEAR ENDED NOVEMBER 30, 1998, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR
CORPORATIONS CAME TO 7.0%.
- --------------------------------------------------------------------------------
<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) AUDITORS
Deloitte & Touche LLP
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) INVESTOR INFORMATION
For MFS stock and bond market outlooks,
William J. Poorvu - Adjunct Professor, call toll free: 1-800-637-4458 anytime from
Harvard University Graduate School of a touch-tone telephone.
Business Administration
For information on MFS mutual funds, call
Charles W.Schmidt - Private Investor your financial adviser or, for an information
kit, call toll free: 1-800-637-2929 any
Arnold D. Scott* - Senior Executive business day from 9 a.m. to 5 p.m. Eastern
Vice President, Director, and Secretary, time (or leave a message anytime).
MFS Investment Management
INVESTOR SERVICE
Jeffrey L. Shames* - Chairman, Chief MFSService Center, Inc.
Executive Officer, and Director, P.O. Box 2281
MFS Investment Management Boston, MA 02107-9906
Elaine R. Smith - Independent Consultant For general information, call toll free:
1-800-225-2606 any business day from
David B. Stone - Chairman and Director, 8 a.m. to 8 p.m. Eastern time.
North American Management Corp.
(investment advisers) For service to speech- or hearing-impaired,
call toll free: 1-800-637-6576 any business
INVESTMENT ADVISER day from 9 a.m. to 5 p.m. Eastern time. (To
Massachusetts Financial Services Company use this service, your phone must be equipped
500 Boylston Street with a Telecommunications Device for the
Boston, MA 02116-3741 Deaf.)
DISTRIBUTOR For share prices, account balances, and
MFS Fund Distributors, Inc. exchanges, call toll free: 1-800-MFS-TALK
500 Boylston Street (1-800-637-8255) anytime from a touch-tone
Boston, MA 02116-3741 telephone.
PORTFOLIO MANAGER WORLD WIDE WEB
Christian A. Felipe* www.mfs.com
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-2 1/99 273M 13/213/313/813
