<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT
We invented the mutual fund(R)
[Graphic Omitted]
MASSACHUSETTS
INVESTORS GROWTH
STOCK FUND
SEMIANNUAL REPORT o MAY 31, 2000
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MUTUAL FUND GIFT KITS (see page 31)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 25
Trustees and Officers ..................................................... 33
MFS ORIGINAL RESEARCH(R)
RESEARCH HAS BEEN CENTRAL TO INVESTMENT MANAGEMENT AT MFS
SINCE 1932, WHEN WE CREATED ONE OF THE FIRST IN-HOUSE
RESEARCH DEPARTMENTS IN THE MUTUAL FUND (SM)
INDUSTRY. ORIGINAL RESEARCH(SM) AT MFS IS MORE ORIGINAL RESEARCH
THAN JUST CRUNCHING NUMBERS AND CREATING
ECONOMIC MODELS: IT'S GETTING TO KNOW MFS
EACH SECURITY AND EACH COMPANY PERSONALLY.
MAKES A DIFFERENCE
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of Jeffrey L. Shames]
Jeffrey L. Shames
Dear Shareholders,
I'm sure you've noticed that whenever financial markets suffer a large
decline, as they did very dramatically this past spring, there's a flurry of
information on "how to deal with market volatility" -- both in the popular
press and from those of us in the investment business. Our own thinking on
this is that, first, for long-term investors volatility is not necessarily
something to be feared; occasional volatility may in fact be healthy for the
markets.
Second, our experience has been that when markets begin to fall, it's often
too late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market
volatility in stride, here are some points you may want to consider the next
time you talk with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with
very high stock prices, relative to their earnings, or with business concepts
that looked great in the euphoria of a booming market but in the end appeared
to have no fundamental backing. It has always been our view that one of the
best protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask
how they fared in previous periods of volatility, as well as in the good
times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over
nearly all long-term periods -- five, 10, 20 years, and more -- stock and bond
returns, as represented by most common indices, have been positive and
have considerably outpaced inflation. Investing is the best way we know of to
make your money work for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading.
In our view, traders who buy securities with the intention of selling them at
a profit in a matter of hours, days, or weeks are gambling. We believe this
seldom turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy,
because only in retrospect do we know when that right time really was. Periods
of volatility are probably the worst times to make an investment decision.
Faced with turmoil in the markets, many investors have opted
to simply stay on the sidelines.
On the other hand, we think one of the best techniques for investing is
through automatic monthly or quarterly deductions from a checking or savings
account. This approach has at least three major benefits. First, you can
formulate a long-term plan -- how much to invest, how often, and
into which portfolios -- in a calm, rational manner, working with your
investment professional. Second, with this approach you invest regularly
without agonizing over the decision each time you buy shares. And, third,
if you invest equal amounts of money at regular intervals, you'll be taking
advantage of a strategy called dollar-cost averaging: by investing a fixed
amount while the share cost fluctuates, you end up with an average share cost
to you that is lower than the average share price over your investment
period.(1) If all this sounds familiar, it's probably because you're already
taking advantage of dollar-cost averaging by investing regularly for
retirement through a 401(k) or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or
value; United States or international; stocks or bonds. The problem with this
approach is that by the time a particular area is generally recognized as
"hot," you may have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in seven
out of 10 years.(2) For the decade, the MSCI EAFE's average annual performance
was 23%, compared to 18% for the S&P 500. Going into the 1990s, then, an
investor looking only at recent performance might have favored international
investments over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in seven out of 10 years,
with the S&P 500 returning an average of 18% annually for the decade and the
MSCI EAFE returning a 7% annual average. Looking ahead, however, we are
optimistic about international markets because we feel that many of the same
forces that propelled the current U.S. economic boom -- deregulation,
restructuring, and increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We
would suggest that one way to potentially profit from swings in the market --
to potentially be invested in various asset classes before the market shifts
in their favor -- is with a diversified portfolio covering several asset
classes.
If you haven't already done so, we encourage you to discuss these thoughts
with your investment professional and factor them into your long-range
financial planning. Hopefully, the next time the markets appear to be going
wild, you'll feel confident enough in your plan to view periods of volatility
as a time of potential opportunity -- or perhaps just a time to sit back and
do nothing.
As always, we appreciate your confidence in MFS and welcome any questions or
comments you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
June 15, 2000
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(1) For a more complete explanation of dollar-cost averaging and the math
involved, see "ABCs of Investing" in the Investor Education section of our
Web site (www.mfs.com).
(2) Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89, '90s --
12/31/89-12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization-weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
A prospectus containing more complete information on any MFS product,
including all charges and expenses, can be obtained from your investment
professional. Please read it carefully before you invest or send money.
Investments in mutual funds will fluctuate and may be worth more or less upon
redemption.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
For the six months ended May 31, 2000, Class A shares of the fund provided a
total return of 12.64%, Class B shares 12.26%, Class C shares 12.21%, and
Class I shares 12.81%. These returns, which include the reinvestment of any
distributions but exclude the effects of any sales charges, compare to a 2.88%
return over the same period for the fund's benchmark, the Standard & Poor's
500 Composite Index (the S&P 500). The S&P 500 is a popular, unmanaged index
of common stock total return performance. During the same period, the average
large-cap growth fund tracked by Lipper Inc., an independent firm that reports
mutual fund performance, returned 7.40%.
Q. HOW DID THE PORTFOLIO OUTPERFORM BOTH ITS BENCHMARK AND A MAJORITY OF ITS
PEERS DURING A PERIOD THAT INCLUDED DRAMATIC MARKET VOLATILITY?
A. The thing we work hardest to achieve in this portfolio is returns that
consistently outperform the market, as represented by the S&P 500, over both
short- and long-term periods. To use a baseball analogy, we seek to achieve
consistency by hitting a lot of doubles and some triples, rather than taking
a high-risk, swing-for-the-fences approach. The way we do that is through
active stock picking based on MFS Original Research(R). We believe that if
there's a secret to our success, it's simply the depth and quality of our
research.
More specifically, we feel several factors helped our performance during a
period that included a sharp market correction. First, we tend to be well
diversified across both companies and sectors; we avoid taking very big
positions in any individual holdings. In our experience, that mitigates some
of the volatility in a down market.
Second, we cut back our technology holdings early in the first quarter
because some of these stocks reached the price targets we had set for them
and, we felt, others had risen to overly high valuations. That helped us
weather a correction that largely affected technology stocks. Third, we used
the correction as an opportunity to add to our positions in what we view as
some very good companies at bargain prices. Cisco Systems is one example.
Q. HOW ELSE HAVE THE PORTFOLIO'S HOLDINGS CHANGED OVER THE PAST SIX MONTHS?
A. We think the likelihood of a slowdown in corporate earnings has risen with
the Federal Reserve Board's (the Fed's) increases in interest rates. We
therefore increased the portfolio's diversification into sectors we believe
may be less exposed to the economic cycle. Two examples are health care and
business services. We've increased our weighting in health care stocks
mainly by adding pharmaceutical holdings such as Pharmacia and Warner-
Lambert, whose recent purchase by Pfizer becomes effective in June 2000.
Short term, we expect there will continue to be a lot of rhetoric out of
Washington regarding health care regulation, but in the long term we don't
think that will seriously impact what our research indicates are strong
earnings outlooks for these companies.
Business services companies provide services that enable larger companies to
become more efficient by downsizing and outsourcing. Two examples are
Computer Sciences, an information technology consulting firm, and Automatic
Data Processing, which we feel is the market leader in payroll processing.
In addition to their strong growth prospects, we think many business
services companies offer relatively predictable, consistent revenues, as
much of their work tends to come from long-term contracts.
Q. WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO'S TECHNOLOGY AND TELECOMMUNICATIONS
HOLDINGS?
A. Although in the short term we feel some of these companies could be
sensitive to an economic slowdown, we continue to have a bullish long-term
outlook for both the technology and telecommunications sectors. A look at
current spending patterns around the world offers a reason for optimism.
According to our research, spending on information technology is increasing
in every area of the world. Our research shows that in the United States,
spending is estimated to reach nearly 5% of gross domestic product this
year. By comparison, however, Europe will spend about half of that figure,
while Japan and other Asian countries will spend even less. We believe that
in the long term these foreign economies will need to dramatically increase
their technology spending in order to remain competitive with the United
States -- and that a significant portion of that spending may go to
companies in our portfolio that are already leaders in the communications
and technology revolution, such as Cisco, Nortel, Corning, and Intel.
Q. HOW WOULD YOU DESCRIBE THE PORTFOLIO'S INVESTMENT STYLE AND STRATEGY?
A. Two phrases we often use in explaining our investment strategy are
"sustainable competitive advantage" and "flexible and opportunistic." What
we try to find for the portfolio are good businesses selling at reasonable
valuations, and one of our definitions of a good business is one that
exhibits a sustainable competitive advantage. Often that's a large market
share; we tend to invest in businesses with very few competitors. A patented
product is another form of competitive advantage; an example would be a
pharmaceutical company with the most effective drug for a certain disease or
condition. Lowest cost may be another form of sustainable competitive
advantage.
Micron Technology, which became one of our top-10 holdings during the
period, offers an example. We believe the company has become a dominant
global manufacturer of dynamic random access (DRAM) computer memory chips,
which are essential components of computer hard drives, wireless phones, and
other devices. According to our research, Micron's market share was about 8%
in 1997 and is expected to reach nearly 20% this year; globally it is one of
the two lowest-cost producers. It is also the only DRAM manufacturer that
has added significant production capacity since 1996, by acquiring a chip
factory from Texas Instruments. Currently, demand for DRAM chips is
outstripping supply; we feel this situation could continue for some time and
lead to dramatic price increases. So we believe Micron has a sustainable
competitive advantage both from being one of the lowest-cost producers and
having a dominant market share of a product experiencing high demand.
Q. AND WHAT DO YOU MEAN WHEN YOU DESCRIBE YOUR STYLE AS "FLEXIBLE AND
OPPORTUNISTIC"?
A. Flexible and opportunistic are two aspects of the same strategy. As long-
term investors, we try to buy stocks we believe we can hold for three years
or more. But we also recognize that the investing landscape changes daily
and has become increasingly volatile in recent years, due largely to the
instantaneous flow of large amounts of information. We try to be flexible
and take advantage of the opportunities that the market presents, in part by
purchasing stocks we believe have strong growth prospects over the long term
but are undervalued over the short term -- perhaps because of some negative
announcement or what we believe is a false rumor. Everything continues to be
driven by our Original Research(SM); in many cases our analysts have
identified companies we would like to invest in when a drop in their stock
price presents us with an opportunity.
/s/ Thomas D. Barrett /s/ Stephen Pesek
Thomas D. Barrett Stephen Pesek
Portfolio Manager Portfolio Manager
Note to Shareholders: Effective April 1, 2000, Thomas D. Barrett became a
portfolio manager of the fund.
The opinions expressed in this report are those of the portfolio managers and
are current only through the end of the period of the report as stated on the
cover. The managers' views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
<PAGE>
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PORTFOLIO MANAGERS' PROFILES
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THOMAS D. BARRETT IS VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R). HE
IS A PORTFOLIO MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND,
MFS(R) INSTITUTIONAL LARGE CAP GROWTH FUND, MFS(R) GROWTH SERIES (PART
OF MFS(R) VARIABLE INSURANCE TRUST(SM)), AND THE MASSACHUSETTS INVESTORS
GROWTH STOCK SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS.
PRIOR TO JOINING MFS IN 1996, MR. BARRETT SPENT TWO YEARS AS AN
ASSISTANT VICE PRESIDENT AND EQUITY RESEARCH ANALYST WITH A LARGE
INVESTMENT MANAGEMENT FIRM. FROM 1988 TO 1992 HE WAS A DIRECTOR OF
FINANCE -- TAX PRACTICE FOR ARTHUR ANDERSEN & COMPANY. HE BEGAN HIS
CAREER AT MFS AS A RESEARCH ANALYST AND BECAME PORTFOLIO MANAGER IN
2000. A CHARTERED FINANCIAL ANALYST, MR. BARRETT HOLDS A MASTERS OF
MANAGEMENT DEGREE FROM NORTHWESTERN UNIVERSITY'S KELLOGG SCHOOL AND A
BACHELOR OF ARTS FROM THE UNIVERSITY OF CALIFORNIA, LOS ANGELES.
STEPHEN PESEK IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R)
AND PORTFOLIO MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND,
MFS(R) CORE GROWTH FUND, AND THE MASSACHUSETTS INVESTORS GROWTH STOCK
SERIES OFFERED THROUGH MFS(R)/SUN LIFE ANNUITY PRODUCTS. HE IS ALSO A
PORTFOLIO MANAGER OF MFS(R) INSTITUTIONAL LARGE CAP GROWTH FUND AND
MFS(R) 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 AND SENIOR VICE PRESIDENT IN 1999. 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 AN M.B.A. 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 ORIGINAL
RESEARCH(R), A GLOBAL, COMPANY-ORIENTED, BOTTOM-UP PROCESS OF SELECTING
SECURITIES.
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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 investment professional, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
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FUND FACTS
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OBJECTIVE: SEEKS 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: $15.8 BILLION NET ASSETS AS OF MAY 31, 2000
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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.)
<TABLE>
TOTAL RATES OF RETURN THROUGH MAY 31, 2000
CLASS A
<CAPTION>
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge +12.64% +31.21% +136.17% +310.08% +567.61%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +31.21% + 33.17% + 32.61% + 20.91%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Including
Sales Charge -- +23.67% + 30.57% + 31.05% + 20.19%
-----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge +12.26% +30.38% +131.52% +294.96% +534.49%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +30.38% + 32.29% + 31.62% + 20.29%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Including
Sales Charge -- +26.38% + 31.72% + 31.48% + 20.29%
-----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge +12.21% +30.38% +132.10% +303.01% +556.10%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +30.38% + 32.40% + 32.15% + 20.70%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Including
Sales Charge -- +29.38% + 32.40% + 32.15% + 20.70%
-----------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
6 Months 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return Excluding
Sales Charge +12.81% +31.70% +138.53% +314.52% +574.85%
-----------------------------------------------------------------------------------------------------------
Average Annual Total Return Excluding
Sales Charge -- +31.70% + 33.61% + 32.90% + 21.04%
-----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PERFORMANCE SUMMARY
Class A Share Performance Including Sales Charge takes into account the
deduction of the maximum 5.75% sales charge. Class B Share Performance
Including Sales Charge takes into account the deduction of the applicable
contingent deferred sales charge (CDSC), which declines over six years from 4%
to 0%. Class C Share Performance Including Sales Charge takes into account the
deduction of the 1% CDSC applicable to Class C shares redeemed within 12
months. Class I shares have no sales charge and are only available to certain
institutional investors.
Class B, C, and I share performance include the performance of the fund's
Class A shares for periods prior to their inception (blended performance).
Class B and C blended performance has been adjusted to take into account the
CDSC applicable to Class B and C shares rather than the initial sales charge
(load) applicable to Class A shares. Class I share blended performance has
been adjusted to account for the fact that Class I shares have no sales
charge. These blended performance figures have not been adjusted to take into
account differences in class-specific operating expenses. Because operating
expenses of Class B and C shares are higher than those of Class A, the blended
Class B and C share performance is higher than it would have been had Class B
and C shares been offered for the entire period. Conversely, because operating
expenses of Class I shares are lower than those of Class A, the blended Class
I share performance is lower than it would have been had Class I shares been
offered for the entire period.
All performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF MAY 31, 2000
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 35.2%
HEALTH CARE 11.6%
UTILITIES & COMMUNICATIONS 11.2%
SPECIAL PRODUCTS & SERVICES 8.7%
FINANCIAL SERVICES 8.7%
TOP 10 STOCK HOLDINGS
INTEL CORP. 2.8% MICRON TECHNOLOGY, INC. 2.1%
Semiconductor manufacturer Semiconductor manufacturer
TYCO INTERNATIONAL LTD. 2.6% CORNING, INC. 2.0%
Security systems, packaging, and Materials and equipment supplier to the
electronic-equipment conglomerate communications industry
CISCO SYSTEMS, INC. 2.5% SAFEWAY, INC. 2.0%
Computer network developer Grocery store chain
GENERAL ELECTRIC CO. 2.3% MICROSOFT CORP. 2.0%
Diversified manufacturing and Computer software and systems company
financial services conglomerate
NORTEL NETWORKS CORP. 2.0%
WARNER-LAMBERT CO. 2.1% Designer and developer of data and
Pharmaceutical company telephony networks
The portfolio is actively managed, and current holdings may be different.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- May 31, 2000
<CAPTION>
Stocks - 97.7%
--------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 89.2%
Advertising
Young & Rubicam, Inc. 98,500 $ 4,703,375
--------------------------------------------------------------------------------------------------------
Aerospace - 1.0%
Honeywell International, Inc. 2,743,900 $ 150,057,031
--------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 0.7%
Providian Financial Corp. 1,191,700 $ 105,986,819
--------------------------------------------------------------------------------------------------------
Biotechnology - 4.0%
Abbott Laboratories, Inc. 5,018,000 $ 204,169,875
Pharmacia Corp.* 5,513,379 286,351,122
Waters Corp.* 1,455,900 137,582,550
---------------
$ 628,103,547
--------------------------------------------------------------------------------------------------------
Business Machines - 2.0%
Seagate Technology, Inc.* 2,691,140 $ 156,086,120
Sun Microsystems, Inc.* 2,174,200 166,598,075
---------------
$ 322,684,195
--------------------------------------------------------------------------------------------------------
Business Services - 4.5%
Automatic Data Processing, Inc. 3,983,500 $ 218,843,531
BEA Systems, Inc.* 820,600 29,644,175
BISYS Group, Inc.* 1,030,500 67,755,375
Computer Sciences Corp.* 2,147,100 205,987,406
First Data Corp. 2,687,500 150,667,969
Fiserv, Inc.* 896,100 41,892,675
---------------
$ 714,791,131
--------------------------------------------------------------------------------------------------------
Cellular Telephones - 3.0%
Motorola, Inc. 2,823,815 $ 264,732,656
Sprint Corp. (PCS Group)* 3,654,000 202,797,000
---------------
$ 467,529,656
--------------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 1.1%
Compaq Computer Corp. 1,900,800 $ 49,896,000
Dell Computer Corp.* 2,838,200 122,397,375
---------------
$ 172,293,375
--------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 2.2%
Mercury Interactive Corp.* 424,930 $ 36,012,818
Microsoft Corp.* 4,937,300 308,889,831
---------------
$ 344,902,649
--------------------------------------------------------------------------------------------------------
Computer Software - Services - 1.3%
EMC Corp.* 1,792,000 $ 208,432,000
--------------------------------------------------------------------------------------------------------
Computer Software - Systems - 6.8%
BMC Software, Inc.* 3,581,050 $ 157,566,200
Cadence Design Systems, Inc.* 5,246,000 83,936,000
Computer Associates International, Inc. 3,256,400 167,704,600
Compuware Corp.* 364,400 3,712,325
Comverse Technology, Inc.* 1,369,200 125,110,650
E.piphany, Inc.* 50,000 3,906,250
Electronic Data Systems Corp. 1,422,900 91,510,256
I2 Technologies, Inc.* 298,500 31,752,938
Oracle Corp.* 2,770,800 199,151,250
Rational Software Corp.* 1,197,000 87,755,062
Redback Networks, Inc.* 50,000 4,193,750
Siebel Systems, Inc.* 452,500 52,942,500
VERITAS Software Corp.* 504,600 58,785,900
---------------
$ 1,068,027,681
--------------------------------------------------------------------------------------------------------
Conglomerates - 2.6%
Tyco International Ltd. 8,572,800 $ 403,457,400
--------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 0.3%
Colgate-Palmolive Co. 641,400 $ 33,753,675
Philip Morris Cos., Inc. 529,000 13,820,125
---------------
$ 47,573,800
--------------------------------------------------------------------------------------------------------
Electrical Equipment - 2.7%
Emerson Electric Co. 1,277,800 $ 75,390,200
General Electric Co. 6,604,100 347,540,762
---------------
$ 422,930,962
--------------------------------------------------------------------------------------------------------
Electronics - 9.8%
Altera Corp.* 532,300 $ 45,711,263
Analog Devices, Inc.* 1,321,000 101,717,000
Applied Micro Circuits Corp.* 10,000 992,500
Atmel Corp.* 2,617,400 99,951,962
Flextronics International Ltd.* 2,463,251 134,093,226
Intel Corp. 3,512,700 437,989,781
Lam Research Corp.* 1,616,100 51,917,213
LSI Logic Corp.* 3,264,500 171,998,344
Micron Technology, Inc.* 4,650,600 325,251,337
National Semiconductor Corp.* 1,964,240 105,577,900
Teradyne, Inc.* 748,000 64,328,000
---------------
$ 1,539,528,526
--------------------------------------------------------------------------------------------------------
Energy - 0.2%
Dynegy, Inc. 335,400 $ 25,867,725
--------------------------------------------------------------------------------------------------------
Entertainment - 3.6%
Infinity Broadcasting Corp., "A"* 3,777,225 $ 119,454,741
Time Warner, Inc. 2,472,488 195,172,021
Univision Communications, Inc., "A"* 777,300 80,061,900
USA Networks, Inc.* 1,894,700 35,880,881
Viacom, Inc., "B"* 2,136,507 132,463,434
---------------
$ 563,032,977
--------------------------------------------------------------------------------------------------------
Financial Institutions - 3.7%
American Express Co. 1,315,800 $ 70,806,488
Associates First Capital Corp., "A" 3,854,800 105,766,075
Citigroup, Inc. 3,141,100 195,337,156
Federal Home Loan Mortgage Corp. 1,995,300 88,790,850
State Street Corp. 1,140,300 127,143,450
---------------
$ 587,844,019
--------------------------------------------------------------------------------------------------------
Financial Services - 0.3%
AXA Financial, Inc. 1,247,400 $ 48,570,638
--------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.5%
Anheuser-Busch Cos., Inc. 1,930,200 $ 149,590,500
Coca-Cola Co. 1,682,600 89,808,775
---------------
$ 239,399,275
--------------------------------------------------------------------------------------------------------
Insurance - 3.7%
American International Group, Inc. 2,379,975 $ 267,895,936
Hartford Financial Services Group, Inc. 3,387,000 200,256,375
Marsh & McLennan Cos., Inc. 1,116,453 122,879,608
---------------
$ 591,031,919
--------------------------------------------------------------------------------------------------------
Internet - 1.0%
Juniper Networks, Inc. 50,000 $ 8,759,375
VeriSign, Inc.* 1,050,300 142,184,363
---------------
$ 150,943,738
--------------------------------------------------------------------------------------------------------
Machinery - 0.5%
Deere & Co., Inc. 2,007,100 $ 83,420,094
--------------------------------------------------------------------------------------------------------
Medical and Health Products - 6.0%
Alza Corp.* 305,100 $ 15,502,894
American Home Products Corp. 4,427,400 238,526,175
Bausch & Lomb, Inc. 1,500,700 104,298,650
Bristol-Myers Squibb Co. 4,654,800 256,304,925
Warner-Lambert Co. 2,685,900 328,015,537
---------------
$ 942,648,181
--------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.1%
Genzyme Corp.* 303,600 $ 17,248,275
Medimmune, Inc.* 98,700 15,335,513
Medtronic, Inc. 2,597,700 134,106,262
---------------
$ 166,690,050
--------------------------------------------------------------------------------------------------------
Oil Services - 3.8%
Baker Hughes, Inc. 4,601,100 $ 166,789,875
Cooper Cameron Corp.* 321,725 22,440,319
Diamond Offshore Drilling, Inc. 1,790,300 73,178,513
Global Marine, Inc.* 2,989,800 84,648,712
Halliburton Co. 3,063,300 156,228,300
Noble Drilling Corp.* 2,377,500 103,124,062
---------------
$ 606,409,781
--------------------------------------------------------------------------------------------------------
Oils - 1.8%
Apache Corp. 549,400 $ 33,444,725
Coastal Corp. 1,736,300 106,565,412
Exxon Mobil Corp. 568,100 47,329,831
Transocean Sedco Forex, Inc. 2,011,000 98,916,063
---------------
$ 286,256,031
--------------------------------------------------------------------------------------------------------
Pharmaceuticals - 0.3%
Sepracor, Inc.* 541,000 $ 51,733,125
Watson Pharmaceuticals, Inc.* 50,000 2,206,250
---------------
$ 53,939,375
--------------------------------------------------------------------------------------------------------
Retail - 3.1%
Costco Wholesale Corp.* 1,092,200 $ 34,882,138
CVS Corp. 5,845,800 254,292,300
Home Depot, Inc. 115,643 5,644,824
Office Depot, Inc.* 2,919,000 20,615,438
Tandy Corp. 2,726,300 115,697,356
Wal-Mart Stores, Inc. 882,500 50,854,062
---------------
$ 481,986,118
--------------------------------------------------------------------------------------------------------
Supermarkets - 2.4%
Kroger Co.* 3,596,100 $ 71,472,487
Safeway, Inc.* 6,710,400 309,517,200
---------------
$ 380,989,687
--------------------------------------------------------------------------------------------------------
Telecommunications - 12.0%
Alltel Corp. 762,000 $ 49,863,375
Amdocs Ltd.* 859,210 53,217,319
American Tower Corp., "A"* 4,301,400 159,689,475
AT&T Corp., "A"* 2,432,000 107,768,000
Cabletron Systems, Inc.* 1,377,500 31,596,406
CIENA Corp.* 195,200 23,363,000
Cisco Systems, Inc.* 6,833,500 389,082,406
Comcast Corp., "A"* 4,307,600 163,150,350
Corning, Inc. 1,626,100 314,548,719
Emulex Corp.* 100,000 4,550,000
Intermedia Communications, Inc.* 27,920 698,000
JDS Uniphase Corp.* 173,000 15,224,000
Metromedia Fiber Network, Inc., "A"* 4,764,500 147,401,719
Network Solutions, Inc.* 1,052,820 155,619,956
Nextlink Communications, Inc., "A"* 799,000 55,979,938
NTL, Inc.* 1,910,025 112,810,852
Pegasus Communications Corp.* 91,800 3,763,800
Qwest Communications International, Inc.* 1,692,400 71,609,675
Sonus Networks, Inc.* 23,180 1,690,691
UnitedGlobalCom, Inc.* 519,500 24,936,000
Vignette Corp.* 60,140 1,657,609
---------------
$ 1,888,221,290
--------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.8%
AES Corp.* 3,335,200 $ 290,996,200
--------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.4%
Enron Corp. 966,900 $ 70,462,838
--------------------------------------------------------------------------------------------------------
Total U.S. Stocks $14,059,712,083
--------------------------------------------------------------------------------------------------------
Foreign Stocks - 8.5%
Bermuda - 1.2%
Global Crossing Ltd. (Telecommunications)* 7,177,900 $ 179,896,119
--------------------------------------------------------------------------------------------------------
Canada - 1.9%
Nortel Networks Corp. (Telecommunications)* 5,567,600 $ 302,390,275
--------------------------------------------------------------------------------------------------------
Finland - 0.2%
Nokia Corp., ADR (Telecommunications) 625,700 $ 32,536,400
--------------------------------------------------------------------------------------------------------
France - 0.3%
Vivendi S.A. (Business Services) 478,200 $ 51,291,976
--------------------------------------------------------------------------------------------------------
Israel - 0.6%
Check Point Software Technologies Ltd. (Computer
Software - Services)* 508,300 $ 95,496,862
--------------------------------------------------------------------------------------------------------
Japan - 0.6%
Fast Retailing Co. (Retail) 233,300 $ 99,555,488
--------------------------------------------------------------------------------------------------------
Mexico - 0.2%
Grupo Television S.A. de C.V., GDR (Entertainment)* 497,000 $ 27,676,688
--------------------------------------------------------------------------------------------------------
Netherlands - 1.3%
KPN N.V. (Telecommunications)* 543,310 $ 49,052,944
Royal Dutch Petroleum Co. (Oils) 2,587,000 159,323,466
---------------
$ 208,376,410
--------------------------------------------------------------------------------------------------------
South Korea - 0.4%
Samsung Electronics (Electronics) 221,800 $ 60,508,769
--------------------------------------------------------------------------------------------------------
Sweden - 0.5%
Telefonaktiebolaget LM Ericsson AB (Telecommunications) 4,068,300 $ 82,689,024
--------------------------------------------------------------------------------------------------------
United Kingdom - 1.3%
Vodafone AirTouch PLC (Telecommunications)* 45,668,043 $ 208,429,711
--------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 1,348,847,722
--------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $13,295,173,653) $15,408,559,805
--------------------------------------------------------------------------------------------------------
Short-Term Obligations - 3.1%
--------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
--------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
due 6/09/00 - 6/13/00 $ 100,000 $ 99,823,889
Federal National Mortgage Assn., due 6/19/00 50,000 49,841,750
General Electric Capital Corp., due 6/01/00 39,932 39,932,000
UBS Finance, Inc., due 6/01/00 300,000 300,000,000
--------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 489,597,639
--------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $13,784,771,292) $15,898,157,444
Other Assets, Less Liabilities - (0.8)% (130,212,306)
--------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $15,767,945,138
--------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------
MAY 31, 2000
-------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $13,784,771,292) $15,898,157,444
Investments of cash collateral for securities loaned,
at value (identified cost, $881,815,003) 881,815,003
Cash 5,241
Foreign currency, at value (identified cost, $5,624,950) 5,633,378
Receivable for Fund shares sold 74,248,066
Receivable for investments sold 428,074,495
Dividends and interest receivable 7,758,206
Other assets 35,183
---------------
Total assets $17,295,727,016
---------------
Liabilities:
Payable for Fund shares reacquired $ 117,823,600
Payable for investments purchased 526,819,713
Collateral for securities loaned, at value 881,815,003
Payable to affiliates -
Management fee 142,151
Shareholder servicing agent fee 42,967
Distribution and service fee 266,942
Administrative fee 1,868
Accrued expenses and other liabilities 869,634
---------------
Total liabilities $ 1,527,781,878
---------------
Net assets $15,767,945,138
===============
Net assets consist of:
Paid-in capital $12,473,783,503
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 2,113,166,084
Accumulated undistributed net realized gain on
investments and foreign currency transactions 1,216,245,712
Accumulated net investment loss (35,250,161)
---------------
Total $15,767,945,138
===============
Shares of beneficial interest outstanding 808,802,781
===========
Class A shares:
Net asset value per share
(net assets of $8,931,802,776 / 446,642,015 shares
of beneficial interest outstanding) $20.00
======
Offering price per share (100 / 94.25 of net asset
value per share) $21.22
======
Class B shares:
Net asset value and offering price per share
(net assets of $5,163,111,714 / 273,651,877 shares
of beneficial interest outstanding) $18.87
======
Class C shares:
Net asset value and offering price per share
(net assets of $1,538,850,239 / 81,827,356 shares of
beneficial interest outstanding) $18.81
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $134,180,409 / 6,681,533 shares of
beneficial interest outstanding) $20.08
======
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, 2000
-------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 29,174,696
Interest 21,321,570
Foreign taxes withheld (346,453)
--------------
Total investment income $ 50,149,813
--------------
Expenses -
Management fee $ 24,205,716
Trustees' compensation 58,118
Shareholder servicing agent fee 7,335,065
Distribution and service fee (Class A) 14,898,658
Distribution and service fee (Class B) 23,467,431
Distribution and service fee (Class C) 6,701,218
Administrative fee 207,403
Custodian fee 1,531,423
Printing 132,390
Postage 560,005
Auditing fees 16,192
Legal fees 3,719
Miscellaneous 4,814,529
--------------
Total expenses $ 83,931,867
Fees paid indirectly (1,166,798)
--------------
Net expenses $ 82,765,069
--------------
Net investment loss $ (32,615,256)
--------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $1,377,496,812
Foreign currency transactions (3,975,941)
--------------
Net realized gain on investments and foriegn currency
transactions $1,373,520,871
--------------
Change in unrealized appreciation (depreciation) -
Investments $ 49,086,995
Translation of assets and liabilities in foreign currencies (260,517)
--------------
Net unrealized gain on investments and foreign currency
translation $ 48,826,478
--------------
Net realized and unrealized gain on investments and
foreign currency $1,422,347,349
--------------
Increase in net assets from operations $1,389,732,093
==============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
(UNAUDITED)
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (32,615,256) $ (25,545,741)
Net realized gain on investments and foreign
currency transactions 1,373,520,871 1,033,471,495
Net unrealized gain on investments and foreign
currency translation 48,826,478 1,118,703,102
--------------- ---------------
Increase in net assets from operations $ 1,389,732,093 $ 2,126,628,856
--------------- ---------------
Distributions declared to shareholders -
From net investment income (Class A) $ -- $ (708,642)
From net investment income (Class I) -- (101,112)
From net realized gain on investments and foreign
currency transactions (Class A) (588,811,032) (286,212,079)
From net realized gain on investments and foreign
currency transactions (Class B) (311,509,283) (102,582,982)
From net realized gain on investments and foreign
currency transactions (Class C) (84,523,845) (21,354,752)
From net realized gain on investments and foreign
currency transactions (Class I) (8,203,833) (4,699,676)
In excess of net investment income (Class A) -- (441,814)
In excess of net investment income (Class I) -- (63,039)
--------------- ---------------
Total distributions declared to shareholders $ (993,047,993) $ (416,164,096)
--------------- ---------------
Net increase in net assets from Fund share
transactions $ 3,900,594,548 $ 5,119,071,485
--------------- ---------------
Total increase in net assets $ 4,297,278,648 $ 6,829,536,245
Net assets:
At beginning of period 11,470,666,490 4,641,130,245
--------------- ---------------
At end of period (including accumulated net
investment loss of $35,250,161 and $2,634,905,
respectively) $15,767,945,138 $11,470,666,490
=============== ===============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS -- continued
<CAPTION>
Financial Highlights
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED --------------------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(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 $19.29 $16.06 $14.68 $13.44 $12.51 $10.48
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss) $(0.02) $(0.01) $ 0.02 $ 0.01 $(0.01) $(0.01)
Net realized and unrealized gain on
investments and foreign currency 2.35 4.63 3.63 4.33 2.55 3.12
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.33 $ 4.62 $ 3.65 $ 4.34 $ 2.54 $ 3.11
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- * $(0.01) $ -- $ -- $ --
From net realized gain on investments
and foreign currency transactions (1.62) (1.39) (2.26) (3.10) (1.61) (1.08)
In excess of net investment income -- -- * -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.62) $(1.39) $(2.27) $(3.10) $(1.61) $(1.08)
------ ------ ------ ------ ------ ------
Net asset value - end of period $20.00 $19.29 $16.06 $14.68 $13.44 $12.51
====== ====== ====== ====== ====== ======
Total return(+) 12.64%++ 31.27% 30.24% 42.91% 23.87% 32.91%
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.88%+ 0.87% 0.79% 0.71% 0.72% 0.73%
Net investment income (loss) (0.18)%+ (0.08)% 0.15% 0.05% (0.05)% (0.08)%
Portfolio turnover 137% 174% 62% 93% 107% 46%
Net assets at end of period
(000,000 Omitted) $8,932 $6,802 $3,283 $1,773 $1,341 $1,180
* Per share amount was less than $0.01.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
(+) 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.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
SIX MONTHS ENDED --------------------------------------------------------------------
MAY 31, 2000 1999 1998 1997 1996 1995
(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 $18.28 $15.37 $14.23 $13.12 $12.26 $10.35
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.08) $(0.12) $(0.07) $(0.09) $(0.11) $(0.11)
Net realized and unrealized gain on
investments and foreign currency 2.22 4.42 3.47 4.21 2.51 3.10
------ ------ ------ ------ ------ ------
Total from investment operations $ 2.14 $ 4.30 $ 3.40 $ 4.12 $ 2.40 $ 2.99
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net realized gain on investments
and foreign currency transactions $(1.55) $(1.39) $(2.26) $(3.01) $(1.54) $(1.08)
------ ------ ------ ------ ------ ------
Net asset value - end of period $18.87 $18.28 $15.37 $14.23 $13.12 $12.26
====== ====== ====== ====== ====== ======
Total return 12.26%++ 30.47% 29.29% 41.77% 22.87% 32.09%
Ratios (to average net assets)/
Supplemental data:
Expenses## 1.53%+ 1.52% 1.48% 1.50% 1.61% 1.63%
Net investment loss (0.83)%+ (0.74)% (0.54)% (0.74)% (0.94)% (0.98)%
Portfolio turnover 137% 174% 62% 93% 107% 46%
Net assets at end of period
(000,000 Omitted) $5,163 $3,608 $1,081 $93 $25 $14
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, PERIOD ENDED
SIX MONTHS ENDED --------------------------- NOVEMBER 30,
MAY 31, 2000 1999 1998 1997*
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------
CLASS C
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $18.23 $15.33 $14.23 $13.98
------ ------ ------ ------
Income from investment operations# -
Net investment loss $(0.08) $(0.12) $(0.07) $(0.01)
Net realized and unrealized gain on
investments and foreign currency 2.21 4.41 3.46 0.26
------ ------ ------ ------
Total from investment operations $ 2.13 $ 4.29 $ 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 (1.55) (1.39) (2.26) --
------ ------ ------ ------
Total distributions declared to
shareholders $(1.55) $(1.39) $(2.29) $ --
------ ------ ------ ------
Net asset value - end of period $18.81 $18.23 $15.33 $14.23
====== ====== ====== ======
Total return 12.21%++ 30.49% 29.27% 1.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.53%+ 1.52% 1.48% 1.54%+
Net investment income (0.83)%+ (0.74)% (0.54)% (0.91)%+
Portfolio turnover 137% 174% 62% 93%
Net assets at end of period
(000 Omitted) $1,538,850 $965,054 $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.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, PERIOD ENDED
SIX MONTHS ENDED --------------------------- NOVEMBER 30,
MAY 31, 2000 1999 1998 1997*
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------
CLASS I
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $19.38 $16.10 $14.71 $ 9.86
------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.02 $ 0.05 $ 0.07 $ 0.03
Net realized and unrealized gain on
investments and foreign currency 2.35 4.67 3.61 4.82
------ ------ ------ ------
Total from investment operations $ 2.37 $ 4.72 $ 3.68 $ 4.85
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.03) $(0.03) $ --
From net realized gain on investments
and foreign currency transactions (1.67) (1.39) (2.26) --
In excess of net investment income -- (0.02) -- --
------ ------ ------ ------
$
Total distributions declared to
shareholders $(1.67) $(1.44) $(2.29) --
------ ------ ------ ------
Net asset value - end of period $20.08 $19.38 $16.10 $14.71
====== ====== ====== ======
Total return 12.81%++ 31.90% 30.56% 49.19%++
Ratios (to average net assets)/
Supplemental data:
Expenses## 0.53%+ 0.52% 0.49% 0.49%+
Net investment income 0.17%+ 0.28% 0.45% 0.22%+
Portfolio turnover 137% 174% 62% 93%
Net assets at end of period (000 Omitted) $134,180 $95,539 $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.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<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 a diversified open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Fund
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Securities for
which there are no such quotations or valuations are valued in good faith, at
fair value, by the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Deferred Trustee Compensation - Effective July 24, 1999, under a Deferred
Compensation Plan (the Plan) independent Trustees may elect to defer receipt
of all or a portion of their annual compensation. Deferred amounts are treated
as though equivalent dollar amounts had been invested in shares of the Fund or
other MFS funds selected by the Trustee. Deferred amounts represent an
unsecured obligation of the fund until distributed in accordance with the
Plan.
Security Loans - State Street Bank and Trust Company ("State Street") and
Chase Manhattan Bank ("Chase"), as lending agents, may loan the securities of
the Fund to certain qualified institutions (the "Borrowers") approved by the
Fund. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street and Chase provide the Fund with indemnification against
Borrower default. The Fund bears the risk of loss with respect to the
investment of cash collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the Fund and the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the Fund and the lending agents. Income
from securities lending is included in interest income on the Statement of
Operations. The dividend and interest income earned on the securities loaned
is accounted for in the same manner as other dividend and interest income.
At May 31, 2000, the value of securities loaned was $870,862,988. These loans
were collateralized by U.S. Treasury securities of $13,851,060 and cash of
$881,815,003 which was invested in the following short-term obligations:
SHARES/ AMORTIZED COST
PRINCIPAL AMOUNT AND VALUE
--------------------------------------------------------------------------------
Bayerische und Vereinsbank, 6.26%, due 7/20/00 $ 2,000,000 $ 1,998,924
Old Line Funding Corp., 6.29%, due 6/01/00 1,561,000 1,561,000
Salomon Smith Barney, Inc., 6.55%, due 6/01/00 5,344,191 5,344,191
Salomon Smith Barney, Inc., 6.57%, due 6/01/00 20,000,000 20,000,000
Navigator Securities Lending Prime Portfolio 852,910,888 852,910,888
------------
Total investments of cash collateral for
securities loaned $881,815,003
============
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 has entered into a directed brokerage
agreement, under which the broker will credit the Fund a portion of the
commissions generated, to offset certain expenses of the Fund. For the period,
the Fund's custodian fees were reduced by $1,166,798 under this agreement.
This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only those distributions in excess of tax basis earnings and profits
are reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits, which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates
are generally due to differences in separate class expenses. Class B shares
will convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at 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. Included in
Trustees' compensation is a net periodic pension expense of $19,548 for the
six months ended May 31, 2000.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund incurs an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$2,959,154 for the six months ended May 31, 2000, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, 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. MFD retains the service fee for
accounts not attributable to a securities dealer, which amounted to $905,363
for the six months ended May 31, 2000. Fees incurred under the distribution
plan during the six months ended May 31, 2000, 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 $42,468 and $7,604 for
Class B and Class C shares, respectively, for the six months ended May 31,
2000. Fees incurred under the distribution plan during the six months ended
May 31, 2000, 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,
2000, were $30,270, $3,569,746, and $222,230 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 annual rate of 0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
--------------------------------------------------------------------------------
U.S. government securities $ 182,701,715 $ 79,323,330
--------------- ---------------
Investments (non-U.S. government securities) $22,123,390,465 $19,166,411,741
--------------- ---------------
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 $13,784,771,292
---------------
Gross unrealized appreciation $ 2,513,108,880
Gross unrealized depreciation (399,722,728)
---------------
Net unrealized appreciation $ 2,113,386,152
===============
(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, 2000 YEAR ENDED NOVEMBER 30, 1999
----------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 413,383,185 $8,491,349,488 450,240,892 $7,750,377,097
Shares issued to shareholders
in reinvestment of
distributions 24,114,451 453,841,962 13,626,740 204,171,579
----------- -------------- ----------- --------------
Net increase 94,094,327 $1,849,386,153 148,095,299 $2,445,305,222
=========== ============== =========== ==============
<CAPTION>
Class B Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
----------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 83,396,896 $1,624,523,972 143,402,660 $2,314,027,813
Shares issued to shareholders
in reinvestment of
distributions 14,880,641 265,026,055 6,060,402 86,547,104
Shares reacquired (21,984,030) (429,060,919) (22,415,571) (365,816,542)
----------- -------------- ----------- --------------
Net increase 76,293,507 $1,460,489,108 127,047,491 $2,034,758,375
=========== ============== =========== ==============
<CAPTION>
Class C Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
----------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 39,124,713 $ 759,508,864 48,836,329 $ 786,078,490
Shares issued to shareholders
in reinvestment of
distributions 3,472,005 61,628,711 988,784 14,085,135
Shares reacquired (13,706,812) (266,283,371) (11,449,264) (186,635,739)
----------- -------------- ----------- --------------
Net increase 28,889,906 $ 554,854,204 38,375,849 $ 613,527,886
=========== ============== =========== ==============
<CAPTION>
Class I Shares
SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999
----------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,494,333 $ 73,920,539 1,882,532 $ 31,864,895
Shares issued to shareholders
in reinvestment of
distributions 358,499 6,764,882 266,753 3,995,963
Shares reacquired (2,100,005) (44,820,338) (599,517) (10,380,856)
----------- -------------- ----------- --------------
Net increase 1,752,827 $ 35,865,083 1,549,768 $ 25,480,002
=========== ============== =========== ==============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $1.1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended May
31, 2000, was $56,401. The Fund had no borrowings during the period.
<PAGE>
<TABLE>
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
<S> <C>
TRUSTEES SECRETARY
J. Atwood Ives - Chairman and Chief Executive Stephen E. Cavan*
Officer, Eastern Enterprises (diversified
services company) ASSISTANT SECRETARY
James R. Bordewick, Jr.*
Lawrence T. Perera - Partner, Hemenway
& Barnes (attorneys) CUSTODIAN
State Street Bank and Trust Company
William J. Poorvu - Adjunct Professor, Harvard
University Graduate School of Business INVESTOR INFORMATION
Administration For information on MFS mutual funds, call your
investment professional or, for an information
Charles W. Schmidt - Private Investor kit, call toll free: 1-800-637-2929 any
business day from 9 a.m. to 5 p.m. Eastern time
Arnold D. Scott* - Senior Executive (or leave a message anytime).
Vice President, Director, and Secretary,
MFS Investment Management INVESTOR SERVICE
MFS Service Center, Inc.
Jeffrey L. Shames* - Chairman and Chief P.O. Box 2281
Executive Officer, 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 8 a.m. to
David B. Stone - Chairman, North American 8 p.m. Eastern time.
Management Corp. (investment adviser)
For service to speech- or hearing-impaired,
INVESTMENT ADVISER call toll free: 1-800-637-6576 any business day
Massachusetts Financial Services Company from 9 a.m. to 5 p.m. Eastern time. (To use
500 Boylston Street this service, your phone must be equipped with
Boston, MA 02116-3741 a Telecommunications Device for the Deaf.)
DISTRIBUTOR For share prices, account balances, exchanges,
MFS Fund Distributors, Inc. or stock and bond outlooks, call toll free:
500 Boylston Street 1-800-MFS-TALK (1-800-637-8255) anytime from a
Boston, MA 02116-3741 touch-tone telephone.
CHAIRMAN AND PRESIDENT World Wide Web
Jeffrey L. Shames* www.mfs.com
PORTFOLIO MANAGERS
Thomas D. Barrett*
Stephen Pesek*
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
+Independent Trustee
*MFS Investment Management
</TABLE>
<PAGE>
MASSACHUSETTS INVESTORS ------------
GROWTH STOCK FUND BULK RATE
U.S. POSTAGE
[Logo] M F S(R) PAID
INVESTMENT MANAGEMENT MFS
We invented the mutual fund(R) ------------
500 Boylston Street
Boston, MA 02116-3741
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MIG-3 7/00 861M 13/213/313/813
