<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MASSACHUSETTS
INVESTORS GROWTH
STOCK FUND
ANNUAL REPORT o NOVEMBER 30, 1999
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MUTUAL FUND GIFT KITS (see page 35)
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<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Performance Summary ....................................................... 9
Portfolio of Investments .................................................. 13
Financial Statements ...................................................... 19
Notes to Financial Statements ............................................. 26
Independent Auditors' Report .............................................. 32
MFS' Year 2000 Readiness Disclosure ....................................... 34
Trustees and Officers ..................................................... 37
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,
One could easily argue that the Internet represents the greatest technological
development most of us may see in our lifetimes. There is no disputing that this
new communication medium is changing forever the way we work, play, and shop.
One might also argue that investing in this new technology represents the
investment opportunity of a lifetime. The question for any investor is whether
and how to take advantage of it.
The popular press, it seems, would have us believe that by surfing the Web, we
can learn everything we need to know about investing. Indeed, there is no doubt
that Internet-delivered information and brokerage services enable individual
investors to be well-informed and to trade at bargain prices. But we believe the
numbers and facts argue that, for most of us, mutual funds purchased through a
financial professional will continue to be one of the best products for
long-term investing in this new millennium.
According to a survey by the Investment Company Institute, a national
association of American investment companies, 44% of American households own
stock or bond mutual funds, while only 25.5% own individual stocks.(1) Of course
that doesn't tell us how well they did owning those funds or stocks, but another
statistic gives us a clue. In the third quarter of 1999, during a period of
volatility in the greatest bull market in history, a quarter of the 7,500 stocks
tracked by Morningstar, a popular rating service, lost more than 20% of their
value. But during the same period, less than 1% of the mutual funds tracked by
Morningstar -- 6 out of 10,000 funds -- were down by a similar amount.(2) So,
with all things being equal, an investor's chance of picking one of those losing
stocks was about 25 times greater than his or her chance of picking an equally
losing fund.
The numbers also show that a majority of Americans seek professional advice when
buying mutual funds. Outside of employer-sponsored retirement plans,
approximately 68% of fund shareholders state that their primary method of
purchasing shares is through a financial professional.(1)
Why do we at MFS(R) believe that mutual funds plus professional advice will
continue to define the best course of action for many investors? Let's look at
some of the characteristics of a successful long-term investment approach:
o HAVING A PLAN AND STICKING TO IT: Our experience is that successful
investors -- those whose lives are enriched by the fruits of their investing
-- share two characteristics. They have a plan for reaching their monetary
goals, and they stick with that plan through up markets and down ones. And
for many investors, working with a financial professional may be the best
way to develop a plan. Although the Internet abounds with calculators for
developing all sorts of investment plans, none has your broker or
consultant's high level of experience and an understanding of your unique
situation. And no calculator can counsel you during a down market, when you
may be tempted to abandon your goals and your plan.
o DIVERSIFICATION: Few investors can afford to own a large number of holdings,
so poor performance of one company can potentially drag down their entire
portfolio. This is especially true when investing in volatile new areas such
as the Internet. On the other hand, a diversified mutual fund that owns
dozens or even hundreds of holdings is better positioned to survive a
disappointment in one or several investments.
o GOOD IN A DOWN MARKET: As we enter the tenth year of the greatest bull
market in history, it's easy to forget that market downturns are an almost
inevitable part of investing. Few mutual funds, of course, are going to be
up when the overall market is down. But as the numbers above from the third
quarter of 1999 demonstrate, mutual funds may be less likely to suffer the
extreme downturns experienced by a large number of individual holdings when
the market heads south.
o MFS ORIGINAL RESEARCH(R): The Internet is one of the greatest research tools
ever invented, but it's still not the same as being eyeball to eyeball with
the management of a company and discussing their plans for their firm's
future.
o GOOD PERFORMANCE AT AN ACCEPTABLE LEVEL OF RISK: Investing in individual
stocks or bonds does indeed offer the potential of exhilarating performance
that few mutual funds even attempt. The downside is that the most exciting
investments are also likely to be the ones that give you sleepless nights.
The diversification and professional management of mutual funds help make
them inherently less risky than individual stock picking, and funds are
available in a wide range of risk profiles.
We believe that now, more than ever, mutual funds sold by an investment
professional may offer many investors the best way to participate in whatever
investment opportunities the new millennium may bring. The combination of
professional portfolio management and professional advice recognizes the key
reason that investors give us their money: because they don't want to make a
hobby or a second profession out of investing; they simply want their money to
work for them so they have a better likelihood of realizing their dreams.
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)
December 15, 1999
(1) Source: Investment Company Institute.
(2) Source: Morningstar CEO Don Phillips' keynote address at The Baltimore Sun's
Dollars and Sense Conference, 10/99. In the period 7/1/99 through 9/ 30/99,
of the 7,500 stocks tracked by Morningstar, 1,865 lost 20% or more; of the
10,000 mutual funds tracked by Morningstar, six lost 20% or more. Mutual
fund results are at net asset value; if sales charges had been reflected,
results would have been lower.
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
[Photo of Stephen Pesek]
Stephen Pesek
For the 12 months ended November 30, 1999, Class A shares of the Fund provided a
total return of 31.27%, Class B shares 30.47%, Class C shares 30.49%, and Class
I shares 31.90%. These returns include the reinvestment of any distributions but
exclude the effects of any sales charges.
During the same period, the average growth fund tracked by Lipper Analytical
Services, Inc., an independent firm that reports mutual fund performance,
returned 27.23%. The Fund's returns also compare to a 20.90% 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. OVER THE PAST 12 MONTHS, SHARES OF THE PORTFOLIO ARE UP MORE THAN THE S&P
500. HOW DID YOU OUTPERFORM THE INDEX?
A. Our holdings in the technology and leisure sectors were major factors in our
strong performance. This is a growth stock portfolio, so we focus on areas
in which we're seeing powerful global trends, and we try to invest in the
companies that we feel will benefit from those trends. When we look for
growth industries today, technology is first on our list.
Even some of our top holdings in the leisure sector, such as Time Warner, we
think could be considered technology plays. We believe the prime driver of
Time Warner's earnings in the next few years will be their cable business.
The cable industry looks to be on the cusp of a wonderful new product cycle
in which they'll deliver Internet access, digital services, and telephone
service to the home, and we think this could accelerate growth at Time
Warner.
Q. LOOKING AT YOUR TOP 10 HOLDINGS, IT SEEMS A MAJORITY ARE INTERNET RELATED;
YET NONE ARE THE HIGHLY VISIBLE "DOT.COM" COMPANIES. WHY?
A. We're approaching the Internet from a couple of directions. First, we
believe the Internet is fundamentally changing everybody's business, and
we're looking for companies that we believe understand this and will profit
from it. General Electric, for example, our third-largest holding, has an
internal program called D.Y.O.B. -- Destroy Your Own Business. They're
challenging executives to rethink their entire business strategies, in terms
of using the Internet to lower the costs of manufacturing, distribution, and
communications, and improve GE's connections with its customers.
Second, looking at the Internet itself, we don't think the real
opportunities over the next five years are going to be the Internet sites.
We think the long-term beneficiaries of the Internet will be the companies
that build its infrastructure. Every "dot.com" company needs infrastructure,
even if the site itself ultimately fails. We believe top portfolio holdings
like Sun Microsystems, a key manufacturer of the servers used to store all
the information for the Internet, may be right in the crosshairs of the
Internet explosion. Cisco Systems builds the plumbing for the Internet, the
routers and switches that carry the data. Our research has led us to believe
these companies and others like them exhibit the qualities we look for in a
long-term investment: sustainable competitive advantage, quality management
team, potential for high earnings growth, and reasonable stock valuation.
Q. IN ADDITION TO INTERNET-RELATED COMPANIES, WHAT OTHER TECHNOLOGY AREAS ARE
IMPORTANT THEMES IN THE FUND?
A. One of the things we look for is situations where demand is growing faster
than supply. In that respect, we think the wireless communications business
is on fire right now. Our research indicates that global demand for wireless
phones exceeds the ability of the producers to manufacture them. What's
important is to determine who might benefit from that, and who could lose --
and that's where we feel our research team gives us an edge.
According to our research, wireless handset manufacturers currently can't
get enough parts to make phones. When supplies are tight, the component
suppliers ship to their tier-one companies first. They don't want to lose a
Nokia or a Motorola as a customer, but they can afford to lose a third-level
handset manufacturer. So the component shortage squeezes the smaller handset
makers out of the business, and the bigger ones increase their share of the
pie.
Globally, we own positions in cellular carriers such as Mannesmann in
Germany, NTT Mobile Communications Network in Japan, and Sprint PCS in the
United States; tier-one cellular phone manufacturers like Nokia, Ericsson,
and Motorola; and companies like Analog Devices that are suppliers to phone
manufacturers. So we're really soup to nuts in companies that we feel should
profit from tremendous growth in the cellular phone business over the next
few years. This is a case in point of our research analysts spotting a
global trend and identifying which companies they think will be the
beneficiaries.
Q. SPEAKING OF RESEARCH, COULD YOU DESCRIBE HOW MFS ORIGINAL RESEARCH(R) WORKS
IN CHOOSING INVESTMENTS FOR THE FUND?
A. You might think of our research process as looking for several points of
view that all converge on a strong outlook for a given company. Take
Corning, for example. They are the world's largest producer of fiber-optic
cable. Internet traffic is placing enormous demands on the global
communications infrastructure, and switching from traditional copper wire to
fiber-optics is one of the solutions. Corning dominates that business.
So last summer we visited their headquarters in Corning, New York and
interviewed the managements of all their divisions. The company projects
that demand for fiber-optic cable will outstrip supply over the next couple
of years, and they're the only firm with a new cable plant coming on line.
At the same time, our telecommunications analyst was noting that the
companies he covered were talking about spending a lot of money to upgrade
systems to fiber optics, so we had corroborating evidence that demand for
Corning's basic product was good. Our anaylsts in Europe were seeing the
same trend, and Corning had won some big contracts in Europe. So all the
evidence -- our telecom analyst, our European analysts, and our personal
contact with the company's management -- converged on Corning as a company
with a strong outlook, and therefore we decided it was a good choice for the
portfolio.
Q. COULD YOU DISCUSS CHANGES IN THE FUND SINCE YOU TOOK OVER AS PORTFOLIO
MANAGER IN FEBRUARY?
A. When I took over the Fund, we were heavy in the consumer-oriented, domestic,
stable growth stocks that had been very successful for the past four years.
In particular, we held large positions in supermarkets, drugstore chains, and
some financial companies. What happened during 1999 was a market rotation
away from those kinds of stocks. Whereas the market had been favoring the
"steady Eddies," the large, well-known companies with predictable earnings,
investors began to perceive that those companies had become overvalued, and
the cyclical companies, those that perform best in an expanding economy, came
back into favor -- particularly in the technology sector.
In addition, there were some problems with big companies in areas that
previously had been in favor. Shares in Rite Aid, a drugstore company,
plummeted on news of accounting irregularities. We sold our shares of Rite
Aid from the Fund. But Rite Aid's poor performance dragged down the entire
category, including CVS, a drugstore chain that we still believe has good
fundamentals. Similarly, the supermarket category was affected by problems
at Albertson's, a West Coast chain that had problems integrating another
chain it had acquired. Although we did not hold Albertson's in the
portfolio, their poor performance hurt our holdings in Safeway and Kroger.
/s/ Stephen Pesek
Stephen Pesek
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and are
current only through the end of the period of the report as stated on the cover.
The manager's views are subject to change at any time based on market and other
conditions, and no forecasts can be guaranteed.
<PAGE>
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PORTFOLIO MANAGER'S PROFILE
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STEPHEN PESEK IS SENIOR VICE PRESIDENT OF MFS INVESTMENT MANAGEMENT(R) AND
PORTFOLIO MANAGER OF MASSACHUSETTS INVESTORS GROWTH STOCK FUND AND THE
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES OFFERED THROUGH MFS(R)/ SUN LIFE
ANNUITY PRODUCTS. HE IS ALSO A PORTFOLIO MANAGER OF MFS(R) INSTITUTIONAL LARGE
CAP GROWTH FUND, MFS(R) STRATEGIC 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.
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 consultant, 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: $11.5 BILLION NET ASSETS AS OF NOVEMBER 30, 1999
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.) It is not possible to invest directly
in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the 10-year period ended November 30, 1999)
Massachusetts
Investors Standard & Poor's
Growth Stock Fund 500 Composite
- Class A Index
- --------------------------------------------------
11/89 $ 9,425 $10,000
11/91 11,555 11,617
11/93 15,644 15,152
11/95 19,753 20,973
11/97 34,969 34,463
11/99 59,784 51,523
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
THROUGH NOVEMBER 30, 1999
<TABLE>
<CAPTION>
CLASS A
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +31.27% +144.33% +302.25% +534.31%
- ----------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +31.27% + 34.69% + 32.10% + 20.29%
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Average Annual Total Return Including Sales Charge +23.72% + 32.05% + 30.54% + 19.58%
- ----------------------------------------------------------------------------------------
<CAPTION>
CLASS B
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +30.47% +139.16% +288.14% +504.88%
- ----------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +30.47% + 33.73% + 31.16% + 19.72%
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Average Annual Total Return Including Sales Charge +26.47% + 33.17% + 31.02% + 19.72%
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<CAPTION>
CLASS C
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +30.49% +141.03% +296.82% +525.76%
- ----------------------------------------------------------------------------------------
Average Annual Total Return Excluding Sales Charge +30.49% + 34.08% + 31.74% + 20.13%
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Average Annual Total Return Including Sales Charge +29.49% + 34.08% + 31.74% + 20.13%
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<CAPTION>
CLASS I
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Cumulative Total Return Excluding Sales Charge +31.90% +146.60% +305.99% +540.22%
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Average Annual Total Return Excluding Sales Charge +31.90% + 35.10% + 32.34% + 20.40%
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<CAPTION>
COMPARATIVE INDICES(+)
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Average growth fund+ +27.23% + 20.72% + 22.97% + 15.68%
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Standard & Poor's 500 Composite Index# +20.90% + 24.32% + 27.47% + 17.81%
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+ Source: Lipper Analytical Services, Inc.
(+) Average annual rates of return.
# Source: Standard & Poor's Micropal, Inc.
</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 includes 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 dividends and capital gains.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO CONCENTRATION AS OF NOVEMBER 30, 1999
FIVE LARGEST STOCK SECTORS
TECHNOLOGY 38.1%
LEISURE 12.5%
UTILITIES & COMMUNICATIONS 11.8%
FINANCIAL SERVICES 8.5%
HEALTH CARE 8.4%
TOP 10 STOCK HOLDINGS
<TABLE>
<S> <C>
MICROSOFT CORP. 3.7% SUN MICROSYSTEMS, INC. 1.9%
Computer software and systems company Computer systems company
CISCO SYSTEMS, INC. 3.1% INFINITY BROADCASTING CORP. 1.8%
Computer network developer Radio station operator and outdoor advertising
company
GENERAL ELECTRIC CO. 2.9%
Diversified manufacturing and financial services CORNING, INC. 1.7%
conglomerate Materials and equipment supplier to
communications industries
MCI WORLDCOM, INC. 2.4%
Telecommunications company TIME WARNER, INC. 1.7%
Publishing and entertainment company
TYCO INTERNATIONAL LTD. 2.2%
Security systems, packaging, and electronic ORACLE CORP. 1.6%
equipment conglomerate Database software developer and manufacturer
</TABLE>
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO OF INVESTMENTS -- November 30, 1999
Stocks - 95.2%
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ISSUER SHARES VALUE
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U.S. Stocks - 86.2%
Advertising - 1.3%
Interpublic Group of Cos, Inc. 641,200 $ 30,136,400
Lamar Advertising Co., "A"* 100,000 5,737,500
Outdoor Systems, Inc.* 741,700 33,005,650
Young & Rubicam, Inc. 1,489,400 77,728,062
---------------
$ 146,607,612
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Automotive
Harley-Davidson, Inc. 100,000 $ 6,100,000
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Biotechnology - 0.9%
Guidant Corp.* 1,197,300 $ 59,865,000
Merrill Lynch Biotech Holding Company
Depository Receipts* 100,000 10,325,000
Waters Corp.* 684,400 33,535,600
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$ 103,725,600
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Broadcasting - 0.5%
Radio One, Inc.* 59,300 $ 3,747,019
Spanish Broadcasting Systems, Inc.* 849,150 26,960,512
Westwood One, Inc.* 394,400 22,579,400
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$ 53,286,931
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Business Machines - 2.8%
Affiliated Computer Services, Inc., "A"* 1,542,970 $ 57,764,939
Sun Microsystems, Inc.* 1,545,600 204,405,600
Texas Instruments, Inc. 655,800 62,997,788
---------------
$ 325,168,327
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Business Services - 2.5%
BEA Systems, Inc.* 200,000 $ 16,250,000
Ceridian Corp.* 3,069,300 66,373,612
Computer Sciences Corp.* 1,177,245 76,815,236
Concord EFS, Inc.* 313,600 8,310,400
Finisar Corp*. 17,030 1,962,708
First Data Corp. 2,588,300 111,943,975
---------------
$ 281,655,931
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Cellular Telephones - 0.8%
Sprint Corp. (PCS Group)* 1,035,100 $ 94,970,425
TeleCorp PCS, Inc.* 22,280 803,472
---------------
$ 95,773,897
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Computer Software - Services - 1.1%
EMC Corp.* 1,346,300 $ 112,500,194
Intertrust Technologies Corp.* 13,700 1,761,306
Real Networks, Inc.* 125,900 17,563,050
---------------
$ 131,824,550
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Computer Software - Systems - 11.8%
Ancor Communications Inc.* 198,800 $ 12,052,250
BMC Software, Inc.* 1,767,300 128,681,531
Cadence Design Systems, Inc.* 1,908,000 33,867,000
Computer Associates International, Inc. 2,573,300 167,264,500
Compuware Corp.* 5,150,800 174,161,425
Crossroads Systems, Inc.* 23,900 2,107,681
Emulex Corporation* 151,200 24,570,000
Intuit, Inc.* 100,000 5,000,000
JNI Corp.* 11,975 938,541
Microsoft Corp.* 4,438,200 404,084,241
Open TV Corp.* 16,550 1,278,488
Oracle Corp.* 2,650,000 179,703,125
Siebel Systems, Inc.* 562,300 39,431,287
SunGard Data Systems, Inc.* 2,050,000 45,612,500
Synopsys, Inc.* 212,200 15,357,975
VERITAS Software Corp.* 1,331,400 121,906,312
Vitria Technology, Inc.* 13,975 1,394,880
---------------
$ 1,357,411,736
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Conglomerates - 2.1%
Tyco International Ltd. 5,944,500 $ 238,151,531
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Consumer Goods and Services - 0.3%
Clorox Co. 506,200 $ 22,557,538
Gillette Co. 200,000 8,037,500
---------------
$ 30,595,038
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Containers - 0.1%
Sealed Air Corp.* 294,800 $ 13,855,600
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Electrical Equipment - 2.7%
General Electric Co. 2,398,600 $ 311,818,000
- ---------------------------------------------------------------------------
Electronics - 7.7%
Agilent Technologies, Inc.* 141,410 $ 5,965,735
Altera Corp.* 1,363,100 73,437,013
Analog Devices, Inc.* 1,555,500 89,344,031
Applied Materials, Inc.* 723,900 70,535,006
Atmel Corp.* 2,522,100 113,021,606
Conexant Systems, Inc.* 200,000 11,850,000
Flextronics International Ltd.* 500,000 41,468,750
Intel Corp. 1,663,100 127,538,981
LSI Logic Corp.* 2,149,100 129,886,231
National Semiconductor Corp.* 2,445,600 103,938,000
Novellus Systems, Inc.* 926,300 76,072,388
Sawtek, Inc.* 200,000 9,125,000
Teradyne, Inc.* 708,100 30,846,606
---------------
$ 883,029,347
- ---------------------------------------------------------------------------
Entertainment - 8.1%
AMFM, Inc.* 609,200 $ 43,062,825
CBS Corp.* 2,827,701 147,040,452
Clear Channel Communications, Inc.* 454,000 36,490,250
Comcast Corp., "A" 2,112,700 95,467,631
Cox Radio, Inc., "A"* 157,500 11,970,000
Emmis Broadcasting Corp., "A"* 50,700 4,106,700
Harrah's Entertainment, Inc.* 505,264 13,957,918
Infinity Broadcasting Corp.* 5,340,400 194,590,825
Macromedia, Inc.* 524,000 34,453,000
MediaOne Group, Inc.* 1,484,200 117,622,850
Time Warner, Inc. 2,928,600 180,658,013
Univision Communications, Inc., "A"* 520,100 45,508,750
---------------
$ 924,929,214
- ---------------------------------------------------------------------------
Financial Institutions - 5.0%
American Express Co. 420,800 $ 63,672,300
Associates First Capital Corp., "A" 1,300,000 43,225,000
Citigroup, Inc. 2,734,400 147,315,800
Morgan Stanley Dean Witter & Co. 1,066,000 128,586,250
Providian Financial Corp. 650,000 51,431,250
State Street Corp. 1,829,500 134,353,906
---------------
$ 568,584,506
- ---------------------------------------------------------------------------
Insurance - 3.0%
American International Group, Inc. 1,588,075 $ 163,968,743
Aon Corp. 1,524,500 54,405,594
CIGNA Corp. 1,062,200 87,365,950
Lincoln National Corp. 1,000,000 41,687,500
---------------
$ 347,427,787
- ---------------------------------------------------------------------------
Internet - 1.2%
Akamai Technologies, Inc.* 19,175 $ 4,544,475
Alteon Websystems, Inc.* 9,500 916,750
America Online, Inc.* 1,095,500 79,629,156
CacheFlow, Inc.* 15,960 2,417,940
VeriSign, Inc.* 175,975 32,698,355
Yahoo, Inc.* 100,000 21,275,000
---------------
$ 141,481,676
- ---------------------------------------------------------------------------
Medical and Health Products - 4.9%
American Home Products Corp. 1,824,000 $ 94,848,000
Bausch & Lomb, Inc. 1,488,800 81,604,850
Bristol-Myers Squibb Co. 1,800,000 131,512,500
Johnson & Johnson Co. 439,300 45,577,375
Pharmacia & Upjohn, Inc. 1,980,200 108,292,188
Warner-Lambert Co. 1,073,900 96,315,406
---------------
$ 558,150,319
- ---------------------------------------------------------------------------
Medical and Health Technology and
Services - 1.9%
Medtronic, Inc. 4,300,000 $ 167,162,500
United Healthcare Corp. 1,092,100 56,720,944
---------------
$ 223,883,444
- ---------------------------------------------------------------------------
Oil Services - 1.2%
Cooper Cameron Corp.* 868,900 37,254,087
Halliburton Co. 759,800 29,394,763
Noble Drilling Corp.* 1,307,700 36,452,137
Schlumberger Ltd. 534,800 32,121,425
---------------
$ 135,222,412
- ---------------------------------------------------------------------------
Oils - 0.7%
Conoco, Inc. 2,866,200 $ 75,058,613
- ---------------------------------------------------------------------------
Photographic Products - 0.1%
Polaroid Corp. 367,000 $ 7,064,750
- ---------------------------------------------------------------------------
Printing and Publishing - 0.3%
Tribune Co. 705,400 $ 33,903,288
- ---------------------------------------------------------------------------
Restaurants and Lodging
Wendy's International, Inc. 60,025 $ 1,324,302
- ---------------------------------------------------------------------------
Special Products and Services - 0.6%
Royal Caribbean Cruises Ltd. 1,503,900 $ 74,255,063
- ---------------------------------------------------------------------------
Stores - 4.0%
Abercrombie & Fitch Co.* 731,600 $ 23,685,550
Circuit City Stores, Inc. 556,300 26,980,550
Costco Wholesale Corp.* 673,300 61,733,194
CVS Corp. 1,991,390 79,033,291
Gap, Inc. 411,100 16,649,550
Lowe's Cos., Inc. 1,788,800 89,104,600
Office Depot, Inc.* 3,428,500 38,142,062
TJX Cos., Inc. 1,000,000 26,187,500
Wal-Mart Stores, Inc. 1,725,100 99,408,887
---------------
$ 460,925,184
- ---------------------------------------------------------------------------
Supermarkets - 1.6%
Kroger Co.* 5,298,800 $ 112,930,675
Safeway, Inc.* 1,783,900 65,781,312
---------------
$ 178,711,987
- ---------------------------------------------------------------------------
Telecommunications - 17.2%
Alltel Corp. 979,200 $ 84,700,800
Amdocs Ltd.* 640,610 22,541,464
American Tower Corp., "A"* 2,019,100 52,748,988
AT&T Corp.* 1,835,100 76,730,119
Cablevision Systems Corp.* 436,100 29,900,106
Cisco Systems, Inc.* 3,805,400 339,394,112
Comverse Technology, Inc.* 220,100 26,604,588
Corning, Inc. 2,027,700 189,970,144
General Instrument Corp.* 2,537,700 166,219,350
Global TeleSystems Group, Inc.* 1,009,100 32,228,131
GTE Corp. 382,900 27,951,700
JDS Uniphase Corp.* 148,200 33,900,750
MCI WorldCom, Inc.* 3,173,500 262,408,781
Metromedia Fiber Network, Inc., "A"* 423,650 16,416,438
Motorola, Inc. 799,900 91,388,575
Network Solutions, Inc.* 336,400 50,123,600
NEXTEL Communications, Inc.* 1,142,800 113,280,050
Nortel Networks Corp. 1,800,000 133,200,000
QUALCOMM, Inc.* 216,300 78,368,194
RF Micro Devices, Inc.* 407,900 27,711,706
Scientific-Atlanta, Inc. 808,400 47,139,825
Telephone & Data Systems, Inc. 139,100 18,526,381
Tellabs, Inc.* 821,899 53,320,698
---------------
$ 1,974,774,500
- ---------------------------------------------------------------------------
Utilities - Electric - 1.8%
AES Corp.* 2,733,000 $ 158,343,187
Calpine Corp.* 755,900 44,598,100
---------------
$ 202,941,287
- ---------------------------------------------------------------------------
Total U.S. Stocks $ 9,887,642,432
- ---------------------------------------------------------------------------
Foreign Stocks - 9.0%
Canada - 0.2%
BCE, Inc. (Telecommunications) 401,600 27,158,200
- ---------------------------------------------------------------------------
Finland - 1.5%
Nokia Corp., ADR (Telecommunications) 1,227,700 $ 169,652,794
- ---------------------------------------------------------------------------
France - 0.4%
Bouygues S.A. (Construction) 88,522 $ 40,843,109
- ---------------------------------------------------------------------------
Germany - 1.2%
Mannesmann AG (Conglomerate) 665,700 $ 138,417,293
- ---------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications) 5,386,000 $ 28,781,741
- ---------------------------------------------------------------------------
Japan - 2.6%
Fast Retailing Co. (Retail) 205,000 $ 76,560,197
Hitachi Ltd. (Electronics) 2,437,000 33,770,712
Nippon Telephone & Telegraph Co.
(Utilities - Telephone) 4,645 83,541,523
NTT Mobile Communications Network, Inc.
(Telecommunications) 2,471 86,940,344
Orix Corp. (Financial Services) 101,000 16,497,494
---------------
$ 297,310,270
- ---------------------------------------------------------------------------
Netherlands - 0.4%
Akzo Nobel N.V. (Chemicals) 1,193,600 $ 51,103,406
- ---------------------------------------------------------------------------
Singapore - 0.1%
Chartered Semiconductor Manufacturing
Co., ADR (Electronics)* 313,200 $ 16,677,900
- ---------------------------------------------------------------------------
Sweden - 0.7%
Ericsson LM, "B" (Telecommunications) 1,615,500 $ 78,371,604
- ---------------------------------------------------------------------------
Switzerland - 0.5%
Nestle S.A. (Food and Beverage Products) 32,378 $ 58,302,401
- ---------------------------------------------------------------------------
United Kingdom - 1.1%
BP Amoco PLC, ADR (Oils) 1,513,400 $ 92,222,813
Shire Pharmaceuticals Group PLC (Medical
and Health Technology and Services)* 1,162,400 35,671,150
---------------
$ 127,893,963
- ---------------------------------------------------------------------------
Total Foreign Stocks $ 1,034,512,681
- ---------------------------------------------------------------------------
Total Stocks (Identified Cost, $8,857,855,956) $10,922,155,113
- ---------------------------------------------------------------------------
Short-Term Obligations - 6.5%
- ---------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ---------------------------------------------------------------------------
Associates Corp. of North America,
due 12/01/99 $100,000 $ 100,000,000
Federal Home Loan Bank, due 1/26/00 75,000 74,347,833
Federal Home Loan Mortgage Corp.,
due 12/01/99 - 1/13/00 401,300 400,221,053
Federal National Mortgage Assn.,
due 12/13/99 - 12/20/99 174,400 174,021,557
- ---------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 748,590,443
- ---------------------------------------------------------------------------
Total Investments (Identified Cost, $9,606,446,399) $11,670,745,556
Other Assets, Less Liabilities - (1.7)% (200,079,066)
- ---------------------------------------------------------------------------
Net Assets - 100.0% $11,470,666,490
- ---------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
NOVEMBER 30, 1999
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $9,606,446,399) $11,670,745,556
Investment of cash collateral for securities loaned, at
value (identified cost, $1,020,023,237) 1,020,023,237
Cash 76,609
Receivable for Fund shares sold 37,746,445
Receivable for investments sold 161,346,216
Interest and dividends receivable 4,307,811
Other assets 35,185
---------------
Total assets $12,894,281,059
---------------
Liabilities:
Payable for foreign currency, at value
(identified cost, $189) $ 187
Payable for Fund shares reacquired 46,278,254
Payable for investments purchased 355,384,760
Collateral for securities loaned, at value 1,020,023,237
Payable to affiliates -
Management fee 321,226
Shareholder servicing agent fee 97,233
Distribution and service fee 585,665
Accrued expenses and other liabilities 924,007
---------------
Total liabilities $ 1,423,614,569
---------------
Net assets $11,470,666,490
===============
Net assets consist of:
Paid-in capital $ 8,573,188,955
Unrealized appreciation on investments and translation
of asset and liabilities in foreign currencies 2,064,339,606
Accumulated undistributed net realized gain on
investments and foreign currency transactions 835,772,834
Accumulated net investment loss (2,634,905)
---------------
Total $11,470,666,490
===============
Shares of beneficial interest outstanding 607,772,214
===========
Class A shares:
Net asset value per share
(net assets of $6,802,209,287 / 352,547,688 shares of
beneficial interest outstanding) $19.29
======
Offering price per share (100 / 94.25 of net asset value
per share) $20.47
======
Class B shares:
Net asset value and offering price per share
(net assets of $3,607,864,538 / 197,358,370 shares of
beneficial interest outstanding) $18.28
======
Class C shares:
Net asset value and offering price per share
(net assets of $965,054,020 / 52,937,450 shares of
beneficial interest outstanding) $18.23
======
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $95,538,645 / 4,928,706 shares of
beneficial interest outstanding) $19.38
======
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, 1999
- ------------------------------------------------------------------------------
Net investment loss:
Income -
Dividends $ 33,805,068
Interest 30,196,484
Foreign taxes withheld (402,011)
--------------
Total investment income $ 63,599,541
--------------
Expenses -
Management fee $ 26,839,942
Trustees' compensation 94,212
Shareholder servicing agent fee 8,388,668
Distribution and service fee (Class A) 17,875,288
Distribution and service fee (Class B) 23,546,324
Distribution and service fee (Class C) 6,087,815
Administrative fee 322,751
Custodian fee 1,537,308
Printing 243,026
Postage 605,559
Auditing fees 33,549
Legal fees 27,643
Miscellaneous 4,717,091
--------------
Total expenses $ 90,319,176
Fees paid indirectly (1,173,894)
--------------
Net expenses $ 89,145,282
--------------
Net investment loss $ (25,545,741)
--------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $1,034,356,391
Foreign currency transactions (884,896)
--------------
Net realized gain on investments and foreign
currency transactions $1,033,471,495
--------------
Change in unrealized appreciation -
Investments $1,118,666,881
Translation of assets and liabilities in foreign
currencies 36,221
--------------
Net unrealized gain on investments and
foreign currency translation $1,118,703,102
--------------
Net realized and unrealized gain on
investments and foreign currency $2,152,174,597
--------------
Increase in net assets from operations $2,126,628,856
==============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (25,545,741) $ 839,474
Net realized gain on investments and foreign
currency transactions 1,033,471,495 417,739,657
Net unrealized gain on investments and foreign
currency translation 1,118,703,102 367,935,023
---------------- ----------------
Increase in net assets from operations $ 2,126,628,856 $ 786,514,154
---------------- ----------------
Distributions declared to shareholders -
From net investment income (Class A) $ (708,642) $ (801,128)
From net investment income (Class C) -- (3,421)
From net investment income (Class I) (101,112) (27,146)
From net realized gain on investments and foreign
currency transactions (Class A) (286,212,079) (273,013,152)
From net realized gain on investments and foreign
currency transactions (Class B) (102,582,982) (16,675,701)
From net realized gain on investments and foreign
currency transactions (Class C) (21,354,752) (287,027)
From net realized gain on investments and foreign
currency transactions (Class I) (4,699,676) (1,756,440)
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 $ (416,164,096) $ (292,564,015)
---------------- ----------------
Net increase in net assets from Fund share transactions $ 5,119,071,485 $ 2,268,115,589
---------------- ----------------
Total increase in net assets $ 6,829,536,245 $ 2,762,065,728
Net assets:
At beginning of period 4,641,130,245 1,879,064,517
---------------- ----------------
At end of period (including accumulated net investment
loss and accumulated undistributed net investment
income of $2,634,905 and $809,754, respectively) $ 11,470,666,490 $ 4,641,130,245
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 16.06 $ 14.68 $ 13.44 $ 12.51 $ 10.48
--------- --------- --------- --------- ---------
Income from investment operations# -
Net investment income (loss) $ (0.01) $ 0.02 $ 0.01 $ (0.01) $ (0.01)
Net realized and unrealized gain on investments
and foreign currency 4.63 3.63 4.33 2.55 3.12
--------- --------- --------- --------- ---------
Total from investment operations $ 4.62 $ 3.65 $ 4.34 $ 2.54 $ 3.11
--------- --------- --------- --------- ---------
Less distributions declared to shareholders -
From net investment income $ --* $ (0.01) $ -- $ -- $ --
In excess of net investment income --* -- -- -- --
From net realized gain on investments and foreign
currency transactions (1.39) (2.26) (3.10) (1.61) (1.08)
--------- --------- --------- --------- ---------
Total distributions declared to shareholders $ (1.39) $ (2.27) $ (3.10) $ (1.61) $ (1.08)
--------- --------- --------- --------- ---------
Net asset value - end of period $ 19.29 $ 16.06 $ 14.68 $ 13.44 $ 12.51
========= ========= ========= ========= =========
Total return(+) 31.27% 30.24% 42.91% 23.87% 32.91%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.87% 0.79% 0.71% 0.72% 0.73%
Net investment income (loss) (0.08)% 0.15% 0.05% (0.05)% (0.08)%
Portfolio turnover 174% 62% 93% 107% 46%
Net assets at end of period (000,000 Omitted) $ 6,802 $ 3,283 $ 1,773 $ 1,341 $ 1,180
* Per share amount was less than $0.01.
# 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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 15.37 $ 14.23 $ 13.12 $ 12.26 $ 10.35
--------- --------- --------- --------- ---------
Income from investment operations# -
Net investment loss $ (0.12) $ (0.07) $ (0.09) $ (0.11) $ (0.11)
Net realized and unrealized gain on investments
and foreign currency 4.42 3.47 4.21 2.51 3.10
--------- --------- --------- --------- ---------
Total from investment operations $ 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 $ (1.39) $ (2.26) $ (3.01) $ (1.54) $ (1.08)
--------- --------- --------- --------- ---------
Net asset value - end of period $ 18.28 $ 15.37 $ 14.23 $ 13.12 $ 12.26
========= ========= ========= ========= =========
Total return 30.47% 29.29% 41.77% 22.87% 32.09%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.52% 1.48% 1.50% 1.61% 1.63%
Net investment loss (0.74)% (0.54)% (0.74)% (0.94)% (0.98)%
Portfolio turnover 174% 62% 93% 107% 46%
Net assets at end of period (000,000 Omitted) $ 3,608 $ 1,081 $ 93 $ 25 $ 14
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999 1998 1997*
- --------------------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $ 15.33 $ 14.23 $ 13.98
----------- ----------- -----------
Income from investment operations# -
Net investment loss $ (0.12) $ (0.07) $ (0.01)
Net realized and unrealized gain on investments and
foreign currency 4.41 3.46 0.26
----------- ----------- -----------
Total from investment operations $ 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 (1.39) (2.26) --
----------- ----------- -----------
Total distributions declared to shareholders $ (1.39) $ (2.29) $ --
----------- ----------- -----------
Net asset value - end of period $ 18.23 $ 15.33 $ 14.23
=========== =========== ===========
Total return 30.49% 29.27% 1.79%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.52% 1.48% 1.54%+
Net investment loss (0.74)% (0.54)% (0.91)%+
Portfolio turnover 174% 62% 93%
Net assets at end of period (000 Omitted) $ 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.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999 1998 1997*
- --------------------------------------------------------------------------------------------------------------
CLASS I
- --------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C>
Net asset value - beginning of period $ 16.10 $ 14.71 $ 9.86
----------- ----------- -----------
Income from investment operations# -
Net investment income $ 0.05 $ 0.07 $ 0.03
Net realized and unrealized gain on investments and
foreign currency 4.67 3.61 4.82
----------- ----------- -----------
Total from investment operations $ 4.72 $ 3.68 $ 4.85
----------- ----------- -----------
Less distributions declared to shareholders -
From net investment income $ (0.03) $ (0.03) $ --
In excess of net investment income (0.02) -- --
From net realized gain on investments and foreign
currency transactions (1.39) (2.26) --
----------- ----------- -----------
Total distributions declared to shareholders $ (1.44) $ (2.29) $ --
----------- ----------- -----------
Net asset value - end of period $ 19.38 $ 16.10 $ 14.71
=========== =========== ===========
Total return 31.90% 30.56% 49.19%++
Ratios (to average net assets)/Supplemental data:
Expenses## 0.52% 0.49% 0.49%+
Net investment income 0.28% 0.45% 0.22%+
Portfolio turnover 174% 62% 93%
Net assets at end of period (000 Omitted) $ 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.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
Massachusetts Investors Growth Stock Fund (the Fund) is a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company.
(2) Significant Accounting Policies
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. 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 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 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 November 30, 1999, the value of securities loaned was $973,248,634. These
loans were collateralized by U.S. Treasury securities of $11,933,044 and cash of
$1,020,023,237 which was invested in the following short-term obligations:
<TABLE>
<CAPTION>
SHARES/ AMORTIZED
PRINCIPAL COST AND
ISSUER AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Navigator Securities Lending Prime Portfolio 991,759,487 $ 991,759,487
Salomon Smith Barney, Inc., due 12/01/99 $ 24,263,750 24,263,750
Credit Suisse First Boston Corp., due 12/01/99 $ 4,000,000 4,000,000
--------------
Total investment of cash collateral for securities loaned
(amortized cost, $1,020,023,237) $1,020,023,237
==============
</TABLE>
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.
During the period, the Fund's custodian fees were reduced by $722,247 under this
arrangement. 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 $451,647 under this agreement. These amounts are 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. 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 be
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. During
the year ended November 30, 1999, accumulated net investment loss decreased by
$23,415,689, accumulated undistributed net realized gain on investments and
foreign currency transactions decreased by $188,568,195, and paid in capital
increased by $165,152,506 due to differences between book and tax accounting for
distributions, currency transactions and the offset of net investment loss
against short term capital gains. 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 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 and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $46,280 for the year ended
November 30, 1999.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee at
the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$5,504,201 for the year ended November 30, 1999, as its portion of the sales
charge on sales of Class A shares of the Fund.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD up to 0.35% per
annum of its average daily net assets attributable to Class A shares in order
that MFD may pay expenses on behalf of the Fund related to the distribution and
servicing of its shares. These expenses include a service fee paid to each
securities dealer that enters into a sales agreement with MFD of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class A shares
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 $1,428,842 for the year ended November 30,
1999. Fees incurred under the distribution plan during the year ended November
30, 1999, were 0.35% of average daily net assets attributable to Class A shares
on an annualized basis.
The Fund's distribution plan provides that the Fund will pay MFD a distribution
fee of 0.75% per annum, and a service fee of up to 0.25% per annum, of the
Fund's average daily net assets attributable to Class B and Class C shares. MFD
will pay to securities dealers that enter into a sales agreement with MFD all or
a portion of the service fee attributable to Class B and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $38,717 and $1,884 for Class B and Class C shares, respectively, for
the year ended November 30, 1999. Fees incurred under the distribution plan
during the year ended November 30, 1999, were 1.00% and 1.00% of average daily
net assets attributable to Class B and Class C shares, respectively, on an
annualized basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. A contingent deferred sales charge is imposed on shareholder
redemptions of Class B shares in the event of a shareholder redemption within
six years of purchase. MFD receives all contingent deferred sales charges.
Contingent deferred sales charges imposed during the year ended November 30,
1999, were $163,809, $3,815,663, and $355,265 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%.
Prior to April 1, 1999, the fee was calculated as a percentage of the Fund's
average daily net assets at an annual rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$17,784,076,986 and $13,086,123,127, respectively.
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 $9,763,707,000
--------------
Gross unrealized appreciation $2,088,835,899
Gross unrealized depreciation (181,797,343)
--------------
Net unrealized appreciation $1,907,038,556
==============
(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, 1999 YEAR ENDED NOVEMBER 30, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 450,240,892 $ 7,750,377,097 275,022,311 $ 3,940,853,660
Shares issued to
shareholders in
reinvestment of
distributions 13,626,740 204,171,579 18,083,385 214,835,976
Shares reacquired (315,772,333) (5,509,243,454) (209,465,152) (3,022,891,589)
--------------- --------------- --------------- ---------------
Net increase 148,095,299 $ 2,445,305,222 83,640,544 $ 1,132,798,047
=============== =============== =============== ===============
<CAPTION>
Class B Shares
YEAR ENDED NOVEMBER 30, 1999 YEAR ENDED NOVEMBER 30, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 143,402,660 $ 2,314,027,813 75,913,460 $ 1,061,361,969
Shares issued to
shareholders in
reinvestment of
distributions 6,060,402 86,547,104 1,300,174 14,891,503
Shares reacquired (22,415,571) (365,816,542) (13,434,921) (183,527,261)
--------------- --------------- --------------- ---------------
Net increase 127,047,491 $ 2,034,758,375 63,778,713 $ 892,726,211
=============== =============== =============== ===============
<CAPTION>
Class C Shares
YEAR ENDED NOVEMBER 30, 1999 YEAR ENDED NOVEMBER 30, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 48,836,329 $ 786,078,490 17,494,795 $ 244,917,711
Shares issued to
shareholders in
reinvestment of
distributions 988,784 14,085,135 18,859 217,382
Shares reacquired (11,449,264) (186,635,739) (2,978,981) (39,962,938)
--------------- --------------- --------------- ---------------
Net increase 38,375,849 $ 613,527,886 14,534,673 $ 205,172,155
=============== =============== =============== ===============
<CAPTION>
Class I Shares
YEAR ENDED NOVEMBER 30, 1999 YEAR ENDED NOVEMBER 30, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,882,532 $ 31,864,895 2,608,884 $ 38,891,794
Shares issued to
shareholders in
reinvestment of
distributions 266,753 3,995,963 150,140 1,783,665
Shares reacquired (599,517) (10,380,856) (228,559) (3,256,283)
--------------- --------------- --------------- ---------------
Net increase 1,549,768 $ 25,480,002 2,530,465 $ 37,419,176
=============== =============== =============== ===============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $820 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, 1999, was $66,622. The Fund had no
borrowings during the year.
<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 of
Massachusetts Investors Growth Stock Fund, including the portfolio of
investments, as of November 30, 1999, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Massachusetts Investors Growth Stock Fund as of November 30, 1999, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 6, 2000
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
- --------------------------------------------------------------------------------
IN JANUARY 2000, SHAREHOLDERS WILL BE MAILED A FORM 1099-DIV REPORTING THE
FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE CALENDAR YEAR 1999.
THE FUND HAS DESIGNATED $486,824,239 AS A CAPITAL GAIN DIVIDEND FOR THE YEAR
ENDED NOVEMBER 30, 1999.
FOR THE YEAR ENDED NOVEMBER 30, 1999, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS RECEIVED DEDUCTION FOR
CORPORATIONS IS 12.85%.
<PAGE>
MFS' YEAR 2000 READINESS DISCLOSURE
MFS Investment Management(R), as an investment adviser and
on behalf of the MFS funds, is committed to the effective
use of technology in managing our portfolio investments,
delivering high-quality service to MFS fund shareholders, [Graphic Omitted]
retirement plan participants, and MFS' institutional
clients, and supporting the financial consultants who sell
our products.
MFS can now say that it is ready for the Year 2000. Our testing has demonstrated
that MFS' computer hardware and software will recognize "00" as the Year 2000
and will not confuse those digits with 1900. All of our critical business
applications and processes have been successfully tested, and we have adopted
companywide policies that will help us maintain our readiness through the
remainder of the year. Any new technology that is brought into the company
before the end of the year will be held to the same stringent standards as our
current technology. We have also developed a vendor readiness survey, contacted
over 700 of our vendors, and established an ongoing process to review responses,
as well as to review readiness statements of new vendors and products.
MFS recognizes that fund shareholders and institutional clients also are
concerned about whether the companies whose securities are held in their
portfolios are addressing Y2K issues. As part of the MFS Original Research(R)
process of evaluating portfolio investments, one of the many relevant factors
that MFS' portfolio managers and research analysts may consider is a company's
Y2K readiness.
Y2K readiness is an enormously complex, worldwide issue. No company or
institution can guarantee that it will be unaffected by the Y2K issue. While MFS
is taking significant steps to protect the integrity of its internal systems,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on MFS fund shareholders, retirement plan participants, or
institutional clients.
If you have further questions regarding MFS' Year 2000 Readiness Program, please
visit our Web site at www.mfs.com, call our toll-free line, 1-800-637-4406, or
write to the MFS Year 2000 Program Management Office by e-mail at [email protected] or
by letter at 500 Boylston Street, Boston, MA 02116-3741.
<PAGE>
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
<TABLE>
<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.*
J. Atwood Ives+ - Chairman and Chief Executive
Officer, Eastern Enterprises (diversified CUSTODIAN
services company) State Street Bank and Trust Company
Lawrence T. Perera+ Partner, Hemenway AUDITORS
& Barnes (attorneys) Deloitte & Touche LLP
William J. Poorvu+ - Adjunct Professor, INVESTOR INFORMATION
Harvard University Graduate School of For information on MFS mutual funds, call
Business Administration your financial adviser or, for an information
kit, call toll free: 1-800-637-2929 any
Charles W.Schmidt+ - Private Investor business day from 9 a.m. to 5 p.m. Eastern
time (or leave a message anytime).
Arnold D. Scott* - Senior Executive
Vice President, Director, and Secretary, INVESTOR SERVICE
MFS Investment Management MFS Service Center, Inc.
P.O. Box 2281
Jeffrey L. Shames* - Chairman, Chief Boston, MA 02107-9906
Executive Officer, and Director,
MFS Investment Management For general information, call toll free:
1-800-225-2606 any business day from
Elaine R. Smith+ - Independent Consultant 8 a.m. to 8 p.m. Eastern time.
David B. Stone+ - Chairman and Director, For service to speech- or hearing-impaired,
North American Management Corp. call toll free: 1-800-637-6576 any business
(investment advisers) day from 9 a.m. to 5 p.m. Eastern time. (To
use this service, your phone must be equipped
INVESTMENT ADVISER with a Telecommunications Device for the
Massachusetts Financial Services Company Deaf.)
500 Boylston Street
Boston, MA 02116-3741 For share prices, account balances, and
exchanges, call toll free: 1-800-MFS-TALK
DISTRIBUTOR (1-800-637-8255) anytime from a touch-tone
MFS Fund Distributors, Inc. telephone.
500 Boylston Street
Boston, MA 02116-3741 WORLD WIDE WEB
www.mfs.com
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
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 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)2000 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
MIG-2 01/00 656.5M 13/213/313/813
