MFS GROWTH OPPORTUNITIES FUND
500 BOYLSTON STREET o BOSTON o MASSACHUSETTS 02116-3741
617 o 954-5000
August 22, 1996
VIA EDGAR
=========
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: MFS GROWTH OPPORTUNITIES FUND (FILE NO. 811-2032)
-------------------------------------------------
Ladies and Gentlemen:
Pursuant to the requirements of Section 30(b) of the Investment Company Act of
1940 and Rule 30b2-1 thereunder,we hereby file a copy of the Semiannual Report
to Shareholders dated June 30, 1996 of MFS Growth Opportunities Fund.
Very truly yours,
APRIL ANDERSON
April Anderson
Senior Production Editor
/aa
<PAGE>
[MFS LOGO] Semiannual Report
THE FIRST NAME IN MUTUAL FUNDS June 30, 1996
MFS [Registration Mark] Growth Opportunities Fund
[Cover Photo: Two Men in a Window]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Fund Manager's Overview ................................................... 3
Fund Manager's Profile .................................................... 4
Performance Summary ....................................................... 5
Fund Facts ................................................................ 6
Portfolio Concentration ................................................... 7
Portfolio of Investments .................................................. 8
Financial Statements ...................................................... 13
Notes to Financial Statements ............................................. 19
Trustees and Officers ..................................................... 29
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HIGHLIGHTS
* FOR THE SIX MONTHS ENDED JUNE 30, 1996, CLASS A SHARES OF THE FUND PROVIDED A
TOTAL RETURN OF 12.73%, WHILE CLASS B SHARES RETURNED 12.21%, EXCEEDING THE
10.09% RETURN OF THE STANDARD & POOR'S 500 COMPOSITE INDEX.
* A NUMBER OF INDUSTRY GROUPS ADDED TO PERFORMANCE DURING THE PAST SIX MONTHS,
INCLUDING LODGING, TRANSPORTATION, AND SOME SEGMENTS OF THE TECHNOLOGY GROUP.
* WEAKNESS FROM SOME MEDICAL SERVICES COMPANIES, SUCH AS HEALTH MAINTENANCE
ORGANIZATIONS, AND SEMICONDUCTOR COMPANIES CREATED A DRAG ON PERFORMANCE,
ALTHOUGH SOME IMPROVEMENT IN BOTH OF THESE AREAS CAN BE SEEN.
* THE FUND'S LARGEST INDUSTRY SECTOR REMAINS TECHNOLOGY, WHICH CONTINUES TO SEE
GROWTH AS CORPORATIONS FOCUS ON IMPROVING PRODUCTIVITY. OTHER LARGE WEIGHTINGS
INCLUDE LEISURE, ENTERTAINMENT, AND RETAILING.
- --------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
Real (inflation-adjusted) economic growth in the first quarter of 1996 was 2.3%
on an annualized basis, and it appears that second-quarter growth could be even
stronger. Thus, real growth in gross domestic product has started the year at a
rate exceeding our expectations. While we continue to believe that growth from
quarter to quarter will be uneven, it is now our expectation that growth for all
of 1996 could exceed 2.5%. Although individual consumers appear to be carrying
an excessive debt load, the consumer sector itself, which represents two-thirds
of the economy, continues to be impressive as the auto and housing markets
remain resilient. Consumer spending has also been positively impacted by
widespread job growth. At the same time, however, the economies of Europe and
Japan continue to be in the doldrums, weakening U.S. export markets while
subduing the capital spending plans of American corporations. Finally, due to
the pickup in economic activity and increasing job growth, it appears that
inflation may accelerate slightly this year, and the Federal Reserve Board is
expected to continue its diligent anti-inflationary stance.
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity market this
year. Although we believe the equity market represents fair value at current
levels, the expected slowdown in the growth of corporate earnings and the
increases in interest rates experienced so far this year raise near-term
concerns. Further increases in interest rates, and an acceleration of inflation
coupled with an additional slowdown in corporate earnings growth, could have a
negative effect on the stock market. However, to the extent that some earnings
disappointments are taken as a sign that the economy is not overheating, this
may prove beneficial for the longer-term health of the equity market. We
continue to believe that many of the technology-driven productivity gains that
U.S. companies have made in recent years will continue to enhance corporate
America's competitiveness and profitability. Therefore, while we have some
near-term concerns, we remain quite constructive on the long-term viability of
the equity market.
Finally, as you may have noticed, this report to shareholders incorporates a
number of changes which we believe will make it more informative and useful to
you. Following the Fund Manager's Overview, you will find
1
<PAGE>
LETTER FROM THE CHAIRMAN - continued
new information on the Fund's holdings, including charts illustrating the
portfolio's concentration in the different types of investments that meet its
criteria. Near the back of the report, you will find a list of phone numbers and
addresses in case you need to contact MFS. We hope to hear from you.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
[Signature of A. Keith Brodkin]
A. Keith Brodkin
Chairman and President
July 10, 1996
2
<PAGE>
FUND MANAGER'S OVERVIEW
[Photo of Paul M. McMahon]
Dear Shareholders:
For the six months ended June 30, 1996, Class A shares of the Fund provided
a total return of 12.73%, while Class B shares returned 12.21%. These returns
assume the reinvestment of distributions but exclude the effect of any sales
charges, and exceed the 10.09% return of the Standard & Poor's 500 Composite
Index (the S&P 500), a popular, unmanaged index of common stock performance,
over the same period.
The investment objective of the Fund is to seek growth of capital. To
achieve this objective, the Fund seeks to invest in companies that possess five
key factors: earnings momentum, reasonable valuations, good management, a strong
balance sheet, and positive secular growth trends relative to the rest of the
economy. Given that price/earnings multiples appear to be reasonable, the focus
of the Fund remains on companies with favorable earnings momentum in order to
achieve further stock price appreciation.
Industry groups that added to performance during the past six months include
lodging, transportation, and some segments of the technology group. In lodging,
hotel franchise companies such as HFS, Inc. and Promus Hotel significantly
outperformed the market due to the strong demand for hotel rooms and tight
supply, which have led to rising hotel room rates. Transportation stocks such as
Wisconsin Central and Southwest Airlines benefited from a major acquisition and
strong traffic, respectively. Certain telecommunications stocks, such as Tellabs
and Worldcom, have benefited from deregulation of the telephone industry, which
has driven demand for their products and services. Computer software also was a
major contributor to the Fund due to strong performance from such companies as
Microsoft and BMC Software.
The two areas of the portfolio that created a drag on performance were
medical services such as health maintenance organizations (HMOs), and
semiconductor companies. HMOs such as United Healthcare have seen a weakening in
pricing trends in the first half of the year; however, we believe this trend is
beginning to improve as we enter the year's second half. Semiconductor
companies, meanwhile, have shown weakness, but now appear to be at lower, more
attractive valuations, and we believe could see improved earnings momentum
assuming the economy remains healthy over the remainder of the year.
3
<PAGE>
FUND MANAGER'S OVERVIEW - continued
The Fund's largest industry sector remains technology, which continues to
benefit from strong spending by corporations as they focus on improving
productivity. Stocks such as Intel and Microsoft are benefiting from the ongoing
proliferation of personal computers in homes as well as businesses. Other large
weightings in the Fund include leisure and entertainment, and retailing, which
is benefiting from a return of the consumer to shopping malls. We believe
retailers could continue to post good results as employment levels and related
consumer spending remain relatively strong.
Respectfully,
[Signature of Paul M. McMahon]
Paul M. McMahon
Fund Manager
- --------------------------------------------------------------------------------
FUND MANAGER'S PROFILE
PAUL MCMAHON JOINED THE MFS RESEARCH DEPARTMENT IN 1981 AS AN INDUSTRY
SPECIALIST. A GRADUATE OF HOLY CROSS COLLEGE AND THE AMOS TUCK SCHOOL OF
BUSINESS ADMINISTRATION OF DARTMOUTH COLLEGE, HE WAS NAMED INVESTMENT OFFICER
IN 1983, ASSISTANT VICE PRESIDENT - INVESTMENTS IN 1984, VICE PRESIDENT -
INVESTMENTS IN 1986, AND SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER OF MFS
GROWTH OPPORTUNITIES FUND IN 1992.
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4
<PAGE>
PERFORMANCE SUMMARY
Because mutual funds like MFS Growth Opportunities Fund are designed for
investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A and Class B shares for the
applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN
Class A Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Cumulative Total Return +12.73% +26.38% +99.22% +176.86%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +26.38% +14.78% + 10.72%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the Securities and Exchange Commission
(the SEC), with all distributions reinvested and reflecting the maximum sales
charge of 5.75% on the initial investment for the 1-, 5- and 10-year periods
ended June 30, 1996, were +19.16%, +13.43% and +10.06%, respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Cumulative Total Return +12.21% +25.24% +94.07% +169.69%
- --------------------------------------------------------------------------------
Average Annual Total Return -- +25.24% +14.18% + 10.43%
- --------------------------------------------------------------------------------
The average annual total returns, calculated for the period ended as of the most
recent calendar quarter as required by the SEC, with all distributions
reinvested and reflecting the contingent deferred sales charge (CDSC) of 4%, 2%
and 0% for the 1-, 5- and 10-year periods ended June 30, 1996, were +21.24%,
+13.95% and +10.43%, respectively.
5
<PAGE>
PERFORMANCE SUMMARY - continued
All results represent past performance and are not an indication of future
results. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost.
Class B share performance includes the performance of the Fund's Class A shares
for periods prior to the commencement of offering of Class B shares on September
7, 1993. Sales charges and operating expenses for Class A and Class B shares
differ. The Class A share SEC performance which is included within the Class B
share performance has been adjusted to reflect the CDSC generally applicable to
Class B shares rather than the initial sales charge generally applicable to
Class A shares. Class B share performance has not been adjusted, however, to
reflect differences in operating expenses (e.g., Rule 12b-1 fees), which
generally are lower for Class A shares.
- --------------------------------------------------------------------------------
FUND FACTS
STRATEGY: THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK GROWTH OF CAPITAL.
DIVIDEND INCOME, IF ANY, IS INCIDENTAL TO THE FUND'S OBJECTIVE.
GENERALLY, EMPHASIS IS PLACED UPON COMPANIES BELIEVED TO POSSESS
ABOVE-AVERAGE GROWTH OPPORTUNITIES. THE FUND INVESTS PRIMARILY IN
COMMON STOCKS, BUT MAY SEEK APPRECIATION IN OTHER TYPES OF
SECURITIES, INCLUDING FIXED-INCOME SECURITIES, CONVERTIBLE BONDS,
CONVERTIBLE PREFERRED STOCKS AND WARRANTS.
COMMENCEMENT
OF INVESTMENT
OPERATIONS: SEPTEMBER 9, 1970
SIZE: $788.2 MILLION AS OF JUNE 30, 1996
- --------------------------------------------------------------------------------
6
<PAGE>
PORTFOLIO CONCENTRATION AS OF JUNE 30, 1996
TOP TEN HOLDINGS
HFS, INC.
Franchiser of hotels and real estate companies
TYCO INTERNATIONAL LTD.
Manufacturer of fire protection, packaging, and electronic equipment
PHILIP MORRIS COS., INC.
Manufacturer of tobacco products and other consumer goods
WISCONSIN CENTRAL TRANSPORTATION CORP.
Midwestern railroad company
MICROSOFT CORP.
Computer software and systems company
CADENCE DESIGN SYSTEMS, INC.
Computer software and systems company
ORACLE CORP.
Developer and manufacturer of database software
INTEL CORP.
Designer and manufacturer of semiconductors
HARRAH'S ENTERTAINMENT, INC.
Owner of gaming operations in several states
PROMUS HOTEL CORP.
Hotel operator
LARGEST SECTORS
[GRAPHIC OMITTED]
Technology 27.38%
Leisure 13.8 %
Miscellaneous 10.7 %
Industrial Goods
and Services 9.38%
Retailing 8.4 %
7
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - June 30, 1996
Stocks - 99.5%
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - 92.6%
Aerospace - 3.2%
Lockheed Martin Corp. 98,300 $ 8,257,200
McDonnell Douglas Corp. 211,600 10,262,600
United Technologies Corp. 60,600 6,969,000
------------
$ 25,488,800
- --------------------------------------------------------------------------------
Agricultural Products - 3.8%
AGCO Corp. 402,800 $ 11,177,700
Case Corp. 225,400 10,819,200
Deere & Co., Inc. 198,900 7,956,000
-----------
$ 29,952,900
- --------------------------------------------------------------------------------
Airlines - 1.5%
American West Airlines, "B"* 72,600 $ 1,597,200
Southwest Airlines Co. 342,100 9,963,663
------------
$ 11,560,863
- --------------------------------------------------------------------------------
Apparel and Textiles - 0.9%
Donna Karan International, Inc.* 11,500 $ 322,000
Nike, Inc., "B" 63,800 6,555,450
------------
$ 6,877,450
- --------------------------------------------------------------------------------
Automotive - 1.0%
APS Holding Corp., "A"* 177,100 $ 3,896,200
General Motors Corp. 74,300 3,891,462
------------
$ 7,787,662
- --------------------------------------------------------------------------------
Banks and Credit Companies - 0.4%
Fleet/Norstar Financial Group, Inc. 81,000 $ 3,523,500
- --------------------------------------------------------------------------------
Broadcasting - 1.0%
Infinity Broadcasting Corp., "A"* 124,300 $ 3,729,000
Jacor Communications, Inc., "A"* 73,400 2,266,225
LIN Television Corp.* 58,500 2,106,000
------------
$ 8,101,225
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Business Machines - 1.2%
Sun Microsystems, Inc.* 165,900 $ 9,767,362
- --------------------------------------------------------------------------------
Business Services - 5.3%
ADT Ltd.* 500,500 $ 9,446,938
ALCO Standard Corp. 200,500 9,072,625
Accustaff, Inc.* 73,800 2,011,050
America Online, Inc.* 27,800 1,216,250
Ceridian Corp.* 267,800 13,523,900
Corestaff, Inc.* 68,050 3,045,238
DST Systems, Inc.* 112,400 3,596,800
First USA Paymentech, Inc.* 3,100 124,000
------------
$ 42,036,801
- --------------------------------------------------------------------------------
Cellular Telephones - 0.1%
Intercel, Inc.* 19,600 $ 392,000
- --------------------------------------------------------------------------------
8
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Chemicals - 0.4%
Geon Co. 24,800 $ 558,000
Polymer Group, Inc.* 51,400 899,500
Praxair, Inc. 46,100 1,947,725
------------
$ 3,405,225
- --------------------------------------------------------------------------------
Computer Software - Personal Computers - 3.7%
Autodesk, Inc. 74,100 $ 2,213,737
Electronic Arts, Inc.* 302,200 8,083,850
Microsoft Corp.* 152,100 18,271,013
Spectrum Holobyte Industries* 149,300 858,475
------------
$ 29,427,075
- --------------------------------------------------------------------------------
Computer Software - Systems - 10.8%
Adobe Systems, Inc. 327,100 $ 11,734,713
BMC Software, Inc.* 155,100 9,267,225
Cadence Design Systems, Inc.* 531,675 17,944,031
Computer Associates International, Inc. 157,900 11,250,375
Micros System, Inc.* 165,400 4,610,525
Oracle Systems Corp.* 454,550 17,926,316
Sybase, Inc.* 352,100 8,318,362
Synopsys, Inc.* 60,100 2,388,975
System Software Associates, Inc. 81,000 1,377,000
------------
$ 84,817,522
- --------------------------------------------------------------------------------
Consumer Goods and Services - 6.6%
Philip Morris Cos., Inc. 239,700 $ 24,928,800
Service Corp. International 38,900 2,236,750
Tyco International Ltd. 619,900 25,260,925
------------
$ 52,426,475
- --------------------------------------------------------------------------------
Defense Electronics - 1.3%
Loral Space and Communications* 767,500 $ 10,457,188
- --------------------------------------------------------------------------------
Electrical Equipment - 0.3%
UCAR International, Inc.* 67,900 $ 2,826,337
- --------------------------------------------------------------------------------
Electronics - 6.1%
Altera Corp.* 158,400 $ 6,019,200
Analog Devices, Inc.* 268,150 6,837,825
ESS Technology, Inc.* 68,000 1,258,000
Intel Corp. 242,800 17,830,625
LSI Logic Corp.* 339,600 8,829,600
Maxim Integrated Products, Inc.* 69,400 1,895,487
Xilinx, Inc.* 161,800 5,137,150
------------
$ 47,807,887
- --------------------------------------------------------------------------------
Entertainment - 4.1%
Harrah's Entertainment, Inc.* 600,100 $ 16,952,825
Mirage Resorts, Inc.* 144,700 7,813,800
Trump Hotels & Casino Resorts, Inc.* 256,900 7,321,650
------------
$ 32,088,275
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9
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Financial Institutions - 4.4%
Associates First Capital Corp.* 36,400 $ 1,369,550
Federal Home Loan Mortgage Corp. 126,300 10,798,650
Financial Federal Corp.* 147,150 2,299,219
Finova Group, Inc. 94,900 4,626,375
Green Tree Financial Corp. 145,900 4,559,375
Schwab (Charles) Corp. 442,500 10,841,250
------------
$ 34,494,419
- --------------------------------------------------------------------------------
Insurance - 0.4%
Amerin Corp.* 69,900 $ 1,869,825
Penncorp Financial Group, Inc. 42,900 1,362,075
------------
$ 3,231,900
- --------------------------------------------------------------------------------
Machinery - 0.5%
IDEX Corp. 105,500 $ 4,009,000
- --------------------------------------------------------------------------------
Medical and Health Products - 1.7%
Johnson & Johnson 245,800 $ 12,167,100
Omnicare, Inc. 61,600 1,632,400
------------
$ 13,799,500
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 4.8%
Foundation Health Corp.* 111,200 $ 3,989,300
Health Care & Retirement Corp.* 67,800 1,610,250
Healthsource, Inc.* 437,900 7,663,250
Living Centers of America* 122,700 4,217,812
Oxford Health Plans, Inc.* 121,100 4,980,238
Schein (Henry), Inc.* 6,200 237,150
United Healthcare Corp. 293,300 14,811,650
------------
$ 37,509,650
- --------------------------------------------------------------------------------
Metals and Minerals - 2.2%
Minerals Technologies, Inc. 103,100 $ 3,531,175
Nucor Corp. 142,000 7,188,750
Phelps Dodge Corp. 79,500 4,958,812
RMI Titanium Co.* 89,900 2,112,650
------------
$ 17,791,387
- --------------------------------------------------------------------------------
Oils - 1.0%
Mobil Corp. 73,500 $ 8,241,188
- --------------------------------------------------------------------------------
Photographic Products - 1.3%
Eastman Kodak Co. 127,700 $ 9,928,675
- --------------------------------------------------------------------------------
Printing and Publishing - 0.3%
Gannett Co., Inc. 29,200 $ 2,065,900
- --------------------------------------------------------------------------------
Railroads - 3.1%
Burlington Northern Santa Fe 45,300 $ 3,663,638
Wisconsin Central Transportation Corp.* 630,300 20,484,750
------------
$ 24,148,388
- --------------------------------------------------------------------------------
10
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Common Stocks - continued
Restaurants and Lodging - 5.9%
HFS, Inc.* 390,100 $ 27,307,000
National Lodging Corp.* 10,300 164,800
Promus Hotel Corp.* 532,050 15,761,981
Renaissance Hotel Group N.V.* 157,400 3,384,100
------------
$ 46,617,881
- --------------------------------------------------------------------------------
Special Products and Services - 0.6%
Compuserve Corp.* 15,100 $ 318,988
Loewen Group, Inc. 138,700 4,195,675
------------
$ 4,514,663
- --------------------------------------------------------------------------------
Stores - 6.0%
Corporate Express, Inc.* 77,800 $ 3,112,000
Duty Free International, Inc. 36,500 556,625
Federated Department Stores, Inc.* 338,900 11,564,963
General Nutrition Cos., Inc.* 410,800 7,189,000
Micro Warehouse, Inc.* 233,300 4,666,000
Office Depot, Inc.* 483,900 9,859,462
Officemax, Inc.* 266,200 6,355,525
Sears, Roebuck & Co. 77,700 3,778,163
------------
$ 47,081,738
- --------------------------------------------------------------------------------
Supermarkets - 1.0%
Safeway, Inc.* 228,400 $ 7,537,200
- --------------------------------------------------------------------------------
Telecommunications - 7.7%
Cabletron Systems, Inc.* 182,300 $ 12,510,338
Cisco Systems, Inc.* 110,300 6,245,737
Glenayre Technologies, Inc.* 287,900 14,395,000
Lucent Technologies, Inc. 63,300 2,397,487
Sterling Commerce, Inc.* 8,200 304,425
Tel-Save Holdings, Inc.* 148,350 3,152,438
Teleport Communications Group, Inc.* 115,600 2,210,850
Tellabs, Inc.* 89,600 5,992,000
U.S. Robotics Corp.* 57,400 4,907,700
Worldcom, Inc.* 149,300 8,267,487
------------
$ 60,383,462
- --------------------------------------------------------------------------------
Total U.S. Common Stocks $730,099,498
- --------------------------------------------------------------------------------
Foreign Stocks - 6.9%
Canada - 1.0%
Canadian National Railway Co. (Railroads)* 84,900 $ 1,560,037
Loewen Group (Special Products and Services)## 159,600 4,865,782
Potash Corp. of Saskatchewan, Inc.
(Precious Metals and Minerals) 21,800 1,444,250
------------
$ 7,870,069
- --------------------------------------------------------------------------------
France
Dassault Systemes S.A., ADR
(Computer Software - Systems)* 7,000 $ 217,000
- --------------------------------------------------------------------------------
Germany - 0.2%
SGL Carbon AG, ADR (Chemicals)* 50,400 $ 1,927,800
- --------------------------------------------------------------------------------
11
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - continued
Stocks - continued
================================================================================
Issuer Shares Value
- --------------------------------------------------------------------------------
Foreign Stocks - continued
Hong Kong - 0.5%
Peregrine Investment Holdings (Finance) 2,607,000 $ 3,755,465
Peregrine Investment Holdings,
Warrants (Finance) 264,400 32,793
------------
$ 3,788,258
- --------------------------------------------------------------------------------
Italy - 1.2%
Telecom Italia Mobile S.p.A.
(Telecommunications) 1,270,100 $ 2,837,634
Telecom Italia Mobile S.p.A., Saving Shares
(Telecommunications) 4,976,200 6,784,252
------------
$ 9,621,886
- --------------------------------------------------------------------------------
Netherlands - 0.6%
Gucci Group Designs N.V. (Apparel and Textiles) 68,400 $ 4,411,800
- --------------------------------------------------------------------------------
New Zealand - 0.3%
Sky City Ltd. (Entertainment)* 607,640 $ 2,647,712
- --------------------------------------------------------------------------------
Singapore - 0.4%
Mandarin Oriental International Ltd. (Lodging) 2,061,000 $ 2,885,400
- --------------------------------------------------------------------------------
South Korea - 0.8%
Korea Mobile Telecommunications
(Telecommunications) 376,400 $ 6,445,850
- --------------------------------------------------------------------------------
Sweden - 1.7%
ASTRA AB, "B" (Medical and Health Products) 228,100 $ 9,950,325
Nobel Biocare AB (Medical and Health Products)* 182,200 3,382,731
------------
$ 13,333,056
- --------------------------------------------------------------------------------
United Kingdom - 0.2%
Powergen PLC (Utilities - Electric) 242,100 $ 1,236,500
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 54,385,331
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $599,770,766) $784,484,829
- --------------------------------------------------------------------------------
Short-Term Obligation - 0.7%
================================================================================
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
General Motors, due 7/01/96, at Amortized Cost $ 5,310 $ 5,310,000
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $605,080,766) $789,794,829
Other Assets, Less Liabilities - (0.2)% (1,627,018)
================================================================================
Net Assets - 100.0% $788,167,811
- --------------------------------------------------------------------------------
*Non-income producing security.
##SEC Rule 144A restriction.
See notes to financial statements
12
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
================================================================================
June 30, 1996
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $605,080,766) $789,794,829
Receivable for Fund shares sold 254,395
Receivable for investments sold 11,275,824
Dividends and interest receivable 673,555
Other assets 11,422
------------
Total assets $802,010,025
------------
Liabilities:
Cash overdraft $ 6,371
Payable for Fund shares reacquired 630,535
Payable for investments purchased 12,355,595
Net payable for forward foreign currency exchange
contracts sold 258,576
Payable to affiliates -
Management fee 27,118
Shareholder servicing agent fee 8,952
Distribution fee 289,314
Accrued expenses and other liabilities 265,753
------------
Total liabilities $ 13,842,214
------------
Net assets $788,167,811
------------
Net assets consist of:
Paid-in capital $544,635,175
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 184,454,503
Accumulated undistributed net realized gain
on investments and foreign currency transactions 59,518,879
Accumulated distributions in excess of
net investment income (440,746)
------------
Total $788,167,811
============
Shares of beneficial interest outstanding 58,544,323
============
Class A shares:
Net asset value price per share
(net assets of $778,507,477 / 57,814,463 shares of
beneficial interest outstanding) $13.47
======
Offering price per share (100/94.25) $14.29
======
Class B shares:
Net asset value and offering price per share
(net assets of $9,660,334 / 729,860 shares of
beneficial interest outstanding) $13.24
======
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
and Class B shares.
See notes to financial statements
13
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
================================================================================
Six Months Ended June 30, 1996
- --------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 2,692,796
Interest 160,119
Foreign taxes withheld (59,427)
------------
Total investment income $ 2,793,488
------------
Expenses -
Management fee $ 1,629,750
Trustees' compensation 27,702
Shareholder servicing agent fee (Class A) 528,771
Shareholder servicing agent fee (Class B) 8,999
Distribution and service fee (Class A) 605,937
Distribution and service fee (Class B) 40,905
Custodian fee 135,543
Postage 56,451
Printing 25,726
Auditing fees 15,478
Legal fees 1,253
Miscellaneous 181,309
------------
Total expenses $ 3,257,824
Fees paid indirectly (79,212)
------------
Net expenses $ 3,178,612
------------
Net investment loss $ (385,124)
------------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) -
Investment transactions $ 59,502,777
Foreign currency transactions 189,245
------------
Net realized gain on investments $ 59,692,022
------------
Change in unrealized appreciation (depreciation) -
Investments $ 32,538,727
Translation of assets and liabilities
in foreign currencies (314,008)
------------
Net unrealized gain on investments $ 32,224,719
------------
Net realized and unrealized gain on investments
and foreign currency $ 91,916,741
------------
Increase in net assets from operations $ 91,531,617
============
See notes to financial statements
14
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
=============================================================================================
Six Months Ended
June 30, 1996 Year Ended
(Unaudited) December 31, 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income (loss) $ (385,124) $ 1,360,815
Net realized gain on investments and
foreign currency transactions 59,692,022 93,753,834
Net unrealized gain on investments and
foreign currency 32,224,719 100,603,997
------------ -------------
Increase in net assets from operations $ 91,531,617 $ 195,718,646
------------ -------------
Distributions declared to shareholders -
From net realized gain on investments and
foreign currency transactions (Class A) $ -- $ (90,832,129)
From net realized gain on investments and
foreign currency transactions (Class B) -- (804,857)
------------ -------------
Total distributions declared to shareholders $ -- $ (91,636,986)
------------ -------------
Fund share (principal) transactions -
Net proceeds from sale of shares $125,212,322 $ 103,860,834
Net asset value of shares issued to shareholders
in reinvestment of distributions 21,120 87,980,013
Cost of shares reacquired (156,737,855) (160,208,262)
------------ -------------
Increase (decrease) in net assets from
Fund share transactions $(31,504,413) $ 31,632,585
------------ -------------
Total increase in net assets $ 60,027,204 $ 135,714,245
Net assets:
At beginning of period 728,140,607 592,426,362
------------ -------------
At end of period (including accumulated distributions
in excess of net investment income of $440,746
and $55,622, respectively) $788,167,811 $ 728,140,607
============ =============
</TABLE>
See notes to financial statements
15
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights
====================================================================================================================================
Six Months
Ended Year Ended December 31,
June 30, 1996
(Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
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 $ 11.94 $ 10.17 $ 11.56 $ 11.17 $ 10.75 $ 9.97
------- ------- ------- ------- ------- -------
Income from investment operations# -
Net investment income (loss) $ (0.01) $ 0.03 $0.02 $ 0.07 $ 0.24 $ 0.15
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 1.54 3.46 (0.50) 1.73 0.67 1.94
------- ------- ------- ------- ------- -------
Total from investment
operations $ 1.53 $ 3.49 $ (0.48) $ 1.80 $ 0.82 $ 2.18
------- ------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $ (0.01) $ (0.07) $ (0.14) $ (0.18)
In excess of net investment income -- -- (0.02) (0.02) -- --
From net realized gain on
investments and foreign
currency transactions -- (1.72) (0.83) 1.32 (0.26) (1.22)
In excess of net realized gain
on investments and foreign
currency transactions -- -- (0.05) -- -- --
------- ------- ------- ------- ------- -------
Total distributions declared
to shareholders $ -- $ (1.72) $ (0.91) $(1.41) $(0.40) $ (1.40)
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 13.47 $ 11.94 $ 10.17 $ 11.56 $ 11.17 $ 10.75
======= ======= ======= ======= ======= =======
Total return+++ 12.73%++ 34.49% (4.15)% 16.19% (8.06)% 9.29%
Average commission rate### $0.0378 -- -- -- -- --
Ratios (to average net assets)/Supplemental data[ss]:
Expenses## 0.82%+ 0.87% 0.86% 0.84% 0.89% 0.88%
Net investment income (loss) (0.09)%+ 0.21% 0.21% 0.60% 1.40% 2.14%
Portfolio turnover 43% 100% 78% 79% 102% 131%
Net assets at end of period (000 omitted) $788,507 $721,467 $589,260 $709,839 $694,084 $739,791
<FN>
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to December 31, 1992 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
+++ Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to March
1991). If the charge had been included, the results would have been lower.
[ss] The distributor did not impose a portion of its distribution fee for certain of the periods indicated. If this fee had been
incurred by the Fund, the net investment income per share and ratios would have been:
Net investment income -- $ 0.02 $ 0.01 $ 0.07 -- --
Ratios (to average net assets):
Expenses -- 0.97% 0.96% 0.87% -- --
Net investment income -- 0.11% 0.11% 0.56% -- --
</FN>
</TABLE>
See notes to financial statements
16
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Year Ended December 31, Year Ended March 31,
------------------------------------------- -----------------------
1990 1989 1988 1987* 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
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 $ 10.93 $ 10.96 $ 10.81 $ 13.41 $ 13.51 $ 10.77
------- ------- ------- ------- ------- -------
Income from investment operations -
Net investment income $ 0.30 $ 0.36 $ 0.22 $ 0.11 $ 0.17 $ 0.22
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (0.77) 2.74 0.76 (2.13) 1.20 3.63
------- ------- ------- ------- ------- -------
Total from investment
operations $ (0.47) $ 3.10 $ 0.98 $ (2.02) $ 1.37 $ 3.85
------- ------- ------- ------- ------- -------
Less distributions declared to shareholders -
From net investment income $ (0.33) $(0.36) $ (0.19) $ (0.11) $ (0.17) $ (0.22)
From net realized gain on
investments and foreign
currency transactions (0.16)++++ (2.77) (0.64) (0.47) (1.30) (0.89)
------- ------- ------- ------- ------- -------
Total distributions declared
to shareholders $ (0.49) $ (3.13) $ (0.83) $ (0.58) $ (1.47) $ (1.11)
------- ------- ------- ------- ------- -------
Net asset value - end of period $ 9.97 $ 10.93 $ 10.96 $ 10.81 $ 13.41 $ 13.51
======= ======= ======= ======= ======= =======
Total return (4.57)% 28.23% 8.90% (20.45)% 11.57% 35.92%
Ratios (to average net assets)/Supplemental data:
Expenses 0.80% 0.77% 0.86% 0.72% 0.71% 0.71%
Net investment income 2.91% 2.79% 1.90% 1.08% 1.28% 1.85%
Portfolio turnover 89% 83% 68% 40% 109% 117%
Net assets at end of period
(000 omitted) $687,847 $805,712 $767,924 $834,359 $1,090,764 $989,980
<FN>
* For the nine months ended December 31, 1987.
+ Annualized.
+++ Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to March
1991). If the charge had been included, the results would have been lower.
++++ Includes a per share distribution from paid-in capital of $0.0006.
See notes to financial statements
</FN>
</TABLE>
17
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Financial Highlights - continued
====================================================================================================================================
Six Months
Ended Year Ended December 31,
June 30, 1996 ------------------------------------
(Unaudited) 1995 1994 1993*
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.79 $ 10.08 $ 11.53 $ 12.52
------- ------- ------- -------
Income from investment operations# -
Net investment loss $ (0.06) $ (0.09) $ (0.08) $ --
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.51 3.42 (0.49) 0.36
------- ------- ------- -------
Total from investment operations $ 1.45 $ 3.33 $ (0.57) $ 0.36
------- ------- ------- -------
Less distributions declared to shareholders -
In excess of net investment income $ -- $ -- $ -- $ (0.03)
From net realized gain on investments and
foreign currency transactions -- (1.62) (0.83) (1.32)
In excess of net realized gain on investments
and foreign currency transactions -- -- (0.05) --
------- ------- ------- -------
Total distributions declared to shareholders $ -- $ (1.62) $ (0.88) $ (1.35)
------- ------- ------- -------
Net asset value - end of period $ 13.24 $ 11.79 $ 10.08 $ 11.53
======= ======= ======= =======
Total return 12.21%++ 33.20% (4.96)% 9.29%
Average commission rate### $0.0378 -- -- --
Ratios (to average net assets)/Supplemental data:
Expenses## 1.74% 1.81% 1.81% 1.33%
Net investment loss (1.00)% (0.75)% (0.70)% --
Portfolio turnover 43% 100% 78% 79%
Net assets at end of period (000 omitted) $ 9,660 $ 6,673 $ 3,166 $ 805
<FN>
* For the period from the commencement of offering of Class B shares, September 7, 1993 to December 31, 1993.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to December 31, 1992 is based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
</FN>
</TABLE>
See notes to financial statements
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Business and Organization
MFS Growth Opportunities Fund (the Fund) is organized as 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. 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 valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value.
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.
Forward Foreign Currency Exchange Contracts - The Fund may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
currency at a fixed price on a future date. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The Fund will enter into forward contracts
for hedging purposes as well as for non-hedging purposes. For hedging purposes,
the Fund may enter into contracts to deliver or receive foreign currency it will
receive from or require for its normal investment activities. It may also use
contracts in a manner intended to protect foreign currency-denominated
securities from declines in value due to unfavorable exchange rate movements.
For non-hedging purposes, the Fund may enter into contracts with the intent of
changing the relative exposure of the Fund's portfolio of securities to
different currencies to take advantage of anticipated changes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized until the contract settlement date.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
Dividend payments received in additional securities are recorded on the
ex-dividend date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a tax
return annually using tax accounting methods required under provisions of the
Code which may differ from generally accepted accounting principles, the basis
on which these financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial statements
may differ from that reported on the Fund's tax return and, consequently, the
character of distributions to shareholders reported in the financial highlights
may differ from that reported to shareholders on Form 1099-DIV. Foreign taxes
have been provided for on interest and dividend income earned on foreign
investments in accordance with the applicable country's tax rates
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
and to the extent unrecoverable are recorded as a reduction of investment
income. Distributions to shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
Multiple Classes of Shares of Beneficial Interest - The Fund offers both Class A
and Class B shares. The two classes of shares differ in their respective
shareholder servicing agent, distribution and service fees. All shareholders
bear the common expenses of the Fund pro rata based on the average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an effective annual rate of
0.43% of 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 of the 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 $8,657 for the six months
ended June 30, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$35,573 as its portion of the sales charge on sales of Class A shares of the
Fund.
The Trustees have adopted separate distribution plans for Class A and Class B
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The Class A distribution plan provides that the Fund will pay MFD up to 0.35%
per annum of its average daily net assets attributable to Class A shares in
order that MFD may pay expenses on behalf of the Fund related to the
distribution and servicing of its shares. These expenses include a service fee
to each securities dealer
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
that enters into a sales agreement with MFD of up to 0.25% per annum (reduced to
0.15% per annum for assets sold prior to March 1, 1991) of the Fund's average
daily net assets attributable to Class A shares which are attributable to that
securities dealer, a distribution fee to MFD of up to 0.10% per annum of the
Fund's average daily net assets attributable to Class A shares, commissions to
dealers and payments to MFD wholesalers for sales at or above a certain dollar
level, and other such distribution-related expenses that are approved by the
Fund. MFD retains the service fee for accounts not attributable to a securities
dealer which amounted to $314,952 for the six months ended June 30, 1996.
Payment of the 0.10% per annum Class A distribution fee will commence on such
date as the Trustees of the Trust may determine. Fees incurred under the
distribution plan during the six months ended June 30, 1996 were 0.16% of
average daily net assets attributable to Class A shares on an annualized basis.
The Class B 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 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 shares. The service fee is intended
to be additional consideration for services rendered by the dealer with respect
to Class B shares. MFD retains the service fee for accounts not attributable to
a securities dealer, which amounted to $923 for Class B shares for the six
months ended June 30, 1996. Fees incurred under the distribution plan during the
six months ended June 30, 1996 were 1.00% of average daily net assets
attributable to Class B shares on an annualized basis.
Purchases over $1 million of Class A shares and certain purchases into
retirement plans are subject to a contingent deferred sales charge in the event
of a shareholder redemption within 12 months following such purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of Class
B shares in the event of a shareholder redemption within six years of purchase.
MFD receives all contingent deferred sales charges. Contingent deferred sales
charges imposed during the six months ended June 30, 1996 were $590 and $5,178
for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15% and up to 0.22% attributable to Class A and
Class B shares, respectively.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities and
short-term obligations, aggregated $300,426,764 and $330,104,107, respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $605,080,766
============
Gross unrealized appreciation $215,457,721
Gross unrealized depreciation (30,743,658)
------------
Net unrealized appreciation $184,714,063
============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
---------------------------- ----------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Shares sold 9,505,372 $ 122,008,104 7,715,800 $ 96,726,782
Shares issued to shareholders
in reinvestment of
distributions 1,761 20,817 7,389,814 87,274,151
Shares reacquired (12,110,797) (155,640,157) (12,623,569) (155,238,811)
----------- ------------- ----------- -------------
Net increase (decrease) (2,603,664) $ (33,611,236) 2,482,045 $ 28,762,122
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
---------------------------- ----------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Shares sold 249,718 $ 3,204,218 604,258 $ 7,134,052
Shares issued to shareholders
in reinvestment of
distributions 26 303 60,477 705,862
Shares reacquired (85,696) (1,097,698) (412,933) (4,969,451)
----------- ------------- ----------- -------------
Net increase 164,048 $ 2,106,823 251,802 $ 2,870,463
=========== ============= =========== =============
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund shares. Interest is charged to each
fund, based on its borrowings, at a rate equal to the bank's base rate. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating funds at the end of each
quarter. The commitment fee allocated to the Fund for the six months ended June
30, 1996 was $4,294.
(7) Financial Instruments
The Fund trades financial instruments with off-balance sheet risk in the normal
course of its investing activities in order to manage exposure to market risks
such as interest rates and foreign currency exchange rates. These financial
instruments are forward foreign currency exchange contracts. The notional or
contractual amounts of these instruments represent the investment the Fund has
in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under these
financial instruments at June 30, 1996, is as follows:
Forward Foreign Currency Exchange Contract
Settlement Contracts to In Exchange Contracts Net Unrealized
Date Deliver/Receive for at Value Depreciation
================================================================================
Sales 8/2/96 SEK 59,091,600 $8,658,110 $8,916,686 $ (258,576)
========== ========== ==========
At June 30, 1996, the Fund had sufficient cash and/or securities to cover any
commitments under this contract.
An abbreviation has been used above to indicate amounts shown in currencies
other than the U.S. dollar. This abbreviation is shown below.
SEK = Swedish Kronor
----------------------------------------------------------------------
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.
24
<PAGE>
IT'S EASY TO CONTACT US
[GRAPHIC OMITTED]
MFS AUTOMATED INFORMATION
ACCOUNT INFORMATION:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.
MARKET OUTLOOK:
Call 1-800-637-4458 any time for the MFS outlook
on the bond and stock markets.
[GRAPHIC OMITTED]
MFS PERSONAL SERVICE
ACCOUNT SERVICE:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
PRODUCT INFORMATION:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
IRA SERVICE:
Call 1-800-637-1255 any business day
from 8 a.m. to 6 p.m. Eastern time.
SERVICE FOR THE HEARING-IMPAIRED:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD required).
[GRAPHIC OMITTED]
MFS MAILING ADDRESSES
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
25
<PAGE>
A FINANCIAL ADVISER CAN HELP YOU BE A BETTER INVESTOR
Financial advisers can be valuable resources for their clients, providing
ongoing education and guidance about investments, as well as a wide range of
services. Here are just some of the ways your financial adviser may be able
to help you be a better investor:
# Day-to-day monitoring of your portfolio
# Tax recordkeeping
# In-depth information on fund managers, their track records and their tenure
# Risk/reward analyses of current or potential holdings
# Asset allocation advice
# Construction of a detailed personal financial profile
# Order and confirmation processing
# Information on a fund group's range of shareholder services
# Portfolio adjustments based on lifestyle changes
# Assistance with business retirement planning
# Evaluation of lump-sum distribution options
# Recommendations on a selection of fund groups
# Specialized research and investment information not readily available to
individuals
# In-depth knowledge of markets and products, kept current by ongoing tracking
# Estate, tax, insurance, and business planning
# Help with possible savings on sales charges through breakpoints, rights of
accumulation, and letters of intent
26
<PAGE>
MFS INVESTMENT OPPORTUNITIES
The MFS Family of Funds [Registration Mark], shown on the following page, falls
into the eight general categories below. All offer full-time professional
management, a diversified portfolio, and a wide array of shareholder
services.
STOCK FUNDS seek growth of capital rather than income through investments in
stocks.
STOCK AND BOND FUNDS seek current income and growth of capital through
investments in both stocks and bonds.
BOND FUNDS seek current income through investments in debt securities.
WORLD FUNDS seek stock, balanced, and bond fund objectives through
investments in U.S. and foreign stocks and bonds.
LIMITED-MATURITY BOND FUNDS seek current income and preservation of capital
through investments in debt securities with remaining maturities of five
years or less.
NATIONAL TAX-FREE BOND FUNDS seek current income exempt from federal income
tax through investments in debt securities issued by states and
municipalities.[1]
STATE TAX-FREE BOND FUNDS seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state
and its municipalities.[1]
MONEY MARKET FUNDS seek preservation of capital and current income through
investments in short-term debt securities.[2]
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call MFS Investor Information
for literature[3] on MFS products and services: 1-800-637-2929, from 9 a.m. to
5 p.m. Eastern time any business day (leave a message anytime).
[1] A small portion of the income may be subject to federal, state and/or
alternative minimum tax.
[2] Investments in money market funds are not issued or guaranteed by the U.S.
government and there is no assurance that the fund will be able to maintain
a stable net asset value.
[3] Including a prospectus which contains more complete information on charges
and expenses. Read the prospectus carefully before investing.
27
<PAGE>
THE MFS FAMILY OF FUNDS [Registration Mark]
AMERICA'S OLDEST MUTUAL FUND GROUP
The members of the MFS Family of Funds are grouped below according to the types
of securities in their portfolios. For free prospectuses containing more
complete information, including the exchange privilege and all charges and
expenses, please contact your financial adviser or call MFS at 1-800-637-2929
any business day from 9 a.m. to 5 p.m. Eastern time (or leave a message any
time). This material should be read carefully before investing or sending money.
STOCK
================================================================================
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS [Registration Mark] Capital Growth Fund
MFS [Registration Mark] Emerging Growth Fund
MFS [Registration Mark] Gold & Natural Resources Fund
MFS [Registration Mark] Growth Opportunities Fund
MFS [Registration Mark] Managed Sectors Fund
MFS [Registration Mark] OTC Fund
MFS [Registration Mark] Research Fund
MFS [Registration Mark] Value Fund
STOCK AND BOND
================================================================================
MFS [Registration Mark] Total Return Fund
MFS [Registration Mark] Utilities Fund
BOND
================================================================================
MFS [Registration Mark] Bond Fund
MFS [Registration Mark] Government Mortgage Fund
MFS [Registration Mark] Government Securities Fund
MFS [Registration Mark] High Income Fund
MFS [Registration Mark] Intermediate Income Fund
MFS [Registration Mark] Strategic Income Fund
LIMITED MATURITY BOND
================================================================================
MFS [Registration Mark] Government Limited Maturity Fund
MFS [Registration Mark] Limited Maturity Fund
MFS [Registration Mark] Municipal Limited Maturity Fund
WORLD
================================================================================
MFS [Registration Mark]/F&C Emerging Markets Equity Fund
MFS [Registration Mark]/Foreign & Colonial International Growth and Income Fund
MFS [Registration Mark]/Foreign & Colonial International Growth Fund
MFS [Registration Mark] World Asset Allocation Fund
MFS [Registration Mark] World Equity Fund
MFS [Registration Mark] World Governments Fund
MFS [Registration Mark] World Growth Fund
MFS [Registration Mark] World Total Return Fund
NATIONAL TAX-FREE BOND
================================================================================
MFS [Registration Mark] Municipal Bond Fund
MFS [Registration Mark] Municipal High Income Fund (closed to new investors)
MFS [Registration Mark] Municipal Income Fund
STATE TAX-FREE BOND
================================================================================
Alabama, Arkansas, California, Florida, Georgia, Maryland, Massachusetts,
Mississippi, New York, North Carolina, Pennsylvania, South Carolina,
Tennessee, Virginia, West Virginia
MONEY MARKET
================================================================================
MFS [Registration Mark] Cash Reserve Fund
MFS [Registration Mark] Government Money Market Fund
MFS [Registration Mark] Money Market Fund
28
<PAGE>
MFS [Registration Mark] GROWTH OPPORTUNITIES FUND
TRUSTEES
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former Chairman and Director (until
1991), Massachusetts Financial Services Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard University Graduate School of
Business Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice President, Director and Secretary,
Massachusetts Financial Services Company
Jeffrey L. Shames* - President and Director, Massachusetts Financial Services
Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American Management Corp. (investment advisers)
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
PORTFOLIO MANAGER
Paul M. McMahon*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
CUSTODIAN
State Street Bank and Trust Company
INVESTOR INFORMATION
For MFS stock and bond market outlooks, call toll free: 1-800-637-4458 anytime
from a touch-tone telephone.
For information on MFS mutual funds, call your financial adviser or, for an
information kit, call toll free: 1-800-637-2929 any business day from 9 a.m. to
5 p.m. Eastern time (or leave a message anytime).
INVESTOR SERVICE
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For current account service, call toll free: 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call toll free: 1-800-637-6576 any
business day from 9 a.m. to 5 p.m. Eastern time. (To use this service, your
phone must be equipped with a Telecommunications Device for the Deaf.)
For share prices, account balances and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255) anytime from a touch-tone telephone.
WEB SITE
htpp://www.mfs.com
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For the second year in a row, MFS earned a #1 ranking in DALBAR, Inc.'s
Broker/Dealer Survey, Main Office Operations Service Quality category. The firm
achieved a 3.49 overall score - on a scale of 1 to 4 - in the 1995 survey. A
total of 71 firms responded, offering input on the quality of service they
receive from 36 mutual fund companies nationwide. The survey contained questions
about service quality in 17 categories, including "knowledge of phone service
contacts," "accuracy of transaction processing," and "overall ease of doing
business with the firm."
- --------------------------------------------------------------------------------
*Affiliated with the Investment Adviser
29
<PAGE>
MFS [Registration Mark] GROWTH [DALBAR LOGO] BULK RATE
OPPORTUNITIES FUND U.S. POSTAGE
500 Boylston Street PAID
Boston, MA 02116 PERMIT #55638
BOSTON, MA
[MFS LOGO]
THE FIRST NAME IN MUTUAL FUNDS
MGO-3 8/96/55M 16/216
<PAGE>
