UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-859
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MASSACHUSETTS INVESTORS GROWTH STOCK FUND
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: November 30
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Date of reporting period: May 31, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND 5/31/05
SEMIANNUAL REPORT
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LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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MANAGEMENT REVIEW 3
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PERFORMANCE SUMMARY 5
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EXPENSE TABLE 9
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PORTFOLIO OF INVESTMENTS 11
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FINANCIAL STATEMENTS 18
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NOTES TO FINANCIAL STATEMENTS 42
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RESULTS OF SHAREHOLDER MEETING 55
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PROXY VOTING POLICIES AND
INFORMATION 56
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QUARTERLY PORTFOLIO DISCLOSURE 56
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CONTACT INFORMATION BACK COVER
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THIS REPORT HAS BEEN PREPARED FOR THE GENERAL
INFORMATION TO SHAREHOLDERS. IT IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
ONLY WHEN WHEN PRECEDED OR ACCOMPANIED BY A M F S(SM)
CURRENT PROSPECTUS. INVESTMENT MANAGEMENT(R)
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders,
As a professional investor for more than 20 years, I've often been asked to name
the single most important factor in investment success. My answer is always the
same: diversification. At MFS we talk about applying a disciplined
diversification(SM) strategy to a portfolio as a three step process: allocate
among the major asset classes; diversify within each asset class; and rebalance
regularly to avoid unnecessary risk.
Individual investors sometimes assume that the amount they're putting away is
too small to allow for diversification. My response would be that a good
investment plan, developed with the help of an investment professional, should
provide a way to properly diversify your contributions.
Remember that the purpose of diversification is to own investments that
historically have not moved in sync with each other - in the hope that, in any
given period, underperforming holdings will be somewhat counteracted by other
outperforming holdings. If none of your asset classes did badly in the past year
or so, you're probably not properly diversified.
Americans today have more of their wealth tied up in the markets than in any
previous period of our history, but we are not yet making the most of our
opportunities. While neither asset allocation nor diversification can guarantee
a profit or protect against a loss, I would voice the opinion that, to a large
extent, a failure to have a plan, diversify contributions, and rebalance a
portfolio annually has been behind many U.S. investors' failure to reach their
long-term financial goals.
For more information on how to apply a disciplined diversification(SM) strategy
to your portfolio, I would urge you to contact your own investment professional.
You may also want to refer to information on the subject on our Website,
MFS.COM.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
July 15, 2005
The opinions expressed in this letter are those of MFS, and no forecasts can be
guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Stocks 97.7%
Cash & Other Net Assets 2.3%
TOP TEN HOLDINGS
Microsoft Corp. 3.7%
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Johnson & Johnson 3.5%
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Cisco Systems, Inc. 3.5%
------------------------------------------------
Wyeth 2.7%
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Dell, Inc. 2.6%
------------------------------------------------
Amgen, Inc. 2.5%
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Oracle Corp. 2.3%
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Abbott Laboratories 2.2%
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Wal-Mart Stores, Inc. 1.9%
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PepsiCo, Inc. 1.9%
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SECTOR WEIGHTINGS
Technology 30.0%
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Health Care 23.8%
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Retailing 10.9%
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Leisure 8.0%
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Consumer Staples 5.5%
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Industrial Goods & Services 5.2%
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Financial Services 4.9%
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Special Products & Services 2.5%
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Energy 2.1%
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Basic Materials 1.8%
------------------------------------------------
Transportation 1.4%
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Utilities & Communications 0.9%
------------------------------------------------
Autos & Housing 0.7%
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Percentages are based on net assets as of 5/31/05.
The portfolio is actively managed, and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the six months ended May 31, 2005, Class A shares of the Massachusetts
Investors Growth Stock Fund provided a total return of 2.35%, at net asset
value. In comparison, the fund's benchmark, the Russell 1000 Growth Index,
returned 2.51%. The fund's investment objective is to provide long-term growth
of capital and future income rather than current income. The fund will invest,
under normal market conditions, at least 80% of its net assets in common stocks
and related securities, such as securities convertible into common stocks and
depository receipts, which MFS believes offer better than average prospects for
long-term growth. MFS uses a bottom-up, as opposed to a top- down, investment
style in managing the equity-oriented funds it advises. This means that
securities are selected based upon fundamental analysis (such as an analysis of
earnings, cash flows, competitive position and management's abilities) performed
by the fund's portfolio manager and MFS' large group of equity research
analysts.
MARKET ENVIRONMENT
Stocks experienced considerable volatility during the six-month period.
Investors endured another rise in oil prices, a volatile U.S. dollar, record
U.S. budget and trade deficits, and war in Iraq. Fundamental economic factors,
however, such as corporate spending and earnings, continued to improve around
the globe. Over the course of the period, investors seemed to conclude that the
global economic recovery, although modest, was still intact. While stocks
suffered in March and April as investors worried about high oil prices and the
credit quality of some major U.S. corporations, the U.S. stock indices finished
the period about where they began.
DETRACTORS FROM PERFORMANCE
Stock selection in the industrial goods and services sector held back results
relative to the Russell 1000 Growth Index. Our position in manufacturing
conglomerate Tyco International and our avoidance of aerospace company Boeing
(an index constituent that outperformed the benchmark) were both top detractors.
An underweighted position in the consumer staples sector also detracted from
relative results as that sector outperformed the broad index. In consumer
staples, our avoidance of strong-performing index constituent Coca Cola held
back results.
Stock selection in the autos and housing sector detracted from relative
performance with motorcycle manufacturer Harley-Davidson among the top
detractors. In the health care sector, our positioning in health insurance and
Medicare/Medicaid provider UnitedHealth Group and biotech company Genentech*
held back results as both stocks outpaced the benchmark. Also in health care,
poor-performing biotech firm ImClone Systems was among the fund's top
detractors. Not owning computer chip manufacturer Intel or drugstore chain
Walgreens (both index constituents that outperformed the benchmark) held back
results. Elsewhere, management consulting firm Accenture, from the special
products and services sector, was a top detractor.
CONTRIBUTORS TO PERFORMANCE
Stock selection and an underweighted position in the financial services sector
contributed to results relative to the Russell 1000 Growth Index. Not owning
poor performing mortgage financer Fannie Mae (an index constituent that lagged
the benchmark) boosted relative performance.
Stock selection in the health care, technology, and basic materials sectors also
contributed to relative returns. In health care, pharmaceutical firm Roche
Holding, hospital operator HCA, and biotech firms Genzyme and Biogen Idec were
all strong contributors. No basic materials stocks were among our top
contributors.
In the technology sector, our positions in fiber optic cable manufacturer
Corning and digital integrated circuits manufacturer Marvell Technology Group
benefited relative results. Elsewhere in the sector, our significantly
underweighted positions in index constituents IBM* and communications software
and technology company QUALCOMM aided results as both stocks lagged the
benchmark. In the retailing sector, drug store chain CVS was also among the
fund's strongest relative contributors.
Respectfully,
/s/ Margaret W. Adams /s/ S. Irfan Ali
Margaret W. Adams S. Irfan Ali
Portfolio Manager Portfolio Manager
/s/ Gregory Locraft /s/ Stephen Pesek
Gregory Locraft Stephen Pesek
Portfolio Manager Portfolio Manager
*Security was not held in the portfolio at period-end.
The views expressed in this report are those of the portfolio managers only
through the end of the period of the report as stated on the cover and do not
necessarily reflect the views of MFS or any other person in the MFS
organization. These views are subject to change at any time based on market and
other conditions, and MFS disclaims any responsibility to update such views.
These views may not be relied upon as investment advice or an indication of
trading intent on behalf of any MFS Fund. References to specific securities are
not recommendations of such securities, and may not be representative of any MFS
Fund's current or future investments.
PERFORMANCE SUMMARY THROUGH 5/31/05
Because mutual funds are designed for investors with long-term goals, we have
provided cumulative results as well as the average annual total returns for the
applicable time periods. Performance results reflect the percentage change in
net asset value, including the reinvestment of any dividends and capital gains
distributions. (See Notes to Performance Summary.)
VISIT MFS.COM FOR THE MOST RECENT MONTH-END PERFORMANCE RESULTS. (FOR THE MOST
RECENT MONTH-END PERFORMANCE FOR I SHARES CALL 1-888-808-6374.) MARKET
VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE, AND CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE
PERFORMANCE SHOWN DOES NOT REFLECT THE DEDUCTION OF TAXES, IF ANY, THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
TOTAL RETURNS
AVERAGE ANNUAL WITHOUT SALES CHARGE
Class inception
Share class date 6-mo 1-yr 3-yr 5-yr 10-yr
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A 1/01/35 2.35% 6.19% 1.88% -7.73% 10.61%
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B 9/07/93 2.02% 5.51% 1.20% -8.34% 9.84%
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C 11/03/97 2.03% 5.44% 1.20% -8.33% 9.83%
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I 1/02/97 2.54% 6.51% 2.24% -7.41% 10.93%
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J 12/18/00 2.04% 5.47% 1.21% -8.34% 9.84%
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R* 12/31/02 2.31% 5.97% 1.83% -7.76% 10.60%
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R1 4/01/05 2.02% 5.51% 1.20% -8.34% 9.84%
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R2 4/01/05 2.11% 5.61% 1.23% -8.32% 9.85%
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R3* 10/31/03 2.19% 5.77% 1.34% -8.26% 9.88%
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R4 4/01/05 2.35% 6.19% 1.88% -7.73% 10.61%
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R5 4/01/05 2.43% 6.28% 1.90% -7.72% 10.62%
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529A 7/31/02 2.23% 5.92% 1.58% -7.89% 10.52%
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529B 7/31/02 1.85% 5.15% 0.99% -8.45% 9.77%
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529C 7/31/02 1.86% 5.17% 0.98% -8.46% 9.77%
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COMPARATIVE BENCHMARKS
Average large-cap growth fund+ 1.88% 4.30% 2.81% -7.64% 7.43%
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Russell 1000 Growth Index# 2.51% 3.33% 3.97% -8.97% 7.85%
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AVERAGE ANNUAL WITH SALES CHARGE
Share class 6-mo 1-yr 3-yr 5-yr 10-yr
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A -3.54% 0.09% -0.12% -8.82% 9.96%
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B -1.98% 1.51% 0.21% -8.67% 9.84%
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C 1.03% 4.44% 1.20% -8.33% 9.83%
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J -2.04% 1.25% -0.16% -9.08% 9.39%
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529A -3.64% -0.17% -0.41% -8.98% 9.86%
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529B -2.15% 1.15% 0.00% -8.79% 9.77%
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529C 0.86% 4.17% 0.98% -8.46% 9.77%
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I, R, R1, R2, R3, R4 and R5 Class shares do not have a sales charge. Please see
Notes to Performance Summary for more details.
CUMULATIVE WITHOUT SALES CHARGE
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A 2.35% 6.19% 5.73% -33.13% 174.21%
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B 2.02% 5.51% 3.64% -35.29% 155.56%
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C 2.03% 5.44% 3.66% -35.28% 155.49%
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I 2.54% 6.51% 6.88% -31.93% 182.15%
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J 2.04% 5.47% 3.68% -35.29% 155.56%
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R* 2.31% 5.97% 5.60% -33.21% 173.88%
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R1 2.02% 5.51% 3.64% -35.29% 155.56%
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R2 2.11% 5.61% 3.73% -35.24% 155.79%
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R3* 2.19% 5.77% 4.08% -35.02% 156.65%
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R4 2.35% 6.19% 5.73% -33.13% 174.21%
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R5 2.43% 6.28% 5.82% -33.08% 174.44%
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529A 2.23% 5.92% 4.81% -33.71% 171.83%
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529B 1.85% 5.15% 2.99% -35.70% 153.95%
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529C 1.86% 5.17% 2.98% -35.71% 153.92%
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* Effective April 1, 2005, Class R1 shares have been renamed "Class R shares"
and Class R2 shares have been renamed "Class R3 shares."
+ Source: Lipper Inc., an independent firm that reports mutual fund
performance.
# Source: Standard & Poor's Micropal, Inc.
Periods less than one year are actual, not annualized.
INDEX DEFINITION
Russell 1000 Growth Index - is constructed to provide a comprehensive barometer
for growth securities in the large-cap segment of the U.S. equity universe.
Companies in this index generally have higher price-to-book ratios and higher
forecasted growth values.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
Class A and 529A results including sales charge reflect the deduction of the
maximum 5.75% sales charge. Class B and 529B results including sales charge
reflect the deduction of the applicable contingent deferred sales charge (CDSC),
which declines over six years from 4% to 0%. Class C and 529C results including
sales charge (assuming redemption within one year from the end of the prior
month of purchase) reflect the deduction of the 1% CDSC. Class J results reflect
the deduction of the maximum 4% sales charge and are available only to residents
of Japan. Class R shares have no initial sales charge or CDSC and are available
only to Class R existing shareholders. Class I, R1, R2, R3, R4, and R5 shares
have no initial sales charge or CDSC. Class I shares are only available to
certain investors, and Class R1, R2, R3, R4, and R5 shares are only available to
certain retirement plans. Class 529 shares are only available in conjunction
with qualified tuition programs, such as the MFS 529 Savings Plan. There also is
an additional annual fee, which is detailed in the program description, on
qualified tuition programs. If this fee was reflected, the performance for Class
529 shares would have been lower. This annual fee is waived for Oregon residents
and for those accounts with assets of $25,000 or more.
Performance for Class I, R, R4, R5, and 529A shares includes the performance of
the fund's Class A shares for periods prior to their offering. Performance for
Class C, J, R1, R2, R3, 529B and 529C shares includes the performance of the
fund's Class B shares for periods prior to their offering. This blended class
performance has been adjusted to take into account differences in sales loads,
if any, applicable to these share classes, but has not been adjusted to take
into account differences in class specific operating expenses (such as Rule
12b-1 fees). Compared to performance these share classes would have experienced
had they been offered for the entire period, the use of blended performance
generally results in higher performance for share classes with higher operating
expenses than the share class to which it is blended, and lower performance for
share classes with lower operating expenses than the share class to which it is
blended.
Performance results reflect any applicable expense subsidies and waivers in
effect during the periods shown. Without such subsidies and waivers the fund's
performance results would be less favorable. Please see the prospectus and
financial statements for complete details.
The performance shown reflects a non-recurring accrual made to the fund July 28,
2004 relating to MFS' revenue sharing settlement with the Securities and
Exchange Commission without which the performance would have been lower. For
example, the impact on the fund's performance (not including sales charge) for
the one-year period through the date shown would have been lower by
approximately 0.27%. The proceeds were paid to the fund on February 16, 2005.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
KEY RISK CONSIDERATIONS
The portfolio may invest in foreign and/or emerging markets securities, which
are more susceptible to risks relating to interest rates, currency exchange
rates, economic, and political conditions.
Market risk is the risk that the price of a security held by the portfolio will
fall due to changing economic, political or market conditions or disappointing
earnings results.
Growth companies risk, is the risk that the prices of growth company securities
held by the portfolio, which are the portfolio's principal investment focus,
will fall to a greater extent than the overall equity markets due to changing
economic, political or market conditions.
Please see the prospectus for further information regarding these and other risk
considerations.
EXPENSE TABLE
FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, DECEMBER 1, 2004
THROUGH MAY 31, 2005.
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on certain purchase or redemption
payments and redemption fees on certain exchanges and redemptions, and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period December 1, 2004 through May 31, 2005.
ACTUAL EXPENSES
The first line for each share class in the table below provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the table below provides information
about hypothetical account values and hypothetical expenses based on the fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the second line for each share
class in the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
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Expenses
Paid During
Annualized Beginning Ending Period**
Share Expense Account Value Account Value 12/01/04-
Class Ratio 12/01/04 5/31/05 5/31/05
- -------------------------------------------------------------------------------
Actual 0.90% $1,000.00 $1,023.50 $4.54
A -----------------------------------------------------------------
Hypothetical* 0.90% $1,000.00 $1,020.44 $4.53
- -------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,020.20 $7.81
B -----------------------------------------------------------------
Hypothetical* 1.55% $1,000.00 $1,017.20 $7.80
- -------------------------------------------------------------------------------
Actual 1.54% $1,000.00 $1,020.30 $7.76
C -----------------------------------------------------------------
Hypothetical* 1.54% $1,000.00 $1,017.25 $7.75
- -------------------------------------------------------------------------------
Actual 0.63% $1,000.00 $1,025.40 $3.18
I -----------------------------------------------------------------
Hypothetical* 0.63% $1,000.00 $1,021.79 $3.18
- -------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,020.40 $7.81
J -----------------------------------------------------------------
Hypothetical* 1.55% $1,000.00 $1,017.20 $7.80
- -------------------------------------------------------------------------------
Actual 1.03% $1,000.00 $1,023.10 $5.20
R -----------------------------------------------------------------
(formerly R1) Hypothetical* 1.03% $1,000.00 $1,019.80 $5.19
- -------------------------------------------------------------------------------
Actual 1.64% $1,000.00 $1,020.20 $8.26
R1 -----------------------------------------------------------------
Hypothetical* 1.64% $1,000.00 $1,016.75 $8.25
- -------------------------------------------------------------------------------
Actual 1.32% $1,000.00 $1,021.10 $6.65
R2 -----------------------------------------------------------------
Hypothetical* 1.32% $1,000.00 $1,018.35 $6.64
- -------------------------------------------------------------------------------
Actual 1.29% $1,000.00 $1,021.90 $6.50
R3 -----------------------------------------------------------------
(formerly R2) Hypothetical* 1.29% $1,000.00 $1,018.50 $6.49
- -------------------------------------------------------------------------------
Actual 0.83% $1,000.00 $1,023.50 $4.19
R4 -----------------------------------------------------------------
Hypothetical* 0.83% $1,000.00 $1,020.79 $4.18
- -------------------------------------------------------------------------------
Actual 0.53% $1,000.00 $1,024.30 $2.67
R5 -----------------------------------------------------------------
Hypothetical* 0.53% $1,000.00 $1,022.29 $2.67
- -------------------------------------------------------------------------------
Actual 1.14% $1,000.00 $1,022.30 $5.75
529A -----------------------------------------------------------------
Hypothetical 1.14% $1,000.00 $1,019.25 $5.74
- -------------------------------------------------------------------------------
Actual 1.79% $1,000.00 $1,018.50 $9.01
529B -----------------------------------------------------------------
Hypothetical* 1.79% $1,000.00 $1,016.01 $9.00
- -------------------------------------------------------------------------------
Actual 1.80% $1,000.00 $1,018.60 $9.06
529C -----------------------------------------------------------------
Hypothetical* 1.80% $1,000.00 $1,015.96 $9.05
- -------------------------------------------------------------------------------
* 5% class return per year before expenses.
** Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied by
the number of days in the period, divided by the number of days in the year.
Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS (unaudited) - 5/31/05
The Portfolio of Investments is a complete list of all securities owned by your
fund. It is categorized by broad-based asset classes.
Stocks - 97.7%
- ---------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- ---------------------------------------------------------------------------------------------
Aerospace - 1.2%
- ---------------------------------------------------------------------------------------------
Lockheed Martin Corp. 260,900 $ 16,929,801
Northrop Grumman Corp. 377,700 21,045,444
United Technologies Corp. 551,500 58,845,050
--------------
$ 96,820,295
- ---------------------------------------------------------------------------------------------
Apparel Manufacturers - 0.7%
- ---------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton S.A 103,900 $ 7,417,948
Nike, Inc., "B" 269,700 22,169,340
Polo Ralph Lauren Corp., "A" 107,100 4,150,125
Reebok International Ltd.^ 601,140 24,472,409
--------------
$ 58,209,822
- ---------------------------------------------------------------------------------------------
Automotive - 0.5%
- ---------------------------------------------------------------------------------------------
Harley-Davidson, Inc.^ 830,800 $ 40,734,124
- ---------------------------------------------------------------------------------------------
Banks & Credit Companies - 2.5%
- ---------------------------------------------------------------------------------------------
American Express Co. 683,150 $ 36,787,628
Citigroup, Inc. 1,111,320 52,354,285
Countrywide Financial Corp.* 877,100 32,601,807
SLM Corp.^ 1,579,100 76,223,157
Wells Fargo & Co. 38,900 2,349,949
--------------
$ 200,316,826
- ---------------------------------------------------------------------------------------------
Biotechnology - 5.2%
- ---------------------------------------------------------------------------------------------
Amgen, Inc.* 3,193,273 $ 199,835,024
Biogen Idec, Inc.^* 959,100 37,500,810
Genzyme Corp.* 1,340,428 83,629,303
Gilead Sciences, Inc.* 1,578,363 64,397,210
ImClone Systems, Inc.^* 476,860 15,803,140
Medimmune, Inc.^* 462,960 12,222,144
--------------
$ 413,387,631
- ---------------------------------------------------------------------------------------------
Broadcast & Cable TV - 4.3%
- ---------------------------------------------------------------------------------------------
Citadel Broadcasting Corp.^* 911,100 $ 10,814,757
Comcast Corp., "A"* 2,323,830 74,827,326
EchoStar Communications Corp., "A"^ 542,000 15,842,660
Grupo Televisa S.A., ADR 388,840 23,330,400
News Corp., "A" 1,684,600 27,172,598
Time Warner, Inc.* 2,438,920 42,437,208
Univision Communications, Inc., "A"* 1,652,680 43,977,815
Viacom, Inc., "B" 1,264,470 43,358,676
Walt Disney Co. 2,204,870 60,501,633
--------------
$ 342,263,073
- ---------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 0.9%
- ---------------------------------------------------------------------------------------------
Chicago Mercantile Exchange Holdings, Inc. 45,500 $ 9,836,645
Goldman Sachs Group, Inc. 111,700 10,890,750
Legg Mason, Inc. 258,700 21,259,966
Mellon Financial Corp. 446,700 12,400,392
Merrill Lynch & Co., Inc. 357,350 19,389,811
--------------
$ 73,777,564
- ---------------------------------------------------------------------------------------------
Business Services - 1.7%
- ---------------------------------------------------------------------------------------------
Accenture Ltd., "A"* 4,099,060 $ 95,426,117
Fiserv, Inc.^* 684,100 29,416,300
Getty Images, Inc.^* 140,360 10,504,542
--------------
$ 135,346,959
- ---------------------------------------------------------------------------------------------
Chemicals - 1.1%
- ---------------------------------------------------------------------------------------------
3M Co. 461,800 $ 35,396,970
Monsanto Co. 951,180 54,217,260
--------------
$ 89,614,230
- ---------------------------------------------------------------------------------------------
Computer Software - 10.1%
- ---------------------------------------------------------------------------------------------
Amdocs Ltd.* 2,831,980 $ 77,171,455
Check Point Software Technologies Ltd.* 445,226 10,111,082
Citrix Systems, Inc.^* 536,650 13,502,114
Mercury Interactive Corp.* 1,640,270 74,008,982
Microsoft Corp. 11,312,160 291,853,728
Oracle Corp.* 14,274,450 182,998,449
Symantec Corp.* 4,432,100 100,209,781
TomTom N.V.* 14,760 338,303
VERITAS Software Corp.* 1,858,330 46,216,667
--------------
$ 796,410,561
- ---------------------------------------------------------------------------------------------
Computer Software - Systems - 3.1%
- ---------------------------------------------------------------------------------------------
CDW Corp.^ 494,900 $ 28,793,282
Dell, Inc.* 5,231,610 208,688,923
Infosys Technologies Ltd., ADR 66,100 4,781,674
LG.Philips LCD Co. Ltd., ADR* 151,700 3,969,989
--------------
$ 246,233,868
- ---------------------------------------------------------------------------------------------
Conglomerates - 0.1%
- ---------------------------------------------------------------------------------------------
Textron, Inc. 102,800 $ 7,945,412
- ---------------------------------------------------------------------------------------------
Construction - 0.1%
- ---------------------------------------------------------------------------------------------
KB Home^ 66,600 $ 4,498,164
Pulte Homes, Inc. 53,900 4,120,655
--------------
$ 8,618,819
- ---------------------------------------------------------------------------------------------
Consumer Goods & Services - 3.5%
- ---------------------------------------------------------------------------------------------
Apollo Group, Inc., "A"* 236,400 $ 18,557,400
Avon Products, Inc. 987,230 39,232,520
Career Education Corp.^* 280,300 9,718,001
Cintas Corp.^ 626,620 25,296,649
Fortune Brands, Inc. 37,600 3,252,400
Gillette Co. 621,580 32,782,129
Procter & Gamble Co. 2,102,660 115,961,699
Reckitt Benckiser PLC 1,144,900 34,981,477
--------------
$ 279,782,275
- ---------------------------------------------------------------------------------------------
Electrical Equipment - 3.1%
- ---------------------------------------------------------------------------------------------
Cooper Industries Ltd., "A" 222,940 $ 15,369,484
Emerson Electric Co. 246,200 16,364,914
General Electric Co. 2,652,530 96,764,294
Tyco International Ltd. 3,884,320 112,373,378
--------------
$ 240,872,070
- ---------------------------------------------------------------------------------------------
Electronics - 5.3%
- ---------------------------------------------------------------------------------------------
Amphenol Corp., "A" 205,600 $ 8,715,384
Analog Devices, Inc. 2,541,930 94,254,764
Broadcom Corp., "A"* 323,300 11,473,917
KLA-Tencor Corp.^ 411,200 18,672,592
Linear Technology Corp.^ 134,440 5,037,467
Marvell Technology Group Ltd.* 1,571,828 64,382,075
Maxim Integrated Products, Inc. 225,760 8,894,944
PMC-Sierra, Inc.^* 1,957,470 17,167,012
Samsung Electronics Co. Ltd., GDR 134,240 32,284,720
Samsung Electronics Co., Ltd. 75,350 36,571,861
Symbol Technologies, Inc. 40 460
Taiwan Semiconductor Manufacturing Co. Ltd., ADR^ 2,988,980 27,528,506
Texas Instruments, Inc. 1,150,390 31,796,780
Xilinx, Inc. 2,309,050 64,076,138
--------------
$ 420,856,620
- ---------------------------------------------------------------------------------------------
Energy - Independent - 0.3%
- ---------------------------------------------------------------------------------------------
Arch Coal, Inc.^ 101,700 $ 4,927,365
EOG Resources, Inc.^ 248,700 12,407,643
Massey Energy Co.^ 122,100 4,936,503
--------------
$ 22,271,511
- ---------------------------------------------------------------------------------------------
Food & Drug Stores - 1.5%
- ---------------------------------------------------------------------------------------------
CVS Corp. 2,177,710 $ 119,447,394
- ---------------------------------------------------------------------------------------------
Food & Non-Alcoholic Beverages - 2.7%
- ---------------------------------------------------------------------------------------------
Groupe Danone 60,700 $ 5,585,218
Kellogg Co. 635,400 28,904,346
PepsiCo, Inc.^ 2,635,250 148,364,575
SYSCO Corp.^ 794,940 29,539,970
--------------
$ 212,394,109
- ---------------------------------------------------------------------------------------------
Furniture & Appliances - 0.1%
- ---------------------------------------------------------------------------------------------
Harman International Industries, Inc. 126,500 $ 10,481,790
- ---------------------------------------------------------------------------------------------
Gaming & Lodging - 1.2%
- ---------------------------------------------------------------------------------------------
Carnival Corp. 1,020,500 $ 53,984,450
Harrah's Entertainment, Inc.^ 225,000 16,157,250
International Game Technology 551,200 15,532,816
Royal Caribbean Cruises Ltd.^ 220,870 10,184,316
--------------
$ 95,858,832
- ---------------------------------------------------------------------------------------------
General Merchandise - 4.7%
- ---------------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 624,100 $ 16,020,647
Kohl's Corp.* 1,956,620 95,267,828
Target Corp. 1,904,950 102,295,815
Wal-Mart Stores, Inc. 3,254,890 153,728,455
--------------
$ 367,312,745
- ---------------------------------------------------------------------------------------------
Health Maintenance Organizations - 0.6%
- ---------------------------------------------------------------------------------------------
UnitedHealth Group, Inc. 64,600 $ 3,138,268
WellPoint, Inc.* 349,300 46,456,900
--------------
$ 49,595,168
- ---------------------------------------------------------------------------------------------
Insurance - 1.5%
- ---------------------------------------------------------------------------------------------
AFLAC, Inc. 622,900 $ 25,881,495
American International Group, Inc. 1,378,750 76,589,563
St. Paul Travelers Cos., Inc.^ 454,465 17,215,134
--------------
$ 119,686,192
- ---------------------------------------------------------------------------------------------
Internet - 3.1%
- ---------------------------------------------------------------------------------------------
Amazon.com, Inc.^* 224,500 $ 7,971,995
eBay, Inc.* 1,542,810 58,642,208
Google, Inc., "A"* 208,900 58,157,760
IAC/InterActiveCorp^* 827,100 20,263,950
Yahoo!, Inc.* 2,584,410 96,140,052
--------------
$ 241,175,965
- ---------------------------------------------------------------------------------------------
Leisure & Toys - 1.4%
- ---------------------------------------------------------------------------------------------
Activision, Inc.* 465,000 $ 7,328,400
Electronic Arts, Inc.* 1,890,340 99,318,464
--------------
$ 106,646,864
- ---------------------------------------------------------------------------------------------
Machinery & Tools - 0.9%
- ---------------------------------------------------------------------------------------------
Caterpillar, Inc.^ 264,000 $ 24,845,040
Illinois Tool Works, Inc. 542,020 45,762,749
--------------
$ 70,607,789
- ---------------------------------------------------------------------------------------------
Medical & Health Technology & Services - 1.0%
- ---------------------------------------------------------------------------------------------
Caremark Rx, Inc.* 760,200 $ 33,950,532
Cerner Corp.^* 146,800 9,593,380
Community Health Systems, Inc.* 485,700 17,664,909
HCA, Inc.^ 349,800 18,889,200
--------------
$ 80,098,021
- ---------------------------------------------------------------------------------------------
Medical Equipment - 4.0%
- ---------------------------------------------------------------------------------------------
Boston Scientific Corp.* 693,960 $ 18,799,376
Fisher Scientific International, Inc.* 1,166,470 72,857,716
Medtronic, Inc. 1,942,470 104,407,763
St. Jude Medical, Inc.* 1,723,370 69,141,604
Varian Medical Systems, Inc.* 503,500 18,936,635
Waters Corp.* 411,000 15,967,350
Zimmer Holdings, Inc.^* 249,000 19,068,420
--------------
$ 319,178,864
- ---------------------------------------------------------------------------------------------
Metals & Mining - 0.2%
- ---------------------------------------------------------------------------------------------
BHP Billiton Ltd.^ 121,800 $ 3,057,180
Companhia Vale do Rio Doce, ADR^ 274,800 7,977,444
--------------
$ 11,034,624
- ---------------------------------------------------------------------------------------------
Oil Services - 1.8%
- ---------------------------------------------------------------------------------------------
BJ Services Co. 168,300 $ 8,473,905
GlobalSantaFe Corp. 877,400 32,147,936
Halliburton Co. 1,363,100 58,258,894
Noble Corp.^ 479,300 27,137,966
Smith International, Inc.^ 142,000 8,343,920
Tenaris S.A., ADR^ 69,100 4,819,725
--------------
$ 139,182,346
- ---------------------------------------------------------------------------------------------
Personal Computers & Peripherals - 1.9%
- ---------------------------------------------------------------------------------------------
EMC Corp.* 8,149,070 $ 114,575,924
Lexmark International, Inc., "A"* 354,800 24,282,512
Network Appliance, Inc.^* 460,050 13,231,038
--------------
$ 152,089,474
- ---------------------------------------------------------------------------------------------
Pharmaceuticals - 13.0%
- ---------------------------------------------------------------------------------------------
Abbott Laboratories 3,564,480 $ 171,950,515
Allergan, Inc.^ 728,510 56,321,108
Eli Lilly & Co. 2,400,730 139,962,559
Johnson & Johnson 4,184,590 280,785,989
Roche Holding AG^ 949,260 119,698,397
Sanofi-Aventis^ 260,800 23,531,619
Teva Pharmaceutical Industries Ltd., ADR 692,100 23,095,377
Wyeth 4,925,080 213,600,720
--------------
$1,028,946,284
- ---------------------------------------------------------------------------------------------
Printing & Publishing - 0.4%
- ---------------------------------------------------------------------------------------------
McGraw-Hill Cos., Inc. 634,400 $ 27,697,904
- ---------------------------------------------------------------------------------------------
Railroad & Shipping - 0.1%
- ---------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 76,700 $ 3,790,514
- ---------------------------------------------------------------------------------------------
Restaurants - 0.7%
- ---------------------------------------------------------------------------------------------
Outback Steakhouse, Inc. 1,279,960 $ 56,638,230
- ---------------------------------------------------------------------------------------------
Specialty Chemicals - 0.5%
- ---------------------------------------------------------------------------------------------
Praxair, Inc. 824,900 $ 38,663,063
- ---------------------------------------------------------------------------------------------
Specialty Stores - 4.0%
- ---------------------------------------------------------------------------------------------
Aeropostale, Inc.* 350,300 $ 9,545,675
Bed Bath & Beyond, Inc.* 345,370 14,039,291
Best Buy Co., Inc. 426,200 23,198,066
CarMax, Inc.* 339,500 8,667,435
Home Depot, Inc. 555,200 21,847,120
Lowe's Cos., Inc. 2,253,100 128,899,851
PETsMART, Inc. 1,876,560 59,618,311
Staples, Inc. 488,995 10,528,062
TJX Cos., Inc.^ 1,814,500 41,606,485
--------------
$ 317,950,296
- ---------------------------------------------------------------------------------------------
Telecommunications - Wireless - 0.4%
- ---------------------------------------------------------------------------------------------
America Movil S.A. de C.V., ADR 600,400 $ 34,030,672
- ---------------------------------------------------------------------------------------------
Telecommunications - Wireline - 6.5%
- ---------------------------------------------------------------------------------------------
Cisco Systems, Inc.* 14,275,130 $ 276,652,019
Comverse Technology, Inc.* 1,285,960 30,258,639
Corning, Inc.^* 6,153,340 96,484,371
Juniper Networks, Inc.* 468,300 12,007,212
QUALCOMM, Inc. 2,705,700 100,814,382
--------------
$ 516,216,623
- ---------------------------------------------------------------------------------------------
Telephone Services - 0.5%
- ---------------------------------------------------------------------------------------------
Sprint Corp. 1,671,950 $ 39,608,496
- ---------------------------------------------------------------------------------------------
Trucking - 1.3%
- ---------------------------------------------------------------------------------------------
Expeditors International of Washington, Inc.^ 209,850 $ 10,698,153
FedEx Corp. 789,760 70,620,339
United Parcel Service, Inc., "B" 303,720 22,368,978
--------------
$ 103,687,470
- ---------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $7,684,914,102) $7,735,481,389
- ---------------------------------------------------------------------------------------------
Short-Term Obligations> - 0.8%
- ---------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- ---------------------------------------------------------------------------------------------
Verizon Global Networks, Inc., 3.05%, due 6/23/05 $ 9,941,000 $ 9,922,471
Verizon Network Funding, 3.03%, due 6/23/05 5,000,000 4,990,742
Verizon Network Funding, 3.06%, due 6/29/05 48,058,000 47,943,622
- ---------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 62,856,835
- ---------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 2.9%
- ---------------------------------------------------------------------------------------------
Morgan Stanley, 3.07%, dated 5/31/05, due 6/01/05, total to
be received $71,124,339 (secured by various U.S.Treasury and
Federal Agency obligations in a individually traded account) $ 71,118,274 $ 71,118,274
- ---------------------------------------------------------------------------------------------
ISSUER SHARES $ VALUE
- ---------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 158,845,634 $ 158,845,634
- ---------------------------------------------------------------------------------------------
Total Collateral for Securities Loaned, at Amortized Cost $ 229,963,908
- ---------------------------------------------------------------------------------------------
Repurchase Agreement - 1.9%
- ---------------------------------------------------------------------------------------------
ISSUER PAR AMOUNT $ VALUE
- ---------------------------------------------------------------------------------------------
Morgan Stanley, 3.05%, dated 5/31/05, due 6/01/05,
total to be received $153,648,016 by various U.S.
Treasury and Federal Agency obligations in a jointly
traded account), at Cost $ 153,635,000 $ 153,635,000
- ---------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $8,131,369,845) $8,181,937,132
- ---------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (3.3)% (262,416,056)
- ---------------------------------------------------------------------------------------------
Net Assets - 100.0% $7,919,521,076
- ---------------------------------------------------------------------------------------------
*Non-income producing security.
^ All or a portion of this security is on loan.
> The rate shown represents an annualized yield at time of purchase.
ADR = American Depository Receipt.
GDR = Global Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (unaudited)
This statement represents your fund's balance sheet, which details the assets
and liabilities composing the total value of the fund.
AT 5/31/05
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value, including $222,200,408 of
securities on loan (identified cost, $8,131,369,845) $8,181,937,132
Cash 875
Receivable for investments sold 69,978,835
Receivable for fund shares sold 4,714,459
Interest and dividends receivable 9,182,260
Other assets 87,269
- -------------------------------------------------------------------------------------------------------
Total assets $8,265,900,830
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable for investments purchased $92,414,841
Payable for fund shares reacquired 19,997,366
Collateral for securities loaned, at value 229,963,908
Payable to affiliates
Management fee 288,196
Shareholder servicing costs 2,074,348
Distribution and service fee 500,850
Administrative fee 6,623
Program manager fee 120
Administrative service fee 43
Accrued expenses and other liabilities 1,133,459
- -------------------------------------------------------------------------------------------------------
Total liabilities $346,379,754
- -------------------------------------------------------------------------------------------------------
Net assets $7,919,521,076
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------
Paid-in capital $12,951,229,610
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 50,581,843
Accumulated net realized loss on investments and foreign
currency transactions (5,073,872,067)
Accumulated net investment loss (8,418,310)
- -------------------------------------------------------------------------------------------------------
Net assets $7,919,521,076
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 674,980,853
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $4,979,706,878
Shares outstanding 411,306,358
- -------------------------------------------------------------------------------------------------------
Net asset value per share $12.11
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25X$12.11) $12.85
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,130,769,520
Shares outstanding 191,921,608
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $11.10
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $636,213,713
Shares outstanding 57,556,558
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $11.05
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $114,801,963
Shares outstanding 9,340,502
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $12.29
- -------------------------------------------------------------------------------------------------------
Class J shares
- -------------------------------------------------------------------------------------------------------
Net assets $5,363,882
Shares outstanding 487,982
- -------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $10.99
- -------------------------------------------------------------------------------------------------------
Class R shares (formerly Class R1)
- -------------------------------------------------------------------------------------------------------
Net assets $46,617,982
Shares outstanding 3,852,708
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $12.10
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $60,114
Shares outstanding 5,415
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $11.10
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $51,142
Shares outstanding 4,604
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $11.11
- -------------------------------------------------------------------------------------------------------
Class R3 shares (formerly Class R2)
- -------------------------------------------------------------------------------------------------------
Net assets $1,409,917
Shares outstanding 117,506
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $12.00
- -------------------------------------------------------------------------------------------------------
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $51,184
Shares outstanding 4,227
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $12.11
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $51,210
Shares outstanding 4,226
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price
per share $12.12
- -------------------------------------------------------------------------------------------------------
Class 529A shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,999,645
Shares outstanding 249,722
- -------------------------------------------------------------------------------------------------------
Net asset value per share $12.01
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25X$12.01) $12.74
- -------------------------------------------------------------------------------------------------------
Class 529B shares
- -------------------------------------------------------------------------------------------------------
Net assets $549,531
Shares outstanding 49,819
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $11.03
- -------------------------------------------------------------------------------------------------------
Class 529C shares
- -------------------------------------------------------------------------------------------------------
Net assets $874,395
Shares outstanding 79,618
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $10.98
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A and Class 529A shares
is reduced. A contingent deferred sales charge may be imposed on redemptions of
Class A, Class B, Class C, Class 529B, and Class 529C shares.
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited)
This statement describes how much your fund received in investment income and
paid in expenses. It also describes any gains and/or losses generated by fund
operations.
SIX MONTHS ENDED 5/31/05
NET INVESTMENT LOSS
- -------------------------------------------------------------------------------------------------------
Income
Dividends $36,285,224
Interest 2,272,368
Foreign taxes withheld (285,180)
- -------------------------------------------------------------------------------------------------------
Total investment income $38,272,412
- -------------------------------------------------------------------------------------------------------
Expenses
Management fee $13,682,982
Trustees' compensation 79,883
Shareholder servicing costs 6,740,043
Distribution and service fee (Class A) 9,049,833
Distribution and service fee (Class B) 11,355,983
Distribution and service fee (Class C) 3,414,490
Distribution and service fee (Class J) 31,735
Distribution and service fee (Class R) 89,988
Distribution and service fee (Class R1) 65
Distribution and service fee (Class R2) 42
Distribution and service fee (Class R3) 2,892
Distribution and service fee (Class R4) 21
Distribution and service fee (Class 529A) 4,707
Distribution and service fee (Class 529B) 2,533
Distribution and service fee (Class 529C) 4,124
Program manager fee (Class 529A) 3,362
Program manager fee (Class 529B) 633
Program manager fee (Class 529C) 1,031
Administrative service fee (Class R1) 39
Administrative service fee (Class R2) 33
Administrative service fee (Class R3) 1,446
Administrative service fee (Class R4) 12
Administrative service fee (Class R5) 8
Administrative fee 232,615
Custodian fee 739,812
Interest expense 1,220
Printing 246,975
Postage 103,368
Auditing fees 32,974
Legal fees 103,015
Shareholder solicitation expense 716,481
- -------------------------------------------------------------------------------------------------------
Miscellaneous 107,395
- -------------------------------------------------------------------------------------------------------
Total expenses $46,749,740
- -------------------------------------------------------------------------------------------------------
Fees paid indirectly (380,236)
Reduction of expenses by investment adviser (18,642)
- -------------------------------------------------------------------------------------------------------
Net expenses $46,350,862
- -------------------------------------------------------------------------------------------------------
Net investment loss $(8,078,450)
- -------------------------------------------------------------------------------------------------------
Statement of Operations (unaudited) - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $337,769,526
Foreign currency transactions (281,118)
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $337,488,408
- -------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $(135,628,883)
Translation of assets and liabilities in foreign currencies 1,477
- -------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $(135,627,406)
- -------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $201,861,002
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $193,782,552
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets
This statement describes the increases and/or decreases in net assets resulting
from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED
5/31/05 11/30/04
(UNAUDITED)
CHANGE IN NET ASSETS
- -------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) $(8,078,450) $23,699,754
Net realized gain (loss) on investments and foreign
currency transactions 337,488,408 762,967,254
Net unrealized gain (loss) on investments and foreign
currency translation (135,627,406) (62,165,681)
- -------------------------------------------------------------------------------------------------------
Change in net assets from operations $193,782,552 $724,501,327
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS -
From net investment income (Class A) $(22,549,647) $--
From net investment income (Class I) (1,105,607) --
From net investment income (Class R) (113,615) --
From net investment income (Class R3) (6,068) --
From net investment income (Class 529A) (7,734) --
- -------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $(23,782,671) $--
- -------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,119,826,533) $(2,936,090,100)
- -------------------------------------------------------------------------------------------------------
Redemption fees $19,402 $9,598
- -------------------------------------------------------------------------------------------------------
Total change in net assets $(949,807,250) $(2,211,579,175)
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
At beginning of period $8,869,328,326 $11,080,907,501
At end of period (including accumulated net investment
loss of $8,418,310 and accumulated undistributed net
investment income of $23,442,811, respectively) $7,919,521,076 $8,869,328,326
- -------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights
The financial highlights table is intended to help you understand the fund's financial performance for the semiannual period
and the past 5 fiscal years (or, if shorter, the period of the fund's operation). Certain information reflects financial
results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or
lost) on an investment in the fund (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 11/30
ENDED ---------------------------------------------------------------------------
CLASS A 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value,
beginning of period $11.88 $11.02 $9.98 $12.73 $18.47 $19.29
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss)(S) $0.00+++ $0.05 $0.00+++ $(0.02) $(0.00)+++ $(0.03)
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.28 0.81 1.04 (2.73) (4.02) 0.83###
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations $0.28 $0.86 $1.04 $(2.75) $(4.02) $0.80
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.05) $-- $-- $-- $-- $--
From net realized gain on
investments and foreign
currency transactions -- -- -- -- (1.47) (1.62)
From paid-in capital -- -- -- -- (0.25) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared
to shareholders $(0.05) $-- $-- $-- $(1.72) $(1.62)
- ------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-
in capital# $0.00+++ $0.00+++ $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $12.11 $11.88 $11.02 $9.98 $12.73 $18.47
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+)& 2.35++ 7.80^ 10.42* (21.60) (24.20) 4.03
- ------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ---------------------------------------------------------------------------
CLASS A (CONTINUED) 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 0.90+ 0.92 0.95 0.94 0.94 0.85
Net investment income (loss) 0.03+ 0.44 0.01 (0.14) (0.03) (0.15)
Portfolio turnover 57 141 283 227 305 261
Net assets at end of period
(000,000 Omitted) $4,980 $5,540 $7,079 $6,327 $8,337 $9,243
- ------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the net
investment income (loss) per share and the ratios would have been:
Net investment income (loss) $0.00+++** $0.05** $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 0.90+** 0.92** -- -- -- --
Net investment income (loss) 0.03+** 0.44** -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
* The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the effect
of this payment from the fund's ending net asset value per share, total return for the year ended November 30, 2003 would
have been 0.07% lower.
** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
### The per share amount is not in accordance with the net realized and unrealized gain for the period because of the timing
of sales of fund shares and the amount of per share realized and unrealized gains and losses at such time.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ----------------------------------------------------------------------------
CLASS B 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning
of period $10.88 $10.16 $9.27 $11.89 $17.37 $18.28
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss)(S) $(0.03) $(0.02) $(0.06) $(0.08) $(0.09) $(0.16)
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.25 0.74 0.95 (2.54) (3.77) 0.80###
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations $0.22 $0.72 $0.89 $(2.62) $(3.86) $0.64
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions $-- $-- $-- $-- $(1.39) $(1.55)
From paid-in capital -- -- -- -- (0.23) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared to
shareholders $-- $-- $-- $-- $(1.62) $(1.55)
- ------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-
in capital# $0.00+++ $0.00+++ $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.10 $10.88 $10.16 $9.27 $11.89 $17.37
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%)& 2.02++ 7.09^ 9.60* (22.04) (24.71) 3.34
- ------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ----------------------------------------------------------------------------
CLASS B (CONTINUED) 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.55+ 1.56 1.60 1.59 1.59 1.50
Net investment income (loss) (0.62)+ (0.17) (0.64) (0.79) (0.68) (0.80)
Portfolio turnover 57 141 283 227 305 261
Net assets at end of period
(000,000 Omitted) $2,131 $2,415 $2,779 $2,820 $4,280 $5,488
- ------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the net
investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.03)** $(0.02)** $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.55+** 1.56** -- -- -- --
Net investment income (loss) (0.62)+** (0.17)** -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
* The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the effect
of this payment from the fund's ending net asset value per share, total return for the year ended November 30, 2003 would
have been 0.08% lower.
** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
### The per share amount is not in accordance with the net realized and unrealized gain for the period because of the timing
of sales of fund shares and the amount of per share realized and unrealized gains and losses at such time.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -------------------------------------------------------------------------------
CLASS C 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value, beginning
of period $10.83 $10.11 $9.23 $11.84 $17.31 $18.23
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss)(S) $(0.03) $(0.02) $(0.06) $(0.08) $(0.09) $(0.16)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 0.25 0.74 0.94 (2.53) (3.75) 0.79###
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations $0.22 $0.72 $0.88 $(2.61) $(3.84) $0.63
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on
investments and foreign
currency transactions $-- $-- $-- $-- $(1.40) $(1.55)
From paid-in capital -- -- -- -- (0.23) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared
to shareholders $-- $-- $-- $-- $(1.63) $(1.55)
- ------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to
paid-in capital# $0.00+++ $0.00+++ $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $11.05 $10.83 $10.11 $9.23 $11.84 $17.31
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%)& 2.03++ 7.12^ 9.53* (22.04) (24.69) 3.32
- ------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED -------------------------------------------------------------------------------
CLASS C (CONTINUED) 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.54+ 1.56 1.60 1.59 1.59 1.50
Net investment income (loss) (0.62)+ (0.19) (0.64) (0.79) (0.68) (0.80)
Portfolio turnover 57 141 283 227 305 261
Net assets at end of period
(000 Omitted) $636,214 $739,534 $911,333 $917,809 $1,446,087 $1,757,043
- ------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the net
investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.03)** $(0.02)** $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.54+** 1.56** -- -- -- --
Net investment income (loss) (0.62)+** (0.19)** -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
* The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the effect
of this payment from the fund's ending net asset value per share, total return for the year ended November 30, 2003 would
have been 0.08% lower.
** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
### The per share amount is not in accordance with the net realized and unrealized gain for the period because of the timing
of sales of fund shares and the amount of per share realized and unrealized gains and losses at such time.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ------------------------------------------------------------------------------
CLASS I 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
Net asset value,
beginning of period $12.08 $11.17 $10.08 $12.81 $18.58 $19.38
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss)(S) $0.02 $0.08 $0.04 $0.03 $0.05 $0.04
Net realized and unrealized
gain (loss) on investments
and foreign currency 0.29 0.83 1.05 (2.76) (4.03) 0.83###
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations $0.31 $0.91 $1.09 $(2.73) $(3.98) $0.87
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.10) $-- $-- $-- $-- $--
From net realized gain on
investments and foreign
currency transactions -- -- -- -- (1.53) (1.67)
From paid-in capital -- -- -- -- (0.26) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions declared
to shareholders $(0.10) $-- $-- $-- $(1.79) $(1.67)
- ------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to
paid-in capital# $0.00+++ $0.00+++ $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $12.29 $12.08 $11.17 $10.08 $12.81 $18.58
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%)& 2.54++ 8.15^ 10.81* (21.31) (23.93) 4.39
- ------------------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30
ENDED ------------------------------------------------------------------------------
CLASS I (CONTINUED) 5/31/05 2004 2003 2002 2001 2000
(UNAUDITED)
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 0.63+ 0.57 0.60 0.59 0.59 0.50
Net investment income (loss) 0.38+ 0.67 0.36 0.21 0.32 0.20
Portfolio turnover 57 141 283 227 305 261
Net assets at end of period
(000 Omitted) $114,802 $133,502 $285,467 $196,501 $195,542 $152,515
- ------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the net
investment income (loss) per share and the ratios would have been:
Net investment income (loss) $0.02** $0.08** $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 0.63+** 0.57** -- -- -- --
Net investment income (loss) 0.38+** 0.67** -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
* The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the effect
of this payment from the fund's ending net asset value per share, total return for the year ended November 30, 2003 would
have been 0.07% lower.
** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
### The per share amount is not in accordance with the net realized and unrealized gain for the period because of the timing
of sales of fund shares and the amount of per share realized and unrealized gains and losses at such time.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 PERIOD
ENDED ----------------------------------------------- ENDED
CLASS J 5/31/05 2004 2003 2002 11/30/01*
(UNAUDITED)
Net asset value, beginning of period $10.77 $10.06 $9.17 $11.77 $15.98
- ------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.03) $(0.03) $(0.06) $(0.08) $(0.09)
Net realized and unrealized gain
(loss) on investments and foreign
currency 0.25 0.74 0.95 (2.52) (4.12)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.22 $0.71 $0.89 $(2.60) $(4.21)
- ------------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in
capital# $0.00+++ $0.00+++ $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.99 $10.77 $10.06 $9.17 $11.77
- ------------------------------------------------------------------------------------------------------------------------------
Total return (%)(+)& 2.04++ 7.06^ 9.71** (22.09) (26.35)++
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.55+ 1.56 1.61 1.59 1.59+
Net investment income (loss) (0.62)+ (0.25) (0.66) (0.79) (0.68)+
Portfolio turnover 57 141 283 227 305
Net assets at end of period
(000 Omitted) $5,364 $7,630 $10,368 $3,284 $6,861
- ------------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share of
Independent Chief Compliance Officer service fees paid to Tarantino LLC. If these fees had been incurred by the fund, the
net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.03)*** $(0.03)*** $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses## 1.55+*** 1.56*** -- -- --
Net investment income (loss) (0.62)+*** (0.25)*** -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class J shares, December 18, 2000, through November 30, 2001.
** The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the effect
of this payment from the fund's ending net asset value per share, total return for the year ended November 30, 2003 would
have been 0.09% lower.
*** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
CLASS R (FORMERLY CLASS R1) 5/31/05 11/30/04 11/30/03*
(UNAUDITED)
Net asset value, beginning of period $11.87 $11.02 $9.23
- ---------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.00)+++ $0.05 $(0.01)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.27 0.80 1.80
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations $0.27 $0.85 $1.79
- ---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------
From net investment income $(0.04) $-- $--
- ---------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $0.00+++ $--
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.10 $11.87 $11.02
- ---------------------------------------------------------------------------------------------------------------
Total return (%)& 2.31++ 7.71^ 19.39++**
- ---------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ---------------------------------------------------------------------------------------------------------------
Expenses## 1.03+ 1.07 1.10+
Net investment income (loss) (0.06)+ 0.42 (0.15)+
Portfolio turnover 57 141 283
Net assets at end of period (000 Omitted) $46,618 $29,239 $14,105
- ---------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its
proportional share of Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had
been incurred by the fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.00)+++*** $0.05*** $--
- ---------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ---------------------------------------------------------------------------------------------------------------
Expenses## 1.03+*** 1.07*** --
Net investment income (loss) (0.06)+*** 0.42*** --
- ---------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class R1 shares, December 31, 2002, through November 30, 2003.
** The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring
litigation settlement recorded as a realized gain on investment transactions. The proceeds resulted in an
increase in the net asset value of less than $0.01 per share based on shares outstanding on the day the
proceeds were received. Excluding the effect of this payment from the fund's ending net asset value per
share, total return for the year ended November 30, 2003 would have been 0.08% lower.
*** The reimbursement impact per share amount and the ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a
result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection
with fund sales, as described in the Legal Proceedings and Transactions with Affiliates footnotes. The
non-recurring accrual resulted in an increase in the net asset value of $0.03 per share based on shares
outstanding on the day the proceeds were recorded. Excluding the effect of this accrual from the ending net
asset value per share, total return for the year ended November 30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance
would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD ENDED
CLASS R1 5/31/05*
(UNAUDITED)
Net asset value, beginning of period $10.86
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- --------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.01)
Net realized and unrealized gain (loss) on investments and
foreign currency 0.25
- --------------------------------------------------------------------------------
Total from investment operations $0.24
- --------------------------------------------------------------------------------
Net asset value, end of period $11.10
- --------------------------------------------------------------------------------
Total return (%)& 2.21++
- --------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- --------------------------------------------------------------------------------
Expenses## 1.64+
Net investment loss (0.53)+
Portfolio turnover 57
Net assets at end of period (000 Omitted) $60
- --------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to
reimburse the fund for its proportional share of Independent Chief
Compliance Officer services paid to Tarantino LLC. If this fee had been
incurred by the fund, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $(0.01)**
- --------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ----------------------------------------------------------------------
Expenses## 1.64+**
Net investment income (loss) (0.53)+**
- --------------------------------------------------------------------------------
* For the period from the inception of Class R1 shares, April 1, 2005
through May 31, 2005.
** The reimbursement impact per share amount and ratios were less than $0.01
and 0.01%, respectively.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
& From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD ENDED
CLASS R2 5/31/05*
(UNAUDITED)
Net asset value, beginning of period $10.86
- ------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ------------------------------------------------------------------------
Net investment income (loss)(S) $(0.00)+++
Net realized and unrealized gain (loss) on investments and
foreign currency 0.25
- ------------------------------------------------------------------------
Total from investment operations $0.25
- ------------------------------------------------------------------------
Net asset value, end of period $11.11
- ------------------------------------------------------------------------
Total return (%)& 2.30++
- ------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ------------------------------------------------------------------------
Expenses## 1.32+
Net investment loss (0.23)+
Portfolio turnover 57
Net assets at end of period (000 Omitted) $51
- ------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to
reimburse the fund for its proportional share of Independent Chief
Compliance Officer services paid to Tarantino LLC. If this fee had been
incurred by the fund, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $(0.00)+++**
- ------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ------------------------------------------------------------------------
Expenses## 1.32+**
Net investment income (loss) (0.23)+**
- ------------------------------------------------------------------------
* For the period from the inception of Class R2 shares, April 1, 2005
through May 31, 2005.
** The reimbursement impact per share amount and ratios were less than
$0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
& From time to time the fund may receive proceeds from litigation
settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
CLASS R3 (FORMERLY CLASS R2) 5/31/05 11/30/04 11/30/03*
(UNAUDITED)
Net asset value, beginning of period $11.82 $11.02 $11.02
- ---------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.02) $0.00+++ $(0.00)+++
Net realized and unrealized gain (loss) on
investments and foreign currency 0.28 0.80 (0.00)+++
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations $0.26 $0.80 $(0.00)+++
- ---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------
From net investment income $(0.08) $-- $--
Redemption fees added to paid-in capital# $0.00+++ $0.00+++ $--
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.00 $11.82 $11.02
- ---------------------------------------------------------------------------------------------------------------
Total return (%)& 2.19++ 7.26^ 0.00++
- ---------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ---------------------------------------------------------------------------------------------------------------
Expenses## 1.29+ 1.33 1.44+
Net investment income (loss) (0.33)+ 0.03 (0.34)+
Portfolio turnover 57 141 283
Net assets at end of period (000 Omitted) $1,410 $708 $5
- ---------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its
proportional share of Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had
been incurred by the fund, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.02)** $0.00+++** $--
- ---------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ---------------------------------------------------------------------------------------------------------------
Expenses## 1.29+** 1.33** --
Net investment income (loss) (0.33)+** 0.03** --
- ---------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class R2 shares, October 31, 2003, through November 30, 2003.
** The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a
result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection
with fund sales, as described in the Legal Proceedings and Transactions with Affiliates footnotes. The
non-recurring accrual resulted in an increase in the net asset value of $0.03 per share based on shares
outstanding on the day the proceeds were recorded. Excluding the effect of this accrual from the ending net
asset value per share, total return for the year ended November 30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance
would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD ENDED
CLASS R4 5/31/05*
(UNAUDITED)
Net asset value, beginning of period $11.83
- --------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- --------------------------------------------------------------------------
Net investment income (loss)(S) 0.01
Net realized and unrealized gain (loss) on investments and
foreign currency 0.27
- --------------------------------------------------------------------------
Total from investment operations 0.28
- --------------------------------------------------------------------------
Net asset value, end of period 2.11
- --------------------------------------------------------------------------
Total return (%)& 2.37++
- --------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- --------------------------------------------------------------------------
Expenses## 0.83+
Net investment income 0.28+
Portfolio turnover 57
Net assets at end of period (000 Omitted) $51
- --------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to
reimburse the fund for its proportional share of Independent Chief
Compliance Officer services paid to Tarantino LLC. If this fee had been
incurred by the fund, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $0.01**
- --------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- --------------------------------------------------------------------------
Expenses## 0.83+**
Net investment income 0.28+**
- --------------------------------------------------------------------------
* For the period from the inception of Class R4 shares, April 1, 2005 through
May 31, 2005.
** The reimbursement impact per share amount and ratios were less than $0.01
and 0.01%, respectively.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
& From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
PERIOD ENDED
CLASS R5 5/31/05*
(UNAUDITED)
Net asset value, beginning of period $11.83
- ----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ----------------------------------------------------------------------------
Net investment income (loss)(S) $0.01
Net realized and unrealized gain (loss) on investments and
foreign currency 0.28
- ----------------------------------------------------------------------------
Total from investment operations $0.29
- ----------------------------------------------------------------------------
Net asset value, end of period $12.12
- ----------------------------------------------------------------------------
Total return (%)& 2.45++
- ----------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ----------------------------------------------------------------------------
Expenses## 0.53+
Net investment income 0.56+
Portfolio turnover 57
Net assets at end of period (000 Omitted) $51
- ----------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to
reimburse the fund for its proportional share of Independent Chief
Compliance Officer services paid to Tarantino LLC. If this fee had been
incurred by the fund, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $0.01**
- ----------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ----------------------------------------------------------------------------
Expenses## 0.53+**
Net investment income 0.56+**
- ----------------------------------------------------------------------------
* For the period from the inception of Class R5 shares, April 1, 2005
through May 31, 2005. ** The reimbursement impact per share amount and
ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
& From time to time the fund may receive proceeds from litigation
settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 PERIOD
ENDED --------------------------------- ENDED
CLASS 529A 5/31/05 2004 2003 11/30/02*
(UNAUDITED)
Net asset value, beginning of period $11.79 $10.96 $9.97 $9.72
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.01) $0.04 $(0.02) $(0.00)+++
Net realized and unrealized gain (loss) on
investments and foreign currency 0.27 0.79 1.01 0.25
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.26 $0.83 $0.99 $0.25
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.04) $-- $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $0.00+++ $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.01 $11.79 $10.96 $9.97
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%)(+)& 2.23++ 7.57^ 9.93** 2.57++
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.14+ 1.17 1.20 1.19+
Net investment income (loss) (0.18)+ 0.39 (0.24) (0.16)+
Portfolio turnover 57 141 283 227
Net assets at end of period (000 Omitted) $3,000 $2,070 $1,068 $95
- ----------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share
of Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the
net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.01)*** $0.04*** $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.14+*** 1.17*** -- --
Net investment income (loss) (0.18)+*** 0.39*** -- --
- ----------------------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class 529A shares, July 31, 2002, through November 30, 2002.
** The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the
effect of this payment from the fund's ending net asset value per share, total return for the year ended November 30,
2003 would have been 0.08% lower.
*** The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
(+) Total returns do not include the applicable sales charge. If the charge had been included, the results would have been
lower.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 PERIOD
ENDED --------------------------------- ENDED
CLASS 529B 5/31/05 2004 2003 11/30/02*
(UNAUDITED)
Net asset value, beginning of period $10.83 $10.13 $9.26 $9.05
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.05) $(0.03) $(0.08) $(0.02)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.25 0.73 0.95 0.23
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.20 $0.70 $0.87 $0.21
- ----------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $0.00+++ $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.03 $10.83 $10.13 $9.26
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%)& 1.85++ 6.91^ 9.40** 2.32++
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.79+ 1.81 1.85 1.84+
Net investment income (loss) (0.85)+ (0.30) (0.89) (0.78)+
Portfolio turnover 57 141 283 227
Net assets at end of period (000 Omitted) $550 $478 $285 $24
- ----------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to
reimburse the fund for its proportional share of Independent Chief
Compliance Officer services paid to Tarantino LLC. If this fee had been
incurred by the fund, the net investment income (loss) per share and the
ratios would have been:
Net investment income (loss) $(0.05)*** $(0.03)*** $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.79+*** 1.81*** -- --
Net investment income (loss) (0.85)+*** (0.30)*** -- --
- ----------------------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class 529B shares, July 31, 2002, through November 30, 2002.
** The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the
effect of this payment from the fund's ending net asset value per share, total return for the year ended November 30,
2003 would have been 0.09% lower.
*** The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 PERIOD
ENDED --------------------------------- ENDED
CLASS 529C 5/31/05 2004 2003 11/30/02*
(UNAUDITED)
Net asset value, beginning of period $10.78 $10.09 $9.22 $9.01
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS#
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(S) $(0.05) $(0.04) $(0.08) $(0.02)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.25 0.73 0.95 0.23
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.20 $0.69 $0.87 $0.21
- ----------------------------------------------------------------------------------------------------------------------------
Redemption fees added to paid-in capital# $0.00+++ $0.00+++ $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.98 $10.78 $10.09 $9.22
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%)& 1.86++ 6.84^ 9.44** 2.33++
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA(S):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.80+ 1.81 1.86 1.84+
Net investment income (loss) (0.85)+ (0.34) (0.88) (0.81)+
Portfolio turnover 57 141 283 227
Net assets at end of period (000 Omitted) $874 $765 $606 $32
- ----------------------------------------------------------------------------------------------------------------------------
(S) Effective June 7, 2004, the investment adviser has voluntarily agreed to reimburse the fund for its proportional share
of Independent Chief Compliance Officer services paid to Tarantino LLC. If this fee had been incurred by the fund, the
net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $(0.05)*** $(0.04)*** $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS):
- ----------------------------------------------------------------------------------------------------------------------------
Expenses## 1.80+*** 1.81*** -- --
Net investment income (loss) (0.85)+*** (0.34)*** -- --
- ----------------------------------------------------------------------------------------------------------------------------
* For the period from the inception of Class 529C shares, July 31, 2002, through November 30, 2002.
** The fund's total return calculation includes proceeds received on March 26, 2003 from a non-recurring litigation
settlement recorded as a realized gain on investment transactions. The proceeds resulted in an increase in the net asset
value of less than $0.01 per share based on shares outstanding on the day the proceeds were received. Excluding the
effect of this payment from the fund's ending net asset value per share, total return for the year ended November 30,
2003 would have been 0.09% lower.
*** The reimbursement impact per share amount and ratios were less than $0.01 and 0.01%, respectively.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect reductions from fees paid indirectly.
^ The fund's net asset value and total return calculation include a non-recurring accrual recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation practices in connection with fund sales, as
described in the Legal Proceedings and Transactions with Affiliates footnotes. The non-recurring accrual resulted in an
increase in the net asset value of $0.03 per share based on shares outstanding on the day the proceeds were recorded.
Excluding the effect of this accrual from the ending net asset value per share, total return for the year ended November
30, 2004 would have been 0.25% lower.
& From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) BUSINESS AND ORGANIZATION
Massachusetts Investors Growth Stock 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 U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The fund can
invest in foreign securities. Investments in foreign securities are vulnerable
to the effects of changes in the relative values of the local currency and the
U.S. dollar and to the effects of changes in each country's legal, political,
and economic environment.
INVESTMENT VALUATIONS - Equity securities in the fund's portfolio for which
market quotations are available are valued at the last sale or official closing
price as reported by an independent pricing service on the primary market or
exchange on which they are primarily traded, or at the last quoted bid price for
securities in which there were no sales during the day. Equity securities traded
over the counter are valued at the last sales price traded each day as reported
by an independent pricing service, or to the extent there are no sales reported,
such securities are valued on the basis of quotations obtained from brokers and
dealers. Short-term obligations with a remaining maturity in excess of 60 days
will be valued upon dealer-supplied valuations. All other short-term obligations
in the fund's portfolio are valued at amortized cost, which approximates market
value as determined by the Board of Trustees. Money market mutual funds are
valued at net asset value. 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. When pricing service information
or market quotations are not readily available, securities are priced at fair
value as determined under the direction of the Board of Trustees. For example,
significant events (such as movement in the U.S. securities market, or other
regional and local developments) may occur between the time that foreign markets
close (where the security is principally traded) and the time that the fund
calculates its net asset value (generally, the close of the NYSE) that may
impact the value of securities traded in these foreign markets. In these cases,
the fund may utilize information from an external vendor or other sources to
adjust closing market quotations of foreign equity securities to reflect what it
believes to be the fair value of the securities as of the fund's valuation time.
Because the frequency of significant events is not predictable, fair valuation
of foreign equity securities may occur on a frequent basis.
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements with
institutions that the fund's investment adviser has determined are creditworthy.
Each repurchase agreement is recorded at cost. The fund requires that the
securities collateral in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the fund to obtain those securities
in the event of a default under the repurchase agreement. The fund monitors, on
a daily basis, the value of the collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the fund under each such
repurchase agreement. The fund, along with other affiliated entities of
Massachusetts Financial Services Company (MFS), may utilize a joint trading
account for the purpose of entering into one or more repurchase agreements.
FOREIGN CURRENCY TRANSLATION - 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 - 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. Included in other assets, and
accrued expenses and other liabilities, is $74,979 of Deferred Trustees'
Compensation.
SECURITY LOANS - State Street Bank and Trust Company ("State Street") and J.P.
Morgan Chase and Co. ("Chase"), as lending agents, may loan the securities of
the fund to certain qualified institutions (the "Borrowers") approved by the
fund. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to the market value of the securities
loaned. State Street and Chase provide the fund with indemnification against
Borrower default. The fund bears the risk of loss with respect to the investment
of cash collateral. On loans collateralized by cash, the cash collateral is
invested in a money market fund or 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.
SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April
1, 2005, the fund will charge a 2% redemption fee (which is retained by the
fund) on proceeds from Class A, Class B, Class C, and Class I shares redeemed or
exchanged within 5 business days following their acquisition (either by purchase
or exchange). Effective April 1, 2005, the fund will no longer charge a
redemption fee. See the fund's prospectus for details. Any redemption fees
charged are accounted for as an addition to paid-in capital.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
discount is amortized or accreted for financial statement purposes in accordance
with U.S. generally accepted accounting principles. All discount is accreted for
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.
The fund may receive proceeds from litigation settlements involving its
portfolio holdings. Any proceeds received are reflected in realized gain/loss in
the statement of operations, or in unrealized gain/loss if the security is still
held by the fund.
FEES PAID INDIRECTLY - The fund's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by the
fund. During the six months ended May 31, 2005, the fund's custodian fees were
reduced by $201,291 under this arrangement. The fund has entered into a
commission recapture agreement, under which certain brokers will credit the fund
a portion of the commissions generated, to offset certain expenses of the fund.
For the six months ended May 31, 2005, the fund's miscellaneous expenses were
reduced by $178,945 under this agreement. These amounts are shown as a reduction
of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The fund
distinguishes between distributions on a tax basis and a financial reporting
basis and only distributions in excess of tax basis earnings and profits are
reported in the financial statements as distributions from paid-in capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits, which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or net realized gains.
As of November 30, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income $23,678,788
Capital loss carryforward $(5,165,453,852)
Post-October capital loss deferral (3,660,457)
Unrealized appreciation (depreciation) (56,036,917)
Other temporary differences (235,977)
Post-October capital loss deferrals represent losses realized during the current
fiscal year, but recognized for tax purposes in the next fiscal year.
For federal income tax purposes, the capital loss carryforward may be applied
against any net taxable realized gains of each succeeding year until the earlier
of its utilization or expiration on November 30, 2009 ($2,865,732,653) and
November 30, 2010 ($2,299,721,199).
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 and Class 529B
shares will convert to Class A and Class 529A shares, respectively,
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 compensation to its Independent Trustees in the form of a
retainer, attendance fees, and additional compensation to Board and Committee
chairpersons, and 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 retired Independent Trustees and an unfunded retirement
benefit deferral plan for current Independent Trustees. Included in Trustees'
compensation is $(3,269) as a result of the change in the fund's unfunded
retirement benefit deferral plan for certain current Independent Trustees and a
pension expense of $21,638 for retired Independent Trustees for the six months
ended May 31, 2005.
This fund and certain other MFS funds (the "funds") have entered into a services
agreement (the "Agreement") which provides for payment of fees by the funds to
Tarantino LLC in return for the provision of services of an Independent Chief
Compliance Officer (ICCO) for the funds. The ICCO is an officer of the funds and
the sole member of Tarantino LLC. MFS has agreed to reimburse each of the funds
for a proportional share of substantially all of the payments made by the funds
to Tarantino LLC and also to provide office space and other administrative
support and supplies to the ICCO. The funds can terminate the Agreement with
Tarantino LLC at any time under the terms of the Agreement.
The fund's investment adviser, MFS, has been the subject of an administrative
proceeding regarding disclosure of brokerage allocation practices in connection
with fund sales, as described in the Legal Proceedings Footnote. On July 28,
2004, the fund accrued an estimate of the amount to be received pursuant to this
matter in the amount of $22,479,377, which resulted in an increase in net asset
value of $0.03 per share based on the shares outstanding on the day the proceeds
were recorded. The proceeds were paid to the fund on February 16, 2005.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement between the funds and MFS, MFS is entitled to partial reimbursement of
the costs MFS incurs to provide these services, subject to review and approval
by the Board of Trustees. Each fund is allocated a portion of these
administrative costs based on its size and relative average net assets. The fund
paid MFS an administrative fee up to the following annual percentage rates of
the fund's average daily net assets:
BEGINNING OF PERIOD
EFFECTIVE DATE THROUGH 2/28/05 3/01/05
First $2 billion 0.01120% 0.01626%
Next $2.5 billion 0.00832% 0.01206%
Next $2.5 billion 0.00032% 0.00056%
In excess of $7 billion 0.00000% 0.00000%
For the six months ended May 31, 2005, the fund paid MFS $232,615, equivalent to
0.00561% of average daily net assets, to partially reimburse MFS for the costs
of providing administrative services.
In addition to the administrative services provided by MFS to the fund as
described above, MFS is responsible for providing certain retirement plan
administration and services with respect to Class R1, Class R2, Class R3
(formerly Class R2), Class R4, and Class R5 shares. These services include
various administrative, recordkeeping, and communication/educational services
with respect to the retirement plans which invest in these shares, and may be
provided directly by MFS or by a third party. Effective April 1, 2005, the fund
pays an annual plan administration and service fee in an amount up to 0.45%,
0.40%, 0.25%, 0.15%, and 0.10% solely from the assets of Class R1, Class R2,
Class R3 (formerly Class R2), Class R4, and Class R5 shares, respectively, to
MFS for the provision of these services. Prior to April 1, 2005, the fund paid
an annual 0.25% plan administration and service fee solely from the assets of
Class R3 (formerly Class R2) shares to MFS for the provision of these services.
DISTRIBUTOR - MFD, a wholly owned subsidiary of MFS, as distributor, received
$149,779 and $1,727 for the six months ended May 31, 2005, as its portion of the
sales charge on sales of Class A and Class 529A shares of the fund,
respectively.
The Trustees have adopted a distribution plan for Class A, Class B, Class C,
Class J, Class R (formerly Class R1), Class R1, Class R2, Class R3 (formerly
Class R2), Class R4, Class 529A, Class 529B, and Class 529C 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 an annual
percentage of its average daily net assets attributable to certain share classes
as compensation for services provided by MFD and financial intermediaries in
connection with the distribution and servicing of its shares. One component of
the plan is a distribution fee and another is a service fee paid by MFD to
financial intermediaries that enter into sales or service agreements with MFD or
its affiliates based on the average daily net assets of accounts attributable to
such intermediaries. These fees are calculated based on each class' average
daily net assets. The maximum distribution and service fees for each class of
shares are as follows:
CLASS A CLASS B CLASS C CLASS J CLASS R CLASS R1
Distribution Fee 0.10% 0.75% 0.75% 0.75% 0.25% 0.50%
Service Fee 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
- -----------------------------------------------------------------------------------------
Total Distribution
Plan 0.35% 1.00% 1.00% 1.00% 0.50% 0.75%
CLASS R2 CLASS R3 CLASS R4 CLASS 529A CLASS 529B CLASS 529C
Distribution Fee 0.25% 0.25% 0.00% 0.25% 0.75% 0.75%
Service Fee 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
- -----------------------------------------------------------------------------------------
Total Distribution
Plan 0.50% 0.50% 0.25% 0.50% 1.00% 1.00%
MFD may retain all or a portion of the service fee, including for accounts for which there is
no financial intermediary of record. Service fees retained by MFD for the six months ended
May 31, 2005 amounted to:
CLASS A CLASS B CLASS C CLASS J CLASS R CLASS R1
Service Fee
Retained
by MFD $285,036 $10,614 $9,381 $0 $0 $0
CLASS R2 CLASS R3 CLASS R4 CLASS 529A CLASS 529B CLASS 529C
Service Fee
Retained
by MFD $0 $13 $0 $445 $12 $41
Fees incurred under the distribution plan during the six months ended May 31, 2005 were as follows:
CLASS A CLASS B CLASS C CLASS J CLASS R CLASS R1
Effective Annual
Percentage Rates 0.35% 1.00% 1.00% 1.00% 0.50% 0.75%
CLASS R2 CLASS R3 CLASS R4 CLASS 529A CLASS 529B CLASS 529C
Effective Annual
Percentage Rates 0.50% 0.50% 0.25% 0.35% 1.00% 1.00%
Payment of the 0.15% per annum portion of the Class 529A distribution fee that
is not currently being charged will be implemented on such a date as the
Trustees of the Trust may determine. Class A shares sold prior to March 1, 1991
are subject to a service fee of 0.15% Per annum attributable to Class A shares.
Class J shares are available for distribution through Mizuho Investors
Securities Co., Ltd. ("Mizuho") and Mitsubishi Securities Co., Ltd.
("Mitsubishi") and their network of financial intermediaries. Mizuho also serves
as the fund's agent securities company in Japan, and in the capacity represents
the fund before Japanese regulatory authorities. MFD will pay to Mizuho and
Mitsubishi 0.60% per annum of the average daily net assets attributable to their
respective Class J shares. In addition, MFD will pay to Mizuho 0.065% per annum
of the fund's average daily net assets attributable to Class J shares to cover
its service as the fund's agent securities company.
Certain Class A, Class C and Class 529C shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within, for Class
A shares, 12 months following the purchase, and, for Class C and Class 529C
shares, the first year of purchase. A contingent deferred sales charge is
imposed on shareholder redemptions of Class B and Class 529B shares in the event
of a shareholder redemption within six years of purchase. MFD receives all
contingent deferred sales charges. Contingent deferred sales charges imposed
during the six months ended May 31, 2005 were as follows:
CLASS A CLASS B CLASS C CLASS 529B CLASS 529C
Contingent Deferred
Sales Charges
Imposed $54,859 $2,719,621 $41,526 $32 $24
The fund has and may from time to time enter into contracts with program
managers and other parties which administer the tuition programs through which
an investment in the fund's 529 share classes is made. The fund has entered into
an agreement with MFD pursuant to which MFD receives an annual fee of up to
0.35% from the fund based solely upon the value of the fund's 529 share classes
attributable to tuition programs to which MFD, or a third party which contracts
with MFD, provides administrative services. The current fee has been established
at 0.25% annually of average net assets of the fund's 529 share classes
attributable to such programs. The fee may only be increased with the approval
of the Board of Trustees that oversees the fund. The services provided by MFD,
or a third party with which MFD contracts, include recordkeeping and tax
reporting and account services, as well as services designed to maintain the
program's compliance with the Internal Revenue Code and other regulatory
requirements.
SHAREHOLDER SERVICING AGENT - Included in shareholder servicing costs is a fee
paid to MFSC, a wholly owned subsidiary of MFS, for its services as shareholder
servicing agent. The fee, which is calculated as a percentage of the fund's
average daily net assets is set periodically under the supervision of the fund's
Trustees. For the beginning of the period through December 31, 2004, the fund
was charged up to 0.0861% of its average daily net assets. For the period
January 1, 2005 through February 28, 2005, the fund was charged up to 0.1035% of
its average daily net assets. Effective March 1, 2005, the fund is charged up to
0.1159% of its average daily net assets. For the six months ended May 31, 2005,
the fund paid MFSC a fee of $4,407,144 for shareholder services which equated to
0.1063% of the fund's average daily net assets. Shareholder service costs
include out of pocket expenses and sub accounting services expenses paid by MFSC
on behalf of the fund and subsequently reimbursed to MFSC which amounted to
$1,576,844, and other costs paid by the fund directly to unaffiliated vendors
for the six months ended May 31, 2005.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$4,662,539,417 and $5,826,379,772, 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 $8,373,616,011
----------------------------------------------------------
Gross unrealized appreciation $156,083,394
Gross unrealized depreciation (347,762,273)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $(191,678,879)
(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:
Six months ended 5/31/05 Year ended 11/30/04
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Shares sold 31,161,464 $371,753,459 97,039,602 $1,105,194,897
Shares issued to shareholders in
reinvestment of distributions 1,444,637 17,624,570 -- --
Shares reacquired (87,781,828) (1,056,230,381) (273,231,815) (3,121,614,621)
- --------------------------------------------------------------------------------------------------------------
Net change (55,175,727) $(666,852,352) (176,192,213) $(2,016,419,724)
CLASS B SHARES
Shares sold 4,851,496 $53,374,100 15,784,345 $165,539,143
Shares reacquired (34,888,138) (383,696,005) (67,350,354) (703,587,008)
- --------------------------------------------------------------------------------------------------------------
Net change (30,036,642) $(330,321,905) (51,566,009) $(538,047,865)
CLASS C SHARES
Shares sold 2,306,070 $25,244,252 10,189,138 $106,267,925
Shares reacquired (13,007,681) (142,595,300) (32,039,671) (333,731,540)
- --------------------------------------------------------------------------------------------------------------
Net change (10,701,611) $(117,351,048) (21,850,533) $(227,463,615)
CLASS I SHARES
Shares sold 1,476,332 $17,996,717 6,724,790 $77,848,366
Shares issued to shareholders in
reinvestment of distributions 74,150 917,234 -- --
Shares reacquired (3,258,261) (40,124,551) (21,237,117) (244,236,758)
- --------------------------------------------------------------------------------------------------------------
Net change (1,707,779) $(21,210,600) (14,512,327) $(166,388,392)
Six months ended 5/31/05 Year ended 11/30/04
SHARES AMOUNT SHARES AMOUNT
CLASS J SHARES
Shares sold 137,900 $1,524,376 862,660 $9,096,763
Shares reacquired (358,200) (3,923,804) (1,185,220) (12,395,399)
- --------------------------------------------------------------------------------------------------------------
Net change (220,300) $(2,399,428) (322,560) $(3,298,636)
CLASS R SHARES (FORMERLY CLASS R1)
Shares sold 1,925,218 $22,792,807 3,162,319 $36,250,892
Shares issued to shareholders in
reinvestment of distributions 8,993 109,709 -- --
Shares reacquired (543,939) (6,546,178) (1,979,466) (22,549,743)
- --------------------------------------------------------------------------------------------------------------
Net change 1,390,272 $16,356,338 1,182,853 $13,701,149
Period ended 5/31/05*
SHARES AMOUNT
CLASS R1 SHARES
Shares sold 5,415 $58,822
CLASS R2 SHARES
Shares sold 4,604 $50,000
Six months ended 5/31/05 Year ended 11/30/04
SHARES AMOUNT SHARES AMOUNT
CLASS R3 SHARES (FORMERLY CLASS R2)
Shares sold 68,625 $821,724 100,372 $1,145,351
Shares issued to shareholders in
reinvestment of distributions 500 6,052 -- --
Shares reacquired (11,494) (134,739) (40,953) (474,714)
- --------------------------------------------------------------------------------------------------------------
Net change 57,631 $693,037 59,419 $670,637
Period ended 5/31/05*
SHARES AMOUNT
CLASS R4 SHARES
Shares sold 4,227 $50,000
CLASS R5 SHARES
Shares sold 4,226 $50,000
Six months ended 5/31/05 Year ended 11/30/04
SHARES AMOUNT SHARES AMOUNT
CLASS 529A SHARES
Shares sold 99,038 $1,187,455 84,770 $955,342
Shares issued to shareholders in
reinvestment of distributions 638 7,734 -- --
Shares reacquired (25,494) (301,899) (6,615) (75,195)
- --------------------------------------------------------------------------------------------------------------
Net change 74,182 $893,290 78,155 $880,147
CLASS 529B SHARES
Shares sold 8,299 $90,050 20,549 $214,289
Shares reacquired (2,607) (28,733) (4,590) (48,766)
- --------------------------------------------------------------------------------------------------------------
Net change 5,692 $61,317 15,959 $165,523
Six months ended 5/31/05 Year ended 11/30/04
SHARES AMOUNT SHARES AMOUNT
CLASS 529C SHARES
Shares sold 10,143 $111,954 19,660 $204,405
Shares reacquired (1,460) (15,958) (8,858) (93,729)
- --------------------------------------------------------------------------------------------------------------
Net change 8,683 $95,996 10,802 $110,676
* For the period from the inception of Class R1, Class R2, Class R4, and Class R5 shares, April 1, 2005, through May 31, 2005.
(6) LINE OF CREDIT
The fund and other affiliated funds participate in a $1 billion unsecured line
of credit provided by a syndication of banks under a line of credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the Federal Reserve funds
rate plus 0.35%. 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 calendar quarter. The commitment fee allocated to the fund
for the six months ended May 31, 2005 was $35,592, and is included in
miscellaneous expense. The fund had no significant borrowings during the six
months ended May 31, 2005.
(7) LEGAL PROCEEDINGS
On March 31, 2004, MFS settled an administrative proceeding with the Securities
and Exchange Commission ("SEC") regarding disclosure of brokerage allocation
practices in connection with MFS fund sales (the term "MFS funds" means the
open-end registered management investment companies sponsored by MFS). Under the
terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing, MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million
in penalty to certain MFS funds, pursuant to a plan developed by an independent
distribution consultant. The brokerage allocation practices which were the
subject of this proceeding were discontinued by MFS in November 2003. The
agreement with the SEC is reflected in an order of the SEC. The SEC settlement
order states that MFS failed to adequately disclose to the Boards of Trustees
and to shareholders of the MFS funds the specifics of its preferred arrangements
with certain brokerage firms selling MFS fund shares. The SEC settlement order
states that MFS had in place policies designed to obtain best execution of all
MFS fund trades. As part of the settlement, MFS retained an independent
compliance consultant to review the completeness of its current policies and
practices regarding disclosure to MFS fund trustees and to MFS fund shareholders
of strategic alliances between MFS or its affiliates and broker-dealers and
other financial intermediaries who support the sale of MFS fund shares. Pursuant
to the SEC order, on July 28, 2004, MFS transferred these settlement amounts to
the SEC, and those MFS funds entitled to these settlement amounts accrued
an estimate of their pro rata portion of these amounts. The final distribution
plan was approved by the SEC on January 21, 2005, and the affected MFS funds
received the payment on February 16, 2005.
In addition, in February 2004, MFS reached agreement with the SEC, the New York
Attorney General ("NYAG") and the Bureau of Securities Regulation of the State
of New Hampshire ("NH") to settle administrative proceedings alleging false and
misleading information in certain MFS open-end retail fund ("MFS retail funds")
prospectuses regarding market timing and related matters (the "February
Settlements"). These regulators alleged that prospectus language for certain MFS
retail funds was false and misleading because, although the prospectuses for
those funds in the regulators' view indicated that they prohibited market
timing, MFS did not limit trading activity in 11 domestic large cap stock, high
grade bond and money market retail funds. MFS' former Chief Executive Officer
and former President also reached agreement with the SEC in which they agreed
to, among other terms, monetary fines and temporary suspensions from association
with any investment adviser or registered investment company. These individuals
have resigned their positions with, and will not be returning to, MFS and the
MFS funds. Under the terms of the February Settlements, MFS and the executives
neither admit nor deny wrongdoing.
Under the terms of the February Settlements, a $225 million pool has been
established for distribution to shareholders in certain MFS retail funds, which
has been funded by MFS and of which $50 million is characterized as a penalty.
This pool will be distributed in accordance with a methodology developed by an
independent distribution consultant in consultation with MFS and the Board of
Trustees of the MFS retail funds, and acceptable to the SEC. MFS has further
agreed with NYAG to reduce its management fees in the aggregate amount of
approximately $25 million annually over the next five years, and not to increase
certain management fees during this period. MFS has also paid an administrative
fine to NH in the amount of $1 million, which will be used for investor
education purposes (NH retained $250,000 and $750,000 was contributed to the
North American Securities Administrators Association's Investor Protection
Trust). In addition, under the terms of the February Settlements, MFS is in the
process of adopting certain governance changes and reviewing its policies and
procedures.
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center, Inc.,
MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS
funds, certain current and/or former Trustees of these MFS funds, and certain
officers of MFS have been named as defendants in multiple lawsuits filed in
federal and state courts. The lawsuits variously have been commenced as class
actions or individual actions on behalf of investors who purchased, held or
redeemed shares of the MFS funds during specified periods, as ERISA actions by
participants in certain retirement plan accounts on behalf of those accounts, or
as derivative actions on behalf of the MFS funds. The lawsuits relating to
market timing and related matters have been transferred to, and consolidated
before, the United States District Court for the District of Maryland, as part
of a multi-district litigation of market timing and related claims involving
several other fund complexes (In re Mutual Funds Investment Litigation (Alger,
Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner), No. 1:04-md-15863
(transfer began March 19, 2004)). The market timing cases related to the MFS
complex are Riggs v. MFS et al., Case No. 04-cv-01162-JFM (direct), Hammerslough
v. MFS et al., Case No. 04-md-01620 (derivative) and Anita Walker v. MFS et al.,
Case No. 1:04-CV-01758 (ERISA). The plaintiffs in these consolidated lawsuits
generally seek injunctive relief including removal of the named Trustees,
adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement
of fees and profits, monetary damages, punitive damages, attorney's fees and
costs and other equitable and declaratory relief. Two lawsuits alleging improper
brokerage allocation practices and excessive compensation are pending in the
United States District Court for the District of Massachusetts (Forsythe v. Sun
Life Financial Inc., et al., No. 04cv10584 (GAO) (a consolidated action) and
Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO)). The plaintiffs in these lawsuits generally seek compensatory
damages, punitive damages, recovery of fees, rescission of contracts, an
accounting, restitution, declaratory relief, equitable and/or injunctive relief
and attorney's fees and costs. The various lawsuits generally allege that some
or all of the defendants (i) permitted or acquiesced in market timing and/or
late trading in some of the MFS funds, inadequately disclosed MFS' internal
policies concerning market timing and such matters (ii) received excessive
compensation as fiduciaries to the MFS funds, or (iii) permitted or acquiesced
in the improper use of fund assets by MFS to support the distribution of MFS
fund shares and inadequately disclosed MFS' use of fund assets in this manner.
The actions assert that some or all of the defendants violated the federal
securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, as
well as fiduciary duties and other violations of common law. Insofar as any of
the actions is appropriately brought derivatively on behalf of any of the MFS
funds, any recovery will inure to the benefit of the MFS funds. In February,
March, and April 2005, the defendants filed separate motions to dismiss all
claims of the various lawsuits. The parties continue to brief the issues for the
courts and various hearing dates have been scheduled. Additional lawsuits based
on similar allegations may be filed in the future.
On March 21, 2005, a class action complaint alleging breach of contract was
filed in Massachusetts state court on behalf of Brian Reaves and other Class B
shareholders in certain MFS Series Trusts and Funds. (Reaves v. MFS Series Trust
I, et al, Mass.Super.Ct., C.A. No. 05-1094). Plaintiffs alleged that the named
MFS Series Trusts and Funds breached their contract with Plaintiffs by (i)
engaging in alleged misconduct, including market timing, (ii) failing to act in
the best interests of the Class B shareholders, and (iii) by engaging in unfair
and deceptive trade practices in the performance of contractual duties. In
relief, Plaintiffs generally seek damages and equitable relief, including the
rescission of fees already paid when Plaintiffs sold Class B shares and
injunctive relief preventing the named MFS Series Trusts and Funds from charging
fees on the Plaintiffs future sale of Class B shares and attorney's fees and
costs. The Reaves lawsuit is subject to a conditional transfer order dated May
6, 2005 that would consolidate and transfer the case to the multi-district
litigation in the District of Maryland (In re Mutual Funds Investment
Litigation; see above). Plaintiffs have given notice of their opposition to
transfer, and the parties will be submitting briefs to the multi-district panel
in June of 2005.
Any potential resolution of these matters may include, but not be limited to,
judgments or settlements for damages against MFS, the MFS funds, or any other
named defendant. As noted above, as part of the regulatory settlements, MFS has
established a restitution pool in the amount of $225 million to compensate
certain shareholders of certain MFS retail funds for damages that they allegedly
sustained as a result of market timing or late trading in certain of the MFS
retail funds, and distributed $50 million to affected MFS funds to compensate
those funds based upon the amount of brokerage commissions allocated in
recognition of MFS fund sales. It is not clear whether these amounts will be
sufficient to compensate shareholders for all of the damage they allegedly
sustained, whether certain shareholders or putative class members may have
additional claims to compensation, or whether the damages that may be awarded in
any of the actions will exceed these amounts. In the event the MFS funds incur
any losses, costs or expenses in connection with such lawsuits, the Boards of
Trustees of the affected MFS funds may pursue claims on behalf of such funds
against any party that may have liability to the funds in respect thereof.
Review of these matters by the independent Trustees of the MFS funds and their
counsel is continuing. There can be no assurance that these regulatory actions
and lawsuits, or the adverse publicity associated with these developments, will
not result in increased fund redemptions, reduced sales of fund shares, or other
adverse consequences to the MFS funds.
RESULTS OF SHAREHOLDER MEETING (unaudited) - 5/31/05
At a special meeting of shareholders of Massachusetts Investors Growth Stock
Fund, which was held on March 23, 2005, the following actions were taken:
ITEM 1. To elect a Board of Trustees:
NUMBER OF DOLLARS
-------------------------------------------
NOMINEE AFFIRMATIVE WITHHOLD AUTHORITY
Lawrence H. Cohn, M.D. $4,363,883,053.93 $137,202,277.43
- ---------------------------------------------------------------------------
David H. Gunning 4,370,828,548.44 130,256,782.92
- ---------------------------------------------------------------------------
William R. Gutow 4,366,455,073.66 134,630,257.70
- ---------------------------------------------------------------------------
Michael Hegarty 4,369,473,780.17 131,611,551.19
- ---------------------------------------------------------------------------
J. Atwood Ives 4,366,064,372.83 135,020,958.53
- ---------------------------------------------------------------------------
Amy B. Lane 4,367,898,810.97 133,186,520.39
- ---------------------------------------------------------------------------
Robert J. Manning 4,370,664,001.56 130,421,329.80
- ---------------------------------------------------------------------------
Lawrence T. Perera 4,364,650,711.67 136,434,619.69
- ---------------------------------------------------------------------------
Robert C. Pozen 4,372,415,492.16 128,669.839.20
- ---------------------------------------------------------------------------
J. Dale Sherratt 4,364,425,230.34 136,660,101.02
- ---------------------------------------------------------------------------
Laurie J. Thomsen 4,369,453,623.80 131,631,707.56
- ---------------------------------------------------------------------------
ITEM 2. To make non-fundamental an investment policy of Massachusetts Investors
Growth Stock Fund as further described in the proxy statement.
NUMBER OF DOLLARS
-------------------
Affirmative $3,062,216,853.83
- ----------------------------------------------------------------------------
Against 143,960,065.40
- ----------------------------------------------------------------------------
Abstain 159,783,227.03
- ----------------------------------------------------------------------------
Broker Non-votes 1,135,125,185.10
- ----------------------------------------------------------------------------
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is available
without charge by visiting the Proxy Voting section of mfs.com or by visiting
the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund will file a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the Commission) for the first and third quarters of
each fiscal year on Form N-Q. The fund's Form N-Q may be reviewed and copied at
the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The fund's Form N-Q is available on
the EDGAR database on the Commission's Internet website at http://www.sec.gov,
and copies of this information may be obtained, upon payment of a duplicating
fee, by electronic request at the following e-mail address: publicinfo@sec.gov
or by writing the Public Reference Section at the above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT INFORMATION
INVESTOR SERVICE
Write to us at: MFS Service Center, Inc.
P.O. Box 55824
Boston, MA 02205-5824
Type of Information Phone number Hours, Eastern Time
- -------------------------------------------------------------------------------
General information 1-800-225-2606 8 a.m. to 8 p.m., any
business day
- -------------------------------------------------------------------------------
Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any
business day
- -------------------------------------------------------------------------------
Shares prices, account 1-800-MFS-TALK
balances exchanges (1-800-637-8255) 24 hours a day, 365 days a
or stock and bond outlooks touch-tone required year
- -------------------------------------------------------------------------------
M F S(SM)
INVESTMENT MANAGEMENT(R)
(C) 2005 MFS Investment Management(R)
MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500
Boylston Street, Boston, MA 02116.
MIG-SEM-7/05 608M
ITEM 2. CODE OF ETHICS.
The Registrant has amended its Code of Ethics to reflect that the Registrant's
Principal Financial Officer has changed.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Act) as conducted within
90 days of the filing date of this Form N-CSR, the registrant's principal
financial officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter covered by the report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit: Code of Ethics attached hereto.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
18 of the United States Code (18 U.S.C. 1350) as an exhibit. A
certification furnished pursuant to this paragraph will not be deemed
"filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r),
or otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent that
the registrant specifically incorporates it by reference: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MASSACHUSETTS INVESTORS GROWTH STOCK FUND
By (Signature and Title)* ROBERT J. MANNING
-----------------------------------------------------
Robert J. Manning, President
Date: July 25, 2005
-------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* ROBERT J. MANNING
-----------------------------------------------------
Robert J. Manning, President (Principal Executive
Officer)
Date: July 25, 2005
-------------
By (Signature and Title)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: July 25, 2005
-------------
* Print name and title of each signing officer under his or her signature.