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: November 30, 2006
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ITEM 1. REPORTS TO STOCKHOLDERS.
M F S(R)
INVESTMENT MANAGEMENT
[graphic omitted]
ANNUAL REPORT
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
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 8
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PORTFOLIO OF INVESTMENTS 10
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STATEMENT OF ASSETS AND LIABILITIES 15
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STATEMENT OF OPERATIONS 18
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STATEMENTS OF CHANGES IN NET ASSETS 20
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FINANCIAL HIGHLIGHTS 21
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NOTES TO FINANCIAL STATEMENTS 30
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 42
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TRUSTEES AND OFFICERS 43
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BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT 49
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PROXY VOTING POLICIES AND
INFORMATION 53
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QUARTERLY PORTFOLIO DISCLOSURE 53
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FEDERAL TAX INFORMATION 53
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MFS(R) PRIVACY NOTICE 54
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CONTACT INFORMATION BACK COVER
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THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.
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NOT FDIC INSURED o MAY LOSE VALUE o
NO BANK OR CREDIT UNION GUARANTEE o NOT A DEPOSIT o
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR
NCUA/NCUSIF
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11/30/06
MIG-ANN
[Photo of Robert J. Manning]
LETTER FROM THE CEO
Dear Shareholders:
What a difference a year can make. By the end of 2005, the Dow Jones
Industrial Average had lost value over the course of the year, as stocks were
beaten back by a myriad of investor worries, including a spike in oil prices,
a rise in interest rates, and political uncertainty in the Middle East.
Fast forward to 2006, and we have seen a dramatically different picture.
While there were some fluctuations in the global markets in the first half of
the year, the second half of 2006 has, so far, been good to many investors.
Oil prices retreated, boosting consumer confidence, and interest rates have
held steady. U.S. stock markets responded favorably to this news, as the Dow
reached a record high in October, passing the 12,000 mark.
What does all of this mean for you? If you're focused on a long-term
investment strategy, the high points in the road -- and the bumps -- should
not necessarily dictate portfolio action on your part. Markets are inherently
cyclical, and we firmly believe that investors who remain committed to a long-
term investment strategy are more likely to achieve their goals than those who
consistently chase short-term performance.
At MFS(R), our unique teamwork approach to managing money and our global
research platform support an unwavering focus on helping you realize your
long-term financial goals. We believe in a three-pronged investment strategy
of allocating your holdings across major asset classes, diversifying within
each class, and rebalancing regularly. Of course, these strategies cannot
guarantee a profit or protect against a loss. Investing and planning for the
long term require diligence and patience -- two traits that are essential to
capitalizing on the many opportunities the financial markets can offer.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
January 16, 2007
The opinions expressed in this letter are subject to change, may not be relied
upon for investment advice, and no forecasts can be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE
Common Stocks 99.2%
Cash & Other Net Assets 0.8%
TOP TEN HOLDINGS
Cisco Systems, Inc. 3.8%
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Intel Corp. 2.9%
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General Electric Co. 2.7%
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Johnson & Johnson 2.4%
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Google, Inc., "A" 2.3%
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Procter & Gamble Co. 2.2%
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Microsoft Corp. 2.2%
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Amgen, Inc. 2.1%
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Oracle Corp. 2.0%
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Genzyme Corp. 1.9%
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EQUITY SECTORS
Technology 24.6%
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Health Care 19.2%
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Financial Services 10.1%
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Industrial Goods & Services 9.8%
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Retailing 7.3%
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Special Products & Services 6.8%
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Leisure 6.3%
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Consumer Staples 6.0%
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Energy 4.5%
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Transportation 1.7%
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Basic Materials 1.2%
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Utilities & Communications 0.9%
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Autos & Housing 0.8%
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Percentages are based on net assets as of 11/30/06.
The portfolio is actively managed and current holdings may be different.
MANAGEMENT REVIEW
SUMMARY OF RESULTS
For the twelve months ended November 30, 2006, Class A shares of the
Massachusetts Investors Growth Stock Fund provided a total return of 7.99%, at
net asset value. This compares with a return of 8.36% for the fund's
benchmark, the Russell 1000 Growth Index.
DETRACTORS FROM PERFORMANCE
Stock selection in the financial services sector held back relative
performance during the reporting period. Student loans provider SLM Corp.
(Sallie Mae) was among the fund's largest detractors. Stock selection and, to
a lesser extent, our underweighted position in the strong-performing consumer
staples sector also dampened results.
Elsewhere, several stocks within the otherwise supportive technology sector
negatively impacted the fund's performance. Data storage systems provider EMC,
networking chip maker Marvell Technology Group(c), and integrated circuits
maker Xilinx(g) hurt results. EMC's stock suffered after the company lowered
earnings guidance. We believe that the increasing competitive environment and
decelerating sales of EMC's platform software business affected the stock's
performance. Marvell's results were marred by concerns relating to customer
consolidation issues.
As with technology, there were a number of stocks in the health care sector
that hurt relative performance. Biotechnology firm Genzyme, medical device
maker Advanced Medical Optics, and cardiovascular medical devices manufacturer
St. Jude Medical were among the fund's top detractors. Shares of Genzyme
declined after the company missed their first quarter earnings target and
reported slightly lower sales for Fabrazyme and Synvisc. Higher operating
expenses also held back the stock's performance.
Stocks in other sectors that hindered results included home products retailer
Williams-Sonoma, specialty apparel retailer Chico's(g), and cruise operator
Carnival Cruise Line(c)(g).
CONTRIBUTORS TO PERFORMANCE
Stock selection in the special products and services sector was the strongest
contributor to the fund's relative performance. Software and services
solutions provider Amdocs Ltd.(c) was the fund's top performer relative to the
benchmark. Amdocs' shares increased, in part, because the company reported
stronger-than-expected earnings during the fiscal year and offered a positive
outlook for 2007.
Stock selection and our positioning in the energy sector also helped, although
no individual stocks in this sector were top contributors to relative results
over the period.
Stock selection in both the technology and health care sectors contributed to
relative returns. In the technology sector, network equipment company Cisco
Systems and enterprise software giant Oracle strengthened results. Cisco
Systems' shares rose as the company reported strong earnings which exceeded
investors' expectations. Furthermore, in the later half of the period, the
company gave better-than-expected fiscal second quarter guidance and
reiterated their confidence that the company's full year earnings will be at
the high end of their projected range. In the health care sector, top relative
performers included biopharmaceutical company Celgene, pharmaceutical
manufacturer Wyeth, and biotechnology firm Gilead Sciences(g).
Our positioning and, to a lesser extent, stock selection in the transportation
sector also aided results. Elsewhere in the fund, casino resorts operator Las
Vegas Sands, discount department store Kohl's, Latin America wireless
communications company America Movil(c), and derivatives exchange Chicago
Mercantile Exchange Holdings also contributed to the fund's relative returns.
During the reporting period, currency exposure was a contributor to relative
performance. All of MFS' investment decisions are driven by the fundamentals
of each individual opportunity and, as such, it is common for our portfolios
to have different currency exposure than the benchmark.
Respectfully,
Jeffrey C. Constantino Stephen Pesek
Portfolio Manager Portfolio Manager
Maureen H. Pettirossi
Portfolio Manager
Note to Shareholders: Effective November 2006, Jeffrey C. Constantino became a
co-manager of the fund with Stephen Pesek and Maureen Pettirossi. He replaced
S. Irfan Ali.
(c) Security is not a benchmark constituent.
(g) 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 portfolio. References to
specific securities are not recommendations of such securities, and may not be
representative of any MFS portfolio's current or
future investments.
PERFORMANCE SUMMARY THROUGH 11/30/06
The following chart illustrates the historical performance of the fund's Class
A shares in comparison to its benchmark. Performance results include the
deduction of the maximum applicable sales charge and reflect the percentage
change in net asset value, including reinvestment of dividends and capital
gains distributions. The performance of other share classes will be greater
than or less than that of the class depicted below. Benchmark comparisons are
unmanaged; do not reflect sales charges, commissions or expenses; and cannot
be invested in directly. (See Notes to Performance Summary.)
PERFORMANCE DATA SHOWN REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE SO YOUR SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR MOST RECENT MONTH-END
PERFORMANCE, PLEASE VISIT MFS.COM. (THE MOST RECENT MONTH-END PERFORMANCE FOR
CLASS J SHARES CAN BE OBTAINED BY CALLING EITHER MIZUHO INVESTORS SECURITIES AT
0120-555-324 OR MITSUBISHI SECURITIES AT 0120-17-3234.) 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.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Massachusetts Russell
Investors Growth 1000
Stock Fund Growth
- Class A Index
- ------------------------------------------
11/96 $ 9,425 $10,000
11/97 13,470 12,652
11/98 17,543 16,278
11/99 23,028 21,403
11/00 23,955 18,930
11/01 18,159 14,614
11/02 14,236 11,300
11/03 15,720 13,193
11/04 16,946 13,961
11/05 18,290 15,321
11/06 19,751 16,602
TOTAL RETURNS THROUGH 11/30/06
AVERAGE ANNUAL WITHOUT SALES CHARGE
Share class Class inception date 1-yr 5-yr 10-yr
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A 1/01/35 7.99% 1.69% 7.68%
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B 9/07/93 7.19% 1.04% 6.96%
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C 11/03/97 7.31% 1.04% 6.96%
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I 1/02/97 8.31% 2.05% 8.04%
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J 12/18/00 7.27% 1.05% 6.96%
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R 12/31/02 7.76% 1.63% 7.64%
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R1 4/01/05 7.03% 0.97% 6.92%
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R2 4/01/05 7.53% 1.12% 7.00%
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R3 10/31/03 7.67% 1.24% 7.06%
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R4 4/01/05 7.91% 1.68% 7.67%
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R5 4/01/05 8.20% 1.78% 7.73%
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529A 7/31/02 7.66% 1.45% 7.55%
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529B 7/31/02 6.99% 0.84% 6.86%
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529C 7/31/02 6.93% 0.84% 6.85%
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AVERAGE ANNUAL
Comparative benchmark
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Russell 1000 Growth Index (f) 8.36% 2.58% 5.20%
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AVERAGE ANNUAL WITH SALES CHARGE
Share class
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A 1.78% 0.50% 7.04%
With Initial Sales Charge (5.75%)
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B 3.19% 0.65% 6.96%
With CDSC (Declining over six years from 4% to 0%)(x)
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C 6.31% 1.04% 6.96%
With CDSC (1% for 12 months) (x)
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J 2.98% 0.23% 6.53%
With Initial Sales Charge (4.00%)
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529A 1.47% 0.25% 6.91%
With Initial Sales Charge (5.75%)
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529B 2.99% 0.45% 6.86%
With CDSC (Declining over six years from 4% to 0%)(x)
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529C 5.93% 0.84% 6.85%
With CDSC (1% for 12 months) (x)
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Class I, R, R1, R2, R3, R4, and R5 shares do not have a sales charge. Please
see Notes to Performance Summary for more details.
CDSC - Contingent Deferred Sales Charge.
(f) Source: FactSet Research Systems Inc.
(x) Assuming redemption at the end of the applicable period.
INDEX DEFINITION
Russell 1000 Growth Index - 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 J shares are available only to residents of Japan. Class R shares are
available only to existing Class R shareholders. Class I shares are only
available to certain eligible 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 Classes 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 Classes 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.
From time to time the fund may receive proceeds from litigation settlements,
without which performance would be lower.
EXPENSE TABLE
Fund expenses borne by the shareholders during the period,
June 1, 2006 through November 30, 2006.
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 June 1, 2006 through
November 30, 2006.
ACTUAL EXPENSES
The first line for each share class in the following table 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 following table 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(p)
Share Expense Account Value Account Value 6/01/06-
Class Ratio 6/01/06 11/30/06 11/30/06
- --------------------------------------------------------------------------------
Actual 0.90% $1,000.00 $1,088.40 $4.71
A -------------------------------------------------------------------------
Hypothetical (h) 0.90% $1,000.00 $1,020.56 $4.56
- --------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,084.90 $8.10
B -------------------------------------------------------------------------
Hypothetical (h) 1.55% $1,000.00 $1,017.30 $7.84
- --------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,085.30 $8.10
C -------------------------------------------------------------------------
Hypothetical (h) 1.55% $1,000.00 $1,017.30 $7.84
- --------------------------------------------------------------------------------
Actual 0.55% $1,000.00 $1,090.70 $2.88
I -------------------------------------------------------------------------
Hypothetical (h) 0.55% $1,000.00 $1,022.31 $2.79
- --------------------------------------------------------------------------------
Actual 1.55% $1,000.00 $1,085.80 $8.10
J -------------------------------------------------------------------------
Hypothetical (h) 1.55% $1,000.00 $1,017.30 $7.84
- --------------------------------------------------------------------------------
Actual 1.05% $1,000.00 $1,087.80 $5.50
R -------------------------------------------------------------------------
Hypothetical (h) 1.05% $1,000.00 $1,019.80 $5.32
- --------------------------------------------------------------------------------
Actual 1.64% $1,000.00 $1,084.30 $8.57
R1 -------------------------------------------------------------------------
Hypothetical (h) 1.64% $1,000.00 $1,016.85 $8.29
- --------------------------------------------------------------------------------
Actual 1.30% $1,000.00 $1,086.40 $6.80
R2 -------------------------------------------------------------------------
Hypothetical (h) 1.30% $1,000.00 $1,018.55 $6.58
- --------------------------------------------------------------------------------
Actual 1.20% $1,000.00 $1,087.10 $6.28
R3 -------------------------------------------------------------------------
Hypothetical (h) 1.20% $1,000.00 $1,019.05 $6.07
- --------------------------------------------------------------------------------
Actual 0.94% $1,000.00 $1,088.50 $4.92
R4 -------------------------------------------------------------------------
Hypothetical (h) 0.94% $1,000.00 $1,020.36 $4.76
- --------------------------------------------------------------------------------
Actual 0.65% $1,000.00 $1,089.70 $3.41
R5 -------------------------------------------------------------------------
Hypothetical (h) 0.65% $1,000.00 $1,021.81 $3.29
- --------------------------------------------------------------------------------
Actual 1.15% $1,000.00 $1,087.80 $6.02
529A -------------------------------------------------------------------------
Hypothetical (h) 1.15% $1,000.00 $1,019.30 $5.82
- --------------------------------------------------------------------------------
Actual 1.80% $1,000.00 $1,083.90 $9.40
529B -------------------------------------------------------------------------
Hypothetical (h) 1.80% $1,000.00 $1,016.04 $9.10
- --------------------------------------------------------------------------------
Actual 1.80% $1,000.00 $1,083.40 $9.40
529C -------------------------------------------------------------------------
Hypothetical (h) 1.80% $1,000.00 $1,016.04 $9.10
- --------------------------------------------------------------------------------
(h) 5% class return per year before expenses.
(p) Expenses paid is equal to each class' annualized expense ratio, as shown
above, multiplied by the average account value over the period, multiplied
by the number of days in the period, divided by the number of days in the
year. Expenses paid do not include any applicable sales charges (loads) or
redemption fees. If these transaction costs had been included, your costs
would have been higher.
PORTFOLIO OF INVESTMENTS
11/30/06
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by
broad-based asset classes.
Common Stocks - 99.2%
- --------------------------------------------------------------------------------------------------------
ISSUER SHARES/PAR VALUE ($)
- --------------------------------------------------------------------------------------------------------
Aerospace - 3.4%
- --------------------------------------------------------------------------------------------------------
Boeing Co. 745,500 $ 65,999,115
Precision Castparts Corp. (l) 523,790 39,525,193
United Technologies Corp. 1,553,560 100,251,227
------------------
$ 205,775,535
- --------------------------------------------------------------------------------------------------------
Apparel Manufacturers - 1.0%
- --------------------------------------------------------------------------------------------------------
NIKE, Inc., "B" 603,290 $ 59,695,546
- --------------------------------------------------------------------------------------------------------
Automotive - 0.8%
- --------------------------------------------------------------------------------------------------------
Harman International Industries, Inc. 458,820 $ 47,643,869
- --------------------------------------------------------------------------------------------------------
Biotechnology - 5.0%
- --------------------------------------------------------------------------------------------------------
Amgen, Inc. (a) 1,820,010 $ 129,220,710
Celgene Corp. (a)(l) 1,102,560 61,445,669
Genzyme Corp. (a) 1,777,190 114,451,036
------------------
$ 305,117,415
- --------------------------------------------------------------------------------------------------------
Broadcasting - 1.1%
- --------------------------------------------------------------------------------------------------------
News Corp., "A" 3,157,000 $ 65,034,200
- --------------------------------------------------------------------------------------------------------
Brokerage & Asset Managers - 4.1%
- --------------------------------------------------------------------------------------------------------
Charles Schwab Corp. 3,882,690 $ 71,208,535
Chicago Mercantile Exchange Holdings, Inc., "A" (l) 156,790 83,976,724
Merrill Lynch & Co., Inc. 338,960 29,635,273
Morgan Stanley 883,080 67,255,373
------------------
$ 252,075,905
- --------------------------------------------------------------------------------------------------------
Business Services - 5.4%
- --------------------------------------------------------------------------------------------------------
Amdocs Ltd. (a) 2,909,060 $ 112,144,261
Automatic Data Processing, Inc. 744,030 35,884,564
CheckFree Corp. (a) 814,910 34,071,387
First Data Corp. 4,038,630 101,975,408
Western Union Co. (a) 1,981,360 45,175,008
------------------
$ 329,250,628
- --------------------------------------------------------------------------------------------------------
Chemicals - 1.2%
- --------------------------------------------------------------------------------------------------------
Ecolab, Inc. (l) 583,520 $ 25,879,112
Monsanto Co. 1,006,200 48,368,034
------------------
$ 74,247,146
- --------------------------------------------------------------------------------------------------------
Computer Software - 6.1%
- --------------------------------------------------------------------------------------------------------
Adobe Systems, Inc. (a) 2,833,042 $ 113,689,976
Microsoft Corp. 4,598,490 134,873,712
Oracle Corp. (a) 6,433,790 122,435,024
------------------
$ 370,998,712
- --------------------------------------------------------------------------------------------------------
Computer Software - Systems - 3.5%
- --------------------------------------------------------------------------------------------------------
Apple Computer, Inc. (a) 1,055,670 $ 96,783,826
Dell, Inc. (a) 1,224,100 33,344,484
Hewlett-Packard Co. 2,080,460 82,094,952
------------------
$ 212,223,262
- --------------------------------------------------------------------------------------------------------
Conglomerates - 0.5%
- --------------------------------------------------------------------------------------------------------
Textron, Inc. (l) 316,630 $ 30,855,594
- --------------------------------------------------------------------------------------------------------
Consumer Goods & Services - 3.7%
- --------------------------------------------------------------------------------------------------------
Colgate-Palmolive Co. 525,400 $ 34,177,270
eBay, Inc. (a) 1,621,470 52,454,555
Procter & Gamble Co. 2,168,236 136,143,538
------------------
$ 222,775,363
- --------------------------------------------------------------------------------------------------------
Electrical Equipment - 5.3%
- --------------------------------------------------------------------------------------------------------
Danaher Corp. (l) 641,770 $ 46,926,222
General Electric Co. 4,701,000 165,851,280
Rockwell Automation, Inc. 1,147,870 74,703,380
W.W. Grainger, Inc. (l) 465,880 33,711,077
------------------
$ 321,191,959
- --------------------------------------------------------------------------------------------------------
Electronics - 5.4%
- --------------------------------------------------------------------------------------------------------
Applied Materials, Inc. (l) 2,931,440 $ 52,707,291
Intel Corp. 8,240,940 175,944,069
Marvell Technology Group Ltd. (a) 2,441,330 50,389,051
Samsung Electronics Co. Ltd., GDR 92,802 31,738,284
SanDisk Corp. (a) 386,730 17,170,812
------------------
$ 327,949,507
- --------------------------------------------------------------------------------------------------------
Energy - Integrated - 0.6%
- --------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 500,500 $ 38,443,405
- --------------------------------------------------------------------------------------------------------
Food & Beverages - 2.4%
- --------------------------------------------------------------------------------------------------------
Nestle S.A. 183,508 $ 64,789,153
PepsiCo, Inc. 1,302,510 80,716,545
------------------
$ 145,505,698
- --------------------------------------------------------------------------------------------------------
Food & Drug Stores - 0.5%
- --------------------------------------------------------------------------------------------------------
CVS Corp. (l) 1,009,400 $ 29,040,438
- --------------------------------------------------------------------------------------------------------
Gaming & Lodging - 3.2%
- --------------------------------------------------------------------------------------------------------
Harrah's Entertainment, Inc. 184,200 $ 14,496,540
International Game Technology 2,253,450 98,656,041
Las Vegas Sands Corp. (a)(l) 509,900 46,686,444
Starwood Hotels & Resorts, Inc. 529,000 33,945,930
------------------
$ 193,784,955
- --------------------------------------------------------------------------------------------------------
General Merchandise - 3.1%
- --------------------------------------------------------------------------------------------------------
Family Dollar Stores, Inc. (l) 1,156,790 $ 32,262,873
Kohl's Corp. (a)(l) 478,260 33,286,896
Target Corp. 1,428,910 83,005,382
Wal-Mart Stores, Inc. 919,560 42,391,716
------------------
$ 190,946,867
- --------------------------------------------------------------------------------------------------------
Health Maintenance Organizations - 0.5%
- --------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc. 639,860 $ 31,404,329
- --------------------------------------------------------------------------------------------------------
Internet - 3.1%
- --------------------------------------------------------------------------------------------------------
Google, Inc., "A" (a) 282,560 $ 137,018,995
Yahoo!, Inc. (a) 1,899,460 51,266,425
------------------
$ 188,285,420
- --------------------------------------------------------------------------------------------------------
Leisure & Toys - 1.7%
- --------------------------------------------------------------------------------------------------------
Electronic Arts, Inc. (a) 1,823,540 $ 101,844,709
- --------------------------------------------------------------------------------------------------------
Machinery & Tools - 1.1%
- --------------------------------------------------------------------------------------------------------
Deere & Co. 713,040 $ 68,451,840
- --------------------------------------------------------------------------------------------------------
Major Banks - 1.7%
- --------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co. 1,076,380 $ 49,814,866
State Street Corp. 874,670 54,343,247
------------------
$ 104,158,113
- --------------------------------------------------------------------------------------------------------
Medical & Health Technology & Services - 1.1%
- --------------------------------------------------------------------------------------------------------
Caremark Rx, Inc. 1,471,800 $ 69,616,140
- --------------------------------------------------------------------------------------------------------
Medical Equipment - 4.8%
- --------------------------------------------------------------------------------------------------------
Advanced Medical Optics, Inc. (a)(l) 1,670,810 $ 58,495,058
Baxter International, Inc. 1,285,470 57,511,928
DENTSPLY International, Inc. 978,960 31,258,193
Medtronic, Inc. (l) 2,158,170 112,505,402
St. Jude Medical, Inc. (a) 857,580 31,962,007
------------------
$ 291,732,588
- --------------------------------------------------------------------------------------------------------
Network & Telecom - 5.7%
- --------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. (a) 8,642,780 $ 232,317,926
Corning, Inc. (a) 2,593,690 55,919,956
Juniper Networks, Inc. (a)(l) 940,800 20,029,632
QUALCOMM, Inc. 962,400 35,214,216
------------------
$ 343,481,730
- --------------------------------------------------------------------------------------------------------
Oil Services - 3.9%
- --------------------------------------------------------------------------------------------------------
GlobalSantaFe Corp. 1,656,440 $ 99,386,400
Noble Corp. 739,820 57,151,095
Schlumberger Ltd. 520,840 35,667,123
Transocean, Inc. (a) 231,070 18,011,907
Weatherford International Ltd. (a) 627,590 28,185,067
------------------
$ 238,401,592
- --------------------------------------------------------------------------------------------------------
Other Banks & Diversified Financials - 4.3%
- --------------------------------------------------------------------------------------------------------
American Express Co. 1,752,030 $ 102,879,202
SLM Corp. 1,428,300 65,473,272
UBS AG 1,527,741 91,873,582
------------------
$ 260,226,056
- --------------------------------------------------------------------------------------------------------
Personal Computers & Peripherals - 0.8%
- --------------------------------------------------------------------------------------------------------
EMC Corp. (a) 2,481,630 $ 32,534,169
Seagate Technology LLC (l) 623,600 16,063,936
------------------
$ 48,598,105
- --------------------------------------------------------------------------------------------------------
Pharmaceuticals - 7.8%
- --------------------------------------------------------------------------------------------------------
Allergan, Inc. (l) 703,270 $ 81,987,217
Eli Lilly & Co. 1,134,520 60,798,927
Johnson & Johnson 2,207,840 145,518,734
Roche Holding AG 512,740 92,653,543
Wyeth 1,891,870 91,339,484
------------------
$ 472,297,905
- --------------------------------------------------------------------------------------------------------
Railroad & Shipping - 0.9%
- --------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 727,800 $ 54,701,448
- --------------------------------------------------------------------------------------------------------
Restaurants - 0.3%
- --------------------------------------------------------------------------------------------------------
YUM! Brands, Inc. (l) 340,570 $ 20,839,478
- --------------------------------------------------------------------------------------------------------
Specialty Stores - 2.7%
- --------------------------------------------------------------------------------------------------------
Lowe's Cos., Inc. 1,536,900 $ 46,352,904
Staples, Inc. 2,825,485 71,965,103
Williams-Sonoma, Inc. (l) 1,423,400 45,150,248
------------------
$ 163,468,255
- --------------------------------------------------------------------------------------------------------
Telecommunications - Wireless - 0.9%
- --------------------------------------------------------------------------------------------------------
America Movil S.A. de C.V., "L", ADR 1,179,070 $ 52,433,243
- --------------------------------------------------------------------------------------------------------
Tobacco - 0.8%
- --------------------------------------------------------------------------------------------------------
Altria Group, Inc. 585,350 $ 49,292,324
- --------------------------------------------------------------------------------------------------------
Trucking - 0.8%
- --------------------------------------------------------------------------------------------------------
FedEx Corp. 439,430 $ 50,723,405
- --------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $5,675,839,077) $ 6,032,512,684
- --------------------------------------------------------------------------------------------------------
Repurchase Agreements - 1.5%
- --------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., 5.31%, dated 11/30/06, due 12/1/06,
total to be received $89,031,130 (secured by various U.S.
Treasury and Federal Agency obligations and Mortgage Backed
securities in a jointly traded account), at Cost $ 89,018,000 $ 89,018,000
- --------------------------------------------------------------------------------------------------------
Collateral for Securities Loaned - 2.2%
- --------------------------------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio, at Cost and Net
Asset Value 133,772,584 $ 133,772,584
- --------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $5,898,629,661) $ 6,255,303,268
- --------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - (2.9)% (175,738,804)
- --------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 6,079,564,464
- --------------------------------------------------------------------------------------------------------
(a) Non-income producing security.
(l) All or a portion of this security is on loan.
The following abbreviations are used in this report and are defined:
ADR American Depository Receipt
GDR Global Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
At 11/30/06
This statement represents your fund's balance sheet, which details the assets and liabilities comprising
the total value of the fund.
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value, including $130,744,297 of securities
on loan (identified cost, $5,898,629,661) $6,255,303,268
Cash 388
Receivable for investments sold 2,037,296
Receivable for fund shares sold 2,265,187
Interest and dividends receivable 5,349,275
Other assets 118,041
- -------------------------------------------------------------------------------------------------------
Total assets $6,265,073,455
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Payable for investments purchased $25,068,116
Payable for fund shares reacquired 23,669,642
Collateral for securities loaned, at value 133,772,584
Payable to affiliates
Management fee 109,971
Shareholder servicing costs 745,136
Distribution and service fees 178,509
Administrative services fee 3,356
Program manager fees 74
Retirement plan administration and services fees 954
Payable for independent trustees' compensation 297,321
Accrued expenses and other liabilities 1,663,328
- -------------------------------------------------------------------------------------------------------
Total liabilities $185,508,991
- -------------------------------------------------------------------------------------------------------
Net assets $6,079,564,464
- -------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------
Paid-in capital $10,207,534,474
Unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currencies 356,694,442
Accumulated net realized gain (loss) on investments and
foreign currency transactions (4,484,443,138)
Accumulated net investment loss (221,314)
- -------------------------------------------------------------------------------------------------------
Net assets $6,079,564,464
- -------------------------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 454,434,301
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class A shares
- -------------------------------------------------------------------------------------------------------
Net assets $3,937,421,313
Shares outstanding 285,527,066
- -------------------------------------------------------------------------------------------------------
Net asset value per share $13.79
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share $14.63
- -------------------------------------------------------------------------------------------------------
Class B shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,389,907,758
Shares outstanding 110,991,654
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $12.52
- -------------------------------------------------------------------------------------------------------
Class C shares
- -------------------------------------------------------------------------------------------------------
Net assets $451,097,386
Shares outstanding 36,180,737
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $12.47
- -------------------------------------------------------------------------------------------------------
Class I shares
- -------------------------------------------------------------------------------------------------------
Net assets $86,309,448
Shares outstanding 6,132,243
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $14.07
- -------------------------------------------------------------------------------------------------------
Class J shares
- -------------------------------------------------------------------------------------------------------
Net assets $1,605,667
Shares outstanding 129,539
- -------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $12.40
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/96.00Xnet asset value per share $12.92
- -------------------------------------------------------------------------------------------------------
Class R shares
- -------------------------------------------------------------------------------------------------------
Net assets $49,392,320
Shares outstanding 3,591,907
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $13.75
- -------------------------------------------------------------------------------------------------------
Class R1 shares
- -------------------------------------------------------------------------------------------------------
Net assets $2,494,657
Shares outstanding 199,832
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $12.48
- -------------------------------------------------------------------------------------------------------
Class R2 shares
- -------------------------------------------------------------------------------------------------------
Net assets $392,305
Shares outstanding 31,212
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $12.57
- -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities - continued
Class R3 shares
- -------------------------------------------------------------------------------------------------------
Net assets $8,090,614
Shares outstanding 594,461
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $13.61
- -------------------------------------------------------------------------------------------------------
Class R4 shares
- -------------------------------------------------------------------------------------------------------
Net assets $11,374,611
Shares outstanding 825,476
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $13.78
- -------------------------------------------------------------------------------------------------------
Class R5 shares
- -------------------------------------------------------------------------------------------------------
Net assets $136,104,124
Shares outstanding 9,823,980
- -------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per share $13.85
- -------------------------------------------------------------------------------------------------------
Class 529A shares
- -------------------------------------------------------------------------------------------------------
Net assets $3,791,053
Shares outstanding 278,119
- -------------------------------------------------------------------------------------------------------
Net asset value per share $13.63
- -------------------------------------------------------------------------------------------------------
Offering price per share (100/94.25Xnet asset value per share) $14.46
- -------------------------------------------------------------------------------------------------------
Class 529B shares
- -------------------------------------------------------------------------------------------------------
Net assets $586,985
Shares outstanding 47,350
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $12.40
- -------------------------------------------------------------------------------------------------------
Class 529C shares
- -------------------------------------------------------------------------------------------------------
Net assets $996,223
Shares outstanding 80,725
- -------------------------------------------------------------------------------------------------------
Net asset value and offering price per share $12.34
- -------------------------------------------------------------------------------------------------------
On sales of $50,000 or more, the offering prices of Class A and Class 529A shares are 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
Year ended 11/30/06
This statement describes how much your fund earned in investment income and accrued in expenses.
It also describes any gains and/or losses generated by fund operations.
NET INVESTMENT LOSS
- ------------------------------------------------------------------------------------------------------
Income
Dividends $59,481,306
Interest 14,629,270
Foreign taxes withheld (805,330)
- ------------------------------------------------------------------------------------------------------
Total investment income $73,305,246
- ------------------------------------------------------------------------------------------------------
Expenses
Management fee $22,170,003
Distribution and service fees 36,902,475
Program manager fees 12,704
Shareholder servicing costs 14,322,611
Administrative services fee 543,948
Retirement plan administration and services fees 156,337
Independent trustees' compensation 141,534
Custodian fee 879,635
Shareholder communications 531,588
Auditing fees 56,435
Legal fees 137,436
Miscellaneous 299,722
- ------------------------------------------------------------------------------------------------------
Total expenses $76,154,428
- ------------------------------------------------------------------------------------------------------
Fees paid indirectly (574,801)
Reduction of expenses by investment adviser (47,367)
- ------------------------------------------------------------------------------------------------------
Net expenses $75,532,260
- ------------------------------------------------------------------------------------------------------
Net investment loss $(2,227,014)
- ------------------------------------------------------------------------------------------------------
Statement of Operations - continued
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $160,576,710
Foreign currency transactions (75,918)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions $160,500,792
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $314,183,295
Translation of assets and liabilities in foreign currencies 30,433
- ------------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments and foreign
currency translation $314,213,728
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency $474,714,520
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $472,487,506
- ------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
These statements describe the increases and/or decreases in net assets resulting from operations,
any distributions, and any shareholder transactions.
YEARS ENDED 11/30
---------------------------------------
2006 2005
CHANGE IN NET ASSETS
FROM OPERATIONS
- ------------------------------------------------------------------------------------------------------
Net investment loss $(2,227,014) $(20,227,001)
Net realized gain (loss) on investments and foreign
currency transactions 160,500,792 765,811,696
Net unrealized gain (loss) on investments and foreign
currency translation 314,213,728 (143,728,535)
- ------------------------------------------------------------------------------------------------------
Change in net assets from operations $472,487,506 $601,856,160
- ------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------
From net investment income
Class A $-- $(22,549,646)
Class I -- (1,105,607)
Class R -- (113,615)
Class R3 -- (6,068)
Class 529A -- (7,734)
- ------------------------------------------------------------------------------------------------------
Total distributions declared to shareholders $-- $(23,782,670)
- ------------------------------------------------------------------------------------------------------
Change in net assets from fund share transactions $(1,981,303,170) $(1,859,041,090)
- ------------------------------------------------------------------------------------------------------
Redemption fees $-- $19,402
- ------------------------------------------------------------------------------------------------------
Total change in net assets $(1,508,815,664) $(1,280,948,198)
- ------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------
At beginning of period 7,588,380,128 8,869,328,326
At end of period (including accumulated net investment
loss and accumulated distributions in excess of net
investment income of $221,314 and $231,825,
respectively) $6,079,564,464 $7,588,380,128
- ------------------------------------------------------------------------------------------------------
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 past 5 years (or
life of a particular share class, if shorter). 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
share class (assuming reinvestment of all distributions) held for the entire period. This information has been audited by the
fund's independent registered public accounting firm, whose report, together with the fund's financial statements, are included
in this report.
CLASS A YEARS ENDED 11/30
---------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $12.77 $11.88 $11.02 $9.98 $12.73
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.02 $(0.00)(w) $0.05 $0.00(w) $(0.02)
Net realized and unrealized gain
(loss) on investments and foreign
currency 1.00 0.94 0.81 1.04 (2.73)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.02 $0.94 $0.86 $1.04 $(2.75)
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $(0.05) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.79 $12.77 $11.88 $11.02 $9.98
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 7.99 7.93 7.80(b) 10.42(j) (21.60)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.93 0.96 0.92 0.95 0.94
Expenses after expense reductions (f) 0.93 0.96 0.92 N/A N/A
Net investment income (loss) 0.17 (0.03) 0.44 0.01 (0.14)
Portfolio turnover 91 125 141 283 227
Net assets at end of period
(000 omitted) $3,937,421 $4,771,192 $5,540,056 $7,079,160 $6,327,026
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS B YEARS ENDED 11/30
---------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $11.68 $10.88 $10.16 $9.27 $11.89
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.06) $(0.08) $(0.02) $(0.06) $(0.08)
Net realized and unrealized gain
(loss) on investments and foreign
currency 0.90 0.88 0.74 0.95 (2.54)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.84 $0.80 $0.72 $0.89 $(2.62)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.52 $11.68 $10.88 $10.16 $9.27
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 7.19 7.35 7.09(b) 9.60(j) (22.04)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.58 1.61 1.56 1.60 1.59
Expenses after expense reductions (f) 1.58 1.61 1.56 N/A N/A
Net investment loss (0.48) (0.68) (0.17) (0.64) (0.79)
Portfolio turnover 91 125 141 283 227
Net assets at end of period
(000 omitted) $1,389,908 $1,947,597 $2,415,346 $2,778,509 $2,820,241
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C YEARS ENDED 11/30
-------------------------------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $11.62 $10.83 $10.11 $9.23 $11.84
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.06) $(0.08) $(0.02) $(0.06) $(0.08)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.91 0.87 0.74 0.94 (2.53)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.85 $0.79 $0.72 $0.88 $(2.61)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.47 $11.62 $10.83 $10.11 $9.23
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 7.31 7.29 7.12(b) 9.53(j) (22.04)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.58 1.61 1.56 1.60 1.59
Expenses after expense reductions (f) 1.58 1.61 1.56 N/A N/A
Net investment loss (0.48) (0.68) (0.19) (0.64) (0.79)
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $451,097 $584,360 $739,534 $911,333 $917,809
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS I YEARS ENDED 11/30
------------------------------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $12.99 $12.08 $11.17 $10.08 $12.81
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.07 $0.04 $0.08 $0.04 $0.03
Net realized and unrealized gain (loss) on
investments and foreign currency 1.01 0.97 0.83 1.05 (2.76)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $1.08 $1.01 $0.91 $1.09 $(2.73)
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $(0.10) $-- $-- $--
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.07 $12.99 $12.08 $11.17 $10.08
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 8.31 8.38 8.15(b) 10.81(j) (21.31)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.58 0.61 0.57 0.60 0.59
Expenses after expense reductions (f) 0.58 0.61 0.57 N/A N/A
Net investment income 0.51 0.32 0.67 0.36 0.21
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $86,309 $122,728 $133,502 $285,467 $196,501
- -------------------------------------------------------------------------------------------------------------------------------
CLASS J YEARS ENDED 11/30
--------------------------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $11.56 $10.77 $10.06 $9.17 $11.77
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.06) $(0.07) $(0.03) $(0.06) $(0.08)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.90 0.86 0.74 0.95 (2.52)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.84 $0.79 $0.71 $0.89 $(2.60)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.40 $11.56 $10.77 $10.06 $9.17
- -------------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 7.27 7.34 7.06(b) 9.71(j) (22.09)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.58 1.60 1.56 1.61 1.59
Expenses after expense reductions (f) 1.58 1.60 1.56 N/A N/A
Net investment loss (0.48) (0.67) (0.25) (0.66) (0.79)
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $1,606 $1,952 $7,630 $10,368 $3,284
- -------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R YEARS ENDED 11/30
-----------------------------------------------------------------
2006 2005 2004 2003(i)
Net asset value, beginning of period $12.76 $11.87 $11.02 $9.23
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.00(w) $(0.02) $0.05 $(0.01)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.99 0.95 0.80 1.80
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.99 $0.93 $0.85 $1.79
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $(0.04) $-- $--
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.75 $12.76 $11.87 $11.02
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 7.76 7.89 7.71(b) 19.39(j)(n)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.08 1.12 1.07 1.10(a)
Expenses after expense reductions (f) 1.08 1.12 1.07 N/A
Net investment income (loss) 0.03 (0.17) 0.42 (0.15)(a)
Portfolio turnover 91 125 141 283
Net assets at end of period (000 omitted) $49,392 $51,749 $29,239 $14,105
- --------------------------------------------------------------------------------------------------------------------------
CLASS R1 YEARS ENDED 11/30
-------------------------------
2006 2005(i)
Net asset value, beginning of period $11.66 $10.86
- -----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.07) $(0.06)
Net realized and unrealized gain (loss) on investments and foreign
currency 0.89 0.86
- -----------------------------------------------------------------------------------------------------------
Total from investment operations $0.82 $0.80
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.48 $11.66
- -----------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 7.03 7.37(n)
- -----------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.77 1.82(a)
Expenses after expense reductions (f) 1.67 1.78(a)
Net investment loss (0.56) (0.80)(a)
Portfolio turnover 91 125
Net assets at end of period (000 omitted) $2,495 $1,008
- -----------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R2 YEARS ENDED 11/30
-------------------------------
2006 2005(i)
Net asset value, beginning of period $11.69 $10.86
- -----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.03) $(0.04)
Net realized and unrealized gain (loss) on investments and foreign
currency 0.91 0.87
- -----------------------------------------------------------------------------------------------------------
Total from investment operations $0.88 $0.83
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.57 $11.69
- -----------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 7.53 7.64(n)
- -----------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.48 1.51(a)
Expenses after expense reductions (f) 1.33 1.47(a)
Net investment loss (0.22) (0.54)(a)
Portfolio turnover 91 125
Net assets at end of period (000 omitted) $392 $274
- -----------------------------------------------------------------------------------------------------------
CLASS R3 YEARS ENDED 11/30
-----------------------------------------------------------------
2006 2005 2004 2003(i)
Net asset value, beginning of period $12.64 $11.82 $11.02 $11.02
- -------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $(0.01) $(0.04) $0.00(w) $(0.00)(w)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.98 0.94 0.80 (0.00)(g)(w)
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.97 $0.90 $0.80 $(0.00)(w)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $(0.08) $-- $--
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.61 $12.64 $11.82 $11.02
- -------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 7.67 7.64 7.26(b) 0.00(n)
- -------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.32 1.37 1.33 1.44(a)
Expenses after expense reductions (f) 1.22 1.34 1.33 N/A
Net investment income (loss) (0.11) (0.37) 0.03 (0.34)(a)
Portfolio turnover 91 125 141 283
Net assets at end of period (000 omitted) $8,091 $4,216 $708 $5
- -------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS R4 YEARS ENDED 11/30
---------------------------
2006 2005(i)
Net asset value, beginning of period $12.77 $11.83
- -----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $0.02 $(0.01)
Net realized and unrealized gain (loss) on investments and foreign
currency 0.99 0.95
- -----------------------------------------------------------------------------------------------------------
Total from investment operations $1.01 $0.94
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.78 $12.77
- -----------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 7.91 7.95(n)
- -----------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.96 1.03(a)
Expenses after expense reductions (f) 0.96 1.03(a)
Net investment income (loss) 0.15 (0.11)(a)
Portfolio turnover 91 125
Net assets at end of period (000 omitted) $11,375 $1,016
- -----------------------------------------------------------------------------------------------------------
CLASS R5 YEARS ENDED 11/30
----------------------------
2006 2005(i)
Net asset value, beginning of period $12.80 $11.83
- -----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------
Net investment income (d) $0.06 $0.03
Net realized and unrealized gain (loss) on investments and foreign
currency 0.99 0.94
- -----------------------------------------------------------------------------------------------------------
Total from investment operations $1.05 $0.97
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.85 $12.80
- -----------------------------------------------------------------------------------------------------------
Total return (%) (r)(s) 8.20 8.20(n)
- -----------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 0.68 0.70(a)
Expenses after expense reductions (f) 0.68 0.70(a)
Net investment income 0.43 0.48(a)
Portfolio turnover 91 125
Net assets at end of period (000 omitted) $136,104 $97,541
- -----------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS 529A YEARS ENDED 11/30
---------------------------------------------------------------------------
2006 2005 2004 2003 2002(i)
Net asset value, beginning of period $12.66 $11.79 $10.96 $9.97 $9.72
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) $(0.01) $(0.03) $0.04 $(0.02) $(0.00)(w)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.98 0.94 0.79 1.01 0.25
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.97 $0.91 $0.83 $0.99 $0.25
- ----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income $-- $(0.04) $-- $-- $--
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.63 $12.66 $11.79 $10.96 $9.97
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 7.66 7.77 7.57(b) 9.93(j) 2.57(n)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.18 1.22 1.17 1.20 1.19(a)
Expenses after expense reductions (f) 1.18 1.22 1.17 N/A N/A
Net investment income (loss) (0.07) (0.27) 0.39 (0.24) (0.16)(a)
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $3,791 $3,203 $2,070 $1,068 $95
- ----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
CLASS 529B YEARS ENDED 11/30
----------------------------------------------------------------------------
2006 2005 2004 2003 2002(i)
Net asset value, beginning of period $11.59 $10.83 $10.13 $9.26 $9.05
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.09) $(0.10) $(0.03) $(0.08) $(0.02)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.90 0.86 0.73 0.95 0.23
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.81 $0.76 $0.70 $0.87 $0.21
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.40 $11.59 $10.83 $10.13 $9.26
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 6.99 7.02 6.91(b) 9.40(j) 2.32(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.83 1.87 1.81 1.85 1.84(a)
Expenses after expense reductions (f) 1.83 1.87 1.81 N/A N/A
Net investment loss (0.73) (0.92) (0.30) (0.89) (0.78)(a)
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $587 $589 $478 $285 $24
- -----------------------------------------------------------------------------------------------------------------------------
CLASS 529C YEARS ENDED 11/30
----------------------------------------------------------------------------
2006 2005 2004 2003 2002(i)
Net asset value, beginning of period $11.54 $10.78 $10.09 $9.22 $9.01
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (d) $(0.09) $(0.10) $(0.04) $(0.08) $(0.02)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.89 0.86 0.73 0.95 0.23
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.80 $0.76 $0.69 $0.87 $0.21
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.34 $11.54 $10.78 $10.09 $9.22
- -----------------------------------------------------------------------------------------------------------------------------
Total return (%) (r)(s)(t) 6.93 7.05 6.84(b) 9.44(j) 2.33(n)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS)
AND SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses before expense reductions (f) 1.83 1.87 1.81 1.86 1.84(a)
Expenses after expense reductions (f) 1.83 1.87 1.81 N/A N/A
Net investment loss (0.72) (0.92) (0.34) (0.88) (0.81)(a)
Portfolio turnover 91 125 141 283 227
Net assets at end of period (000 omitted) $996 $952 $765 $606 $32
- -----------------------------------------------------------------------------------------------------------------------------
Any redemption fees charged by the fund during the 2004 and 2005 fiscal years resulted in a per share impact of less than $0.01.
(a) Annualized.
(b) 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. 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, Class A,
Class B, Class C, Class I, Class J, Class R, ClassR3, Class 529A, Class529B and Class 529C total returns for the year ended
November 30, 2004 would have been lower by 0.25%, respectively.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(g) The per share amount is not in accordance with the net realized and unrealized gain/loss for the period because of the
timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time.
(i) For the period from the class' inception, July 31, 2002 (Classes 529A, 529B, and 529C), December 31, 2002 (Class R),
October 31, 2003 (Class R3), and April 1, 2005 (Classes R1, R2, R4, and R5) through the stated period end.
(j) 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, the Class A, Class B, Class C, Class I, Class J, Class R,
Class 529A, Class 529B, and Class 529C total returns for the year ended November 30, 2003 would have been lower by
approximately 0.07%, 0.08%, 0.08%, 0.07%, 0.09%, 0.08%, 0.08%, 0.09%, and 0.09%, respectively.
(n) Not annualized.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.
(t) Total returns do not include any applicable sales charges.
(w) Per share amount was less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
(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 an 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, including securities of emerging market
issuers. 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. The markets of emerging markets countries are generally more
volatile than the markets of developed countries with more mature economies.
All of the risks of investing in foreign securities previously described are
heightened when investing in emerging markets countries.
INVESTMENT VALUATIONS - Equity securities, including restricted equity
securities, are generally valued at the last sale or official closing price as
reported by an independent pricing service on the market or exchange on which
they are primarily traded. For securities for which there were no sales
reported that day, equity securities are generally valued at the last quoted
daily bid quotation as reported by an independent pricing service on the
market or exchange on which they are primarily traded. Short-term instruments
with a maturity at issuance of 60 days or less may be valued at amortized
cost, which approximates market value. Open-end investment companies are
generally valued at their net asset value per share. Securities and other
assets generally valued on the basis of information from an independent
pricing service may also be valued at a broker-dealer bid quotation. The
values of foreign securities and other assets and liabilities expressed in
foreign currencies are converted to U.S. dollars using the mean of bid and
asked prices for rates reported by an independent pricing service.
The Board of Trustees has delegated primary responsibility for determining or
causing to be determined the value of the fund's investments (including any
fair valuation) to the adviser pursuant to valuation policies and procedures
approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as
determined in good faith by the adviser in accordance with such procedures
under the oversight of the Board of Trustees. Under the fund's valuation
policies and procedures, market quotations are not considered to be readily
available for many types of debt instruments. These investments are generally
valued at fair value based on information from independent pricing services.
In addition, investments may be valued at fair value if the adviser determines
that an investment's value has been materially affected by events occurring
after the close of the exchange or market on which the investment is
principally traded (such as foreign exchange or market) and prior to the
determination of the fund's net asset value, or after the halting of trading
of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that
occur on a frequent basis after foreign markets close (such as developments in
foreign markets and significant movements in the U.S. markets) and prior to
the determination of the fund's net asset value may be deemed to have a
material affect on the value of securities traded in foreign markets.
Accordingly, the fund's foreign equity securities may often be valued at fair
value. The adviser may rely on independent pricing services or other
information (such as the correlation with price movements of similar
securities in the same or other markets; the type, cost and investment
characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to
fair value and at what value to fair value an investment. The value of an
investment for purposes of calculating the fund's net asset value can differ
depending on the source and method used to determine value. When fair
valuation is used, the value of investments used to determine the fund's net
asset value may differ from quoted or published prices for the same
investments.
In September 2006, FASB Statement No. 157, Fair Value Measurements (the
"Statement") was issued, and is effective for fiscal years beginning after
November 15, 2007 and for all interim periods within those fiscal years. This
Statement provides a single definition of fair value, a hierarchy for
measuring fair value and expanded disclosures about fair value measurements.
Management is evaluating the application of the Statement to the fund, and
believes the impact will be limited to expanded disclosures resulting from the
adoption of this Statement in the fund's financial statements.
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.
SECURITY LOANS - State Street Bank and Trust Company ("State Street") and
JPMorgan 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.
INDEMNIFICATIONS - Under the fund's organizational documents, its officers and
trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to the fund. Additionally, in the
normal course of business, the fund enters into agreements with service
providers that may contain indemnification clauses. The fund's maximum
exposure under these agreements is unknown as this would involve future claims
that may be made against the fund that have not yet occurred.
SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April
1, 2005, the fund charged a 2% redemption fee (which was 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 no longer charges 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.
Certain dividends from foreign securities will be recorded when the fund is
informed of the dividend if such information is obtained subsequent to 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 year ended November 30, 2006, the fund's custodian fees
were reduced by $452,091 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 year ended November 30, 2006, the fund's custodian expenses were
reduced by $122,710 under this agreement. These amounts are shown as a
reduction of total expenses on the Statement of Operations. Effective
January 1, 2006, the commission recapture agreement was terminated.
TAX MATTERS AND DISTRIBUTIONS - The fund intends to qualify as a regulated
investment company, as defined under Subchapter M of the Internal Revenue
Code, and to distribute all of its taxable income, including realized capital
gains. Accordingly, no provision for federal income tax is required in the
financial statements. Foreign taxes, if any, have been accrued by the fund in
the accompanying financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Certain capital accounts in the financial statements are
periodically adjusted for permanent differences in order to reflect their tax
character. These adjustments have no impact on net assets or net asset value
per share. Temporary differences which arise from recognizing certain items of
income, expense, gain or loss in different periods for financial statement and
tax purposes will reverse at some time in the future. Distributions in excess
of net investment income or net realized gains are temporary overdistributions
for financial statement purposes resulting from differences in the recognition
or classification of income or distributions for financial statement and tax
purposes.
Book/tax differences primarily relate to net operating losses and wash sale
loss deferrals.
The tax character of distributions declared to shareholders is as follows:
11/30/06 11/30/05
Ordinary income (including any short-term
capital gains)(a) $-- $23,782,670
(a) Included in the fund's distributions from ordinary income for the year
ended November 30, 2005 is $103,882 in excess of investment company
taxable income, which in accordance with applicable U.S. tax law, is
taxable to shareholders as ordinary income distributions.
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF 11/30/06
Cost of investments $5,970,399,308
----------------------------------------------------------
Gross appreciation $482,541,041
Gross depreciation (197,637,081)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $284,903,960
Capital loss carryforwards (4,412,673,491)
Other temporary differences (200,479)
As of November 30, 2006, the fund had capital loss carryforwards available to
offset future realized gains. Such losses expire as follows:
11/30/09 $(2,112,952,292)
11/30/10 (2,299,721,199)
----------------------------------------------------------
$(4,412,673,491)
In June 2006, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (the "Interpretation") was issued, and is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years
as of no later than May 30, 2008. This Interpretation prescribes a minimum
threshold for financial statement recognition of the benefit of a tax position
taken or expected to be taken in a tax return, and requires certain expanded
disclosures. Management is evaluating the application of the Interpretation to
the fund, and has not at this time determined the impact, if any, resulting
from the adoption of this Interpretation on the fund's financial statements.
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 MFS to
provide overall investment management and related administrative services and
facilities to the fund. The management fee is computed daily and paid monthly
at an annual rate of 0.33% of the fund's average daily net assets.
DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of
MFS, as distributor, received $187,510 and $1,626 for the year ended November
30, 2006, as its portion of the initial sales charge on sales of Class A and
Class 529A shares of the fund, respectively.
The Board of Trustees has adopted a distribution plan for certain class shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay MFD for services
provided by MFD and financial intermediaries in connection with the
distribution and servicing of certain share classes. One component of the plan
is a distribution fee paid to MFD and another component of the plan is a
service fee paid to MFD. MFD may subsequently pay all, or a portion, of the
distribution and/or service fees to financial intermediaries.
Distribution Fee Plan Table:
TOTAL ANNUAL DISTRIBUTION
DISTRIBUTION SERVICE DISTRIBUTION EFFECTIVE AND SERVICE
FEE RATE FEE RATE PLAN(d) RATE(e) FEE
Class A 0.10% 0.25% 0.35% 0.35% $14,906,836
Class B 0.75% 0.25% 1.00% 1.00% 16,578,128
Class C 0.75% 0.25% 1.00% 1.00% 5,049,792
Class J (f) 0.75% 0.25% 1.00% 1.00% 16,025
Class R 0.25% 0.25% 0.50% 0.50% 257,468
Class R1 0.50% 0.25% 0.75% 0.75% 12,372
Class R2 0.25% 0.25% 0.50% 0.50% 1,986
Class R3 0.25% 0.25% 0.50% 0.50% 34,684
Class R4 -- 0.25% 0.25% 0.25% 17,182
Class 529A 0.25% 0.25% 0.50% 0.35% 12,284
Class 529B 0.75% 0.25% 1.00% 1.00% 5,945
Class 529C 0.75% 0.25% 1.00% 1.00% 9,773
- ---------------------------------------------------------------------------------------------------------------------
Total Distribution and Service Fees $36,902,475
(d) In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees up
to these annual percentage rates of each class' average daily net assets.
(e) The annual effective rates represent actual fees incurred under the distribution plan for the year ended
November 30, 2006 based on each class' average daily net assets. Assets attributable to Class A shares sold
prior to March 1, 1991 are subject to a service fee of 0.15% annually. 0.10% of the Class 529A distribution fee
is currently being paid by the fund. Payment of the remaining 0.15% of the Class 529A distribution fee is not
yet in effect and will be implemented on such date as the fund's Board of Trustees may determine.
(f) Includes fees that MFD pays to financial intermediaries and for services rendered as the fund's agent company in
Japan.
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 12
months of purchase. Class B and Class 529B shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within six
years of purchase. All contingent deferred sales charges are paid to MFD and
during the year ended November 30, 2006, were as follows:
AMOUNT
Class A $69,153
Class B 2,523,235
Class C 40,307
Class 529B 581
Class 529C --
The fund has entered into 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% of the average daily net assets attributable to each
529 share class. The fee is based on average daily net assets and is currently
established at 0.25% annually of average daily net assets of the fund's 529
share classes. The fee may only be increased with the approval of the Board of
Trustees who 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. Program
manager fees for the year ended November 30, 2006, were as follows:
AMOUNT
Class 529A $8,775
Class 529B 1,486
Class 529C 2,443
--------------------------------------------------
Total Program Manager Fees $12,704
SHAREHOLDER SERVICING AGENT - MFS Service Center, Inc. (MFSC), a wholly-owned
subsidiary of MFS, receives a fee from the fund for its services as
shareholder servicing agent calculated as a percentage of the average daily
net assets of the fund as determined periodically under the supervision of the
fund's Board of Trustees. For the year ended November 30, 2006, the fee was
$6,416,281, which equated to 0.0956% annually of the fund's average daily net
assets. MFSC also receives payment from the fund for out-of-pocket and sub-
accounting expenses paid by MFSC on behalf of the fund. For the year ended
November 30, 2006, these costs amounted to $2,883,438. The fund may also pay
shareholder servicing related costs to non-related parties.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to the fund.
Under an administrative services agreement, the fund partially reimburses MFS
the costs incurred to provide these services. The fund is charged a fixed
amount plus a fee based on calendar year average net assets. From July 1, 2005
through March 31, 2006, the fund's annual fixed amount was $10,000. Effective
April 1, 2006, the fund's annual fixed amount is $17,500. The administrative
services fee incurred for the year ended November 30, 2006 was equivalent to
an annual effective rate of 0.0081% of the fund's average daily net assets.
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 certain 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. MFS may subsequently
pay all, or a portion, of the retirement plan administration and services fee
to affiliated or unaffiliated third parties. For the year ended November 30,
2006, the fund paid MFS an annual retirement plan administration and services
fee up to the following annual percentage rates of each class' average daily
net assets:
ANNUAL
EFFECTIVE TOTAL
FEE RATE RATE(g) AMOUNT
Class R1 0.45% 0.35% $7,424
Class R2 0.40% 0.25% 1,589
Class R3 0.25% 0.15% 17,342
Class R4 0.15% 0.15% 10,309
Class R5 0.10% 0.10% 119,673
- --------------------------------------------------------------------------------
Total Retirement Plan Administration and
Services Fees $156,337
(g) MFS has agreed in writing to waive a portion of the retirement plan
administration and services fee equal to 0.10% for Class R1 shares, 0.15%
for Class R2 shares, and 0.10% for Class R3 shares. This agreement will
continue until at least September 30, 2008. For the year ended November
30, 2006, this waiver amounted to $9,182 and is reflected as a reduction
of total expenses in the Statement of Operations.
TRUSTEES' AND OFFICERS' COMPENSATION - The fund pays compensation to
independent trustees in the form of a retainer, attendance fees, and
additional compensation to Board and Committee chairpersons. The fund does not
pay compensation directly to trustees or officers of the fund who are also
officers of the investment adviser, 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, MFD, and MFSC.
The fund has an unfunded, defined benefit plan for certain retired independent
trustees which resulted in a pension expense of $13,401. The fund also has an
unfunded retirement benefit deferral plan for certain independent trustees
which resulted in an expense of $11,546. Both amounts are included in
independent trustees' compensation for the year ended November 30, 2006. The
liability for deferred retirement benefits payable to certain independent
trustees under both plans amounted to $218,093 at November 30, 2006, and is
included in payable for independent
trustees' compensation.
DEFERRED TRUSTEE COMPENSATION - Under a Deferred Compensation Plan (the Plan)
independent trustees previously were allowed to elect to defer receipt of all
or a portion of their annual compensation. Trustees are no longer allowed to
defer compensation under the Plan. Amounts previously deferred 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 payable for independent trustees'
compensation is $78,673 of deferred trustees' compensation.
OTHER - 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. The funds can terminate the
Agreement with Tarantino LLC at any time under the terms of the Agreement. For
the year ended November 30, 2006, the fee paid to Tarantino LLC was $39,277. MFS
has agreed to reimburse the fund for a portion of the payments made by the funds
to Tarantino LLC in the amount of $38,185, which is shown as a reduction of
total expenses in the Statement of Operations. Additionally, MFS has agreed to
bear all expenses associated with office space, other administrative support,
and supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$5,813,268,000 and $7,552,007,655, respectively.
(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:
YEAR ENDED YEAR ENDED
11/30/06 11/30/05(i)
SHARES AMOUNT SHARES AMOUNT
Shares sold
Class A 49,929,965 $649,122,488 55,645,086 $676,685,537
Class B 4,860,154 57,749,301 7,838,909 87,410,962
Class C 2,004,288 23,718,072 3,949,856 43,910,441
Class I 1,628,793 21,727,740 2,570,105 31,792,172
Class J 25,799 307,654 158,188 1,753,770
Class R 1,034,455 13,469,068 2,787,174 33,440,279
Class R1 167,481 1,993,453 102,839 1,166,806
Class R2 54,385 642,360 45,105 518,278
Class R3 604,710 7,744,164 389,440 4,803,665
Class R4 983,844 12,845,742 102,545 1,274,648
Class R5 5,413,572 70,930,770 7,794,198 95,886,699
Class 529A 55,667 719,090 118,438 1,426,324
Class 529B 4,902 57,670 10,421 114,047
Class 529C 9,754 115,236 17,579 195,384
- -----------------------------------------------------------------------------------------------------------
66,777,769 $861,142,808 81,529,883 $980,379,012
Shares issued to shareholders in
reinvestment of distributions
Class A -- $-- 1,444,585 $17,624,039
Class I -- -- 74,150 917,235
Class R -- -- 9,046 110,345
Class R3 -- -- 500 6,052
Class 529A -- -- 638 7,734
- -----------------------------------------------------------------------------------------------------------
-- $-- 1,528,919 $18,665,405
Shares reacquired
Class A (137,928,490) $(1,795,845,918) (150,046,165) $(1,830,111,618)
Class B (60,685,449) (719,139,930) (62,980,210) (704,001,606)
Class C (16,095,540) (190,297,812) (21,936,036) (243,908,986)
Class I (4,944,413) (65,495,428) (4,244,673) (52,647,907)
Class J (65,190) (766,213) (697,540) (7,724,445)
Class R (1,499,227) (19,461,640) (1,201,977) (14,737,604)
Class R1 (54,142) (642,263) (16,346) (189,267)
Class R2 (46,644) (561,261) (21,634) (241,727)
Class R3 (343,865) (4,449,422) (116,199) (1,438,617)
Class R4 (237,928) (3,074,818) (22,985) (286,201)
Class R5 (3,209,880) (42,087,024) (173,910) (2,191,260)
Class 529A (30,620) (392,949) (41,544) (499,007)
Class 529B (8,403) (95,393) (3,697) (40,871)
Class 529C (11,587) (135,907) (5,956) (66,391)
- ------------------------------------------------------------------------------------------------------------
(225,161,378) $(2,842,445,978) (241,508,872) $(2,858,085,507)
Net change
Class A (87,998,525) $(1,146,723,430) (92,956,494) $(1,135,802,042)
Class B (55,825,295) (661,390,629) (55,141,301) (616,590,644)
Class C (14,091,252) (166,579,740) (17,986,180) (199,998,545)
Class I (3,315,620) (43,767,688) (1,600,418) (19,938,500)
Class J (39,391) (458,559) (539,352) (5,970,675)
Class R (464,772) (5,992,572) 1,594,243 18,813,020
Class R1 113,339 1,351,190 86,493 977,539
Class R2 7,741 81,099 23,471 276,551
Class R3 260,845 3,294,742 273,741 3,371,100
Class R4 745,916 9,770,924 79,560 988,447
Class R5 2,203,692 28,843,746 7,620,288 93,695,439
Class 529A 25,047 326,141 77,532 935,051
Class 529B (3,501) (37,723) 6,724 73,176
Class 529C (1,833) (20,671) 11,623 128,993
- -----------------------------------------------------------------------------------------------------------
(158,383,609) $(1,981,303,170) (158,450,070) $(1,859,041,090)
(i) For the period from the class' inception, April 1, 2005 (Classes R1, R2, R4, and R5), through the stated period end.
(6) LINE OF CREDIT
The fund and other funds managed by MFS participate in a $1 billion unsecured
committed line of credit provided by a syndication of banks under a credit
agreement. In addition, the fund and other funds managed by MFS have
established uncommitted borrowing arrangements with certain banks. Borrowings
may be made for temporary financing needs. Interest is charged to each fund,
based on its borrowings, generally 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 committed line of credit, is allocated among the
participating funds at the end of each calendar quarter. For the year ended
November 30, 2006, the fund's commitment fee and interest expense were $45,048
and $0, respectively, and are included in miscellaneous expense on the
Statement of Operations.
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of
Massachusetts Investors Growth Stock Fund:
We have audited the accompanying statement of assets and liabilities of
Massachusetts Investors Growth Stock Fund (the Fund), including the portfolio
of investments, as of November 30, 2006, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Fund's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of November 30, 2006, by
correspondence with the Fund's custodian and brokers or by other appropriate
auditing procedures where replies from brokers were not received. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Massachusetts Investors Growth Stock Fund at November 30, 2006, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and its financial highlights for
each of the periods indicated therein, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
January 18, 2007
TRUSTEES AND OFFICERS --
IDENTIFICATION AND BACKGROUND
The Trustees and officers of the Trust, as of January 1, 2007, are listed below, together with their principal
occupations during the past five years. (Their titles may have varied during that period.) The address of each
Trustee and officer is 500 Boylston Street, Boston, Massachusetts 02116.
PRINCIPAL OCCUPATIONS DURING
POSITION(s) HELD TRUSTEE/OFFICER THE PAST FIVE YEARS &
NAME, DATE OF BIRTH WITH FUND SINCE(h) OTHER DIRECTORSHIPS(j)
- ------------------- ---------------- --------------- -----------------------------
INTERESTED TRUSTEES
Robert J. Manning(k) Trustee February 2004 Massachusetts Financial Services
(born 10/20/63) Company, Chief Executive Officer,
President, Chief Investment
Officer and Director
Robert C. Pozen(k) Trustee February 2004 Massachusetts Financial Services
(born 8/08/46) Company, Chairman (since February
2004); Secretary of Economic
Affairs, The Commonwealth of
Massachusetts (January 2002 to
December 2002); Fidelity
Investments, Vice Chairman (June
2000 to December 2001); Fidelity
Management & Research Company
(investment adviser), President
(March 1997 to July 2001); Bell
Canada Enterprises
(telecommunications), Director;
Medtronic, Inc. (medical
technology), Director; Telesat
(satellite communications),
Director
INDEPENDENT TRUSTEES
J. Atwood Ives Trustee and Chair February 1992 Private investor; Eastern
(born 5/01/36) of Trustees Enterprises (diversified services
company), Chairman, Trustee and
Chief Executive Officer (until
November 2000)
Robert E. Butler(n) Trustee January 2006 Consultant - regulatory and
(born 11/29/41) compliance matters (since July
2002); PricewaterhouseCoopers LLP
(professional services firm),
Partner (November 2000 until June
2002)
Lawrence H. Cohn, M.D. Trustee August 1993 Brigham and Women's Hospital,
(born 3/11/37) Senior Cardiac Surgeon, Chief of
Cardiac Surgery (until 2005);
Harvard Medical School, Professor
of Surgery; Brigham and Women's
Hospital Physicians' Organization,
Chair (2000 to 2004)
David H. Gunning Trustee January 2004 Cleveland-Cliffs Inc. (mining
(born 5/30/42) products and service provider),
Vice Chairman/Director (since
April 2001); Encinitos Ventures
(private investment company),
Principal (1997 to April 2001);
Lincoln Electric Holdings, Inc.
(welding equipment manufacturer),
Director
William R. Gutow Trustee December 1993 Private investor and real estate
(born 9/27/41) consultant; Capitol Entertainment
Management Company (video
franchise), Vice Chairman
Michael Hegarty Trustee December 2004 Retired; AXA Financial (financial
(born 12/21/44) services and insurance), Vice
Chairman and Chief Operating
Officer (until May 2001); The
Equitable Life Assurance Society
(insurance), President and Chief
Operating Officer (until May 2001)
Lawrence T. Perera Trustee July 1981 Hemenway & Barnes (attorneys),
(born 6/23/35) Partner
J. Dale Sherratt Trustee August 1993 Insight Resources, Inc.
(born 9/23/38) (acquisition planning
specialists), President; Wellfleet
Investments (investor in health
care companies), Managing General
Partner (since 1993); Cambridge
Nutraceuticals (professional
nutritional products), Chief
Executive Officer (until May 2001)
Laurie J. Thomsen Trustee March 2005 Private investor; Prism Venture
(born 8/05/57) Partners (venture capital), Co-
founder and General Partner (until
June 2004); St. Paul Travelers
Companies (commercial property
liability insurance), Director
Robert W. Uek Trustee January 2006 Retired (since 1999);
(born 5/18/41) PricewaterhouseCoopers LLP
(professional services firm),
Partner (until 1999); Consultant
to investment company industry
(since 2000); TT International
Funds (mutual fund complex),
Trustee (2000 until 2005);
Hillview Investment Trust II Funds
(mutual fund complex), Trustee
(2000 until 2005)
OFFICERS
Maria F. Dwyer(k) President November 2005 Massachusetts Financial Services
(born 12/01/58) Company, Executive Vice President
and Chief Regulatory Officer
(since March 2004); Fidelity
Management & Research Company,
Vice President (prior to March
2004); Fidelity Group of Funds,
President and Treasurer (prior to
March 2004)
Tracy Atkinson(k) Treasurer September 2005 Massachusetts Financial Services
(born 12/30/64) Company, Senior Vice President
(since September 2004);
PricewaterhouseCoopers LLP,
Partner (prior to September 2004)
Christopher R. Bohane(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 1/18/74) and Assistant Clerk Company, Vice President and Senior
Counsel (since April 2003);
Kirkpatrick & Lockhart LLP (law
firm), Associate (prior to April
2003)
Ethan D. Corey(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/21/63) and Assistant Clerk Company, Special Counsel (since
December 2004); Dechert LLP (law
firm), Counsel (prior to December
2004)
David L. DiLorenzo(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 8/10/68) Company, Vice President (since
June 2005); JP Morgan Investor
Services, Vice President (prior to
June 2005)
Timothy M. Fagan(k) Assistant Secretary September 2005 Massachusetts Financial Services
(born 7/10/68) and Assistant Clerk Company, Vice President and Senior
Counsel (since September 2005);
John Hancock Advisers, LLC, Vice
President and Chief Compliance
Officer (September 2004 to August
2005), Senior Attorney (prior to
September 2004); John Hancock
Group of Funds, Vice President and
Chief Compliance Officer
(September 2004 to December 2004)
Mark D. Fischer(k) Assistant Treasurer July 2005 Massachusetts Financial Services
(born 10/27/70) Company, Vice President (since May
2005); JP Morgan Investment
Management Company, Vice President
(prior to May 2005)
Brian E. Langenfeld(k) Assistant Secretary June 2006 Massachusetts Financial Services
(born 3/07/73) and Assistant Clerk Company, Assistant Vice President
and Counsel (since May 2006); John
Hancock Advisers, LLC, Assistant
Vice President and Counsel (May
2005 to April 2006); John Hancock
Advisers, LLC, Attorney and
Assistant Secretary (prior to May
2005)
Ellen Moynihan(k) Assistant Treasurer April 1997 Massachusetts Financial Services
(born 11/13/57) Company, Senior Vice President
Susan S. Newton(k) Assistant Secretary May 2005 Massachusetts Financial Services
(born 3/07/50) and Assistant Clerk Company, Senior Vice President and
Associate General Counsel (since
April 2005); John Hancock
Advisers, LLC, Senior Vice
President, Secretary and Chief
Legal Officer (prior to April
2005); John Hancock Group of
Funds, Senior Vice President,
Secretary and Chief Legal Officer
(prior to April 2005)
Susan A. Pereira(k) Assistant Secretary July 2005 Massachusetts Financial Services
(born 11/05/70) and Assistant Clerk Company, Vice President and Senior
Counsel (since June 2004); Bingham
McCutchen LLP (law firm),
Associate (prior to June 2004)
Mark N. Polebaum(k) Secretary and Clerk January 2006 Massachusetts Financial Services
(born 5/01/52) Company, Executive Vice President,
General Counsel and Secretary
(since January 2006); Wilmer
Cutler Pickering Hale and Dorr LLP
(law firm), Partner (prior to
January 2006)
Frank L. Tarantino Independent Chief June 2004 Tarantino LLC (provider of
(born 3/07/44) Compliance Officer compliance services), Principal
(since June 2004); CRA Business
Strategies Group (consulting
services), Executive Vice
President (April 2003 to June
2004); David L. Babson & Co.
(investment adviser), Managing
Director, Chief Administrative
Officer and Director (prior to
March 2003)
James O. Yost(k) Assistant Treasurer September 1990 Massachusetts Financial Services
(born 6/12/60) Company, Senior Vice President
- ------------
(h) Date first appointed to serve as Trustee/officer of an MFS fund. Each Trustee has served continuously
since appointment unless indicated otherwise.
(j) Directorships or trusteeships of companies required to report to the Securities and Exchange Commission
(i.e., "public companies").
(k) "Interested person" of the Trust within the meaning of the Investment Company Act of 1940 (referred to as
the 1940 Act), which is the principal federal law governing investment companies like the fund, as a
result of position with MFS. The address of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
(n) In 2004 and 2005, Mr. Butler provided consulting services to the independent compliance consultant
retained by MFS pursuant to its settlement with the SEC concerning market timing and related matters. The
terms of that settlement required that compensation and expenses related to the independent compliance
consultant be borne exclusively by MFS and, therefore, MFS paid Mr. Butler for the services he rendered to
the independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a total of $351,119.29.
The Trust held a shareholders' meeting in 2005 to elect Trustees, and will hold a shareholders' meeting at
least once every five years thereafter, to elect Trustees.
Each Trustee (except Mr. Butler and Mr. Uek) has been elected by share- holders and each Trustee and officer
holds office until his or her successor is chosen and qualified or until his or her earlier death,
resignation, retirement or removal. Messrs. Butler, Gutow, Sherratt and Uek and Ms. Thomsen are members of the
Trust's Audit Committee.
Each of the Trust's Trustees and officers holds comparable positions with certain other funds of which MFS or
a subsidiary is the investment adviser or distributor, and, in the case of the officers, with certain
affiliates of MFS. As of January 1, 2006, the Trustees served as board members of 98 funds within the MFS
Family of Funds.
The Statement of Additional Information contains further information about the Trustees and is available
without charge upon request by calling 1-800-225-2606.
- -------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER CUSTODIANS
Massachusetts Financial Services Company State Street Bank and Trust Company
500 Boylston Street, Boston, MA 02116-3741 225 Franklin Street, Boston, MA 02110
JPMorgan Chase Bank
DISTRIBUTOR One Chase Manhattan Plaza
MFS Fund Distributors, Inc. New York, NY 10081
500 Boylston Street, Boston, MA 02116-3741
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PORTFOLIO MANAGERS Ernst & Young LLP
Stephen Pesek 200 Clarendon Street, Boston, MA 02116
Jeffrey C. Constantino
Maureen H. Pettirossi
BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT
The Investment Company Act of 1940 requires that both the full Board of
Trustees and a majority of the non-interested ("independent") Trustees, voting
separately, annually approve the continuation of the Fund's investment
advisory agreement with MFS. The Trustees consider matters bearing on the Fund
and its advisory arrangements at their meetings throughout the year, including
a review of performance data at each regular meeting. In addition, the
independent Trustees met several times over the course of three months
beginning in May and ending in July, 2006 ("contract review meetings") for the
specific purpose of considering whether to approve the continuation of the
investment advisory agreement for the Fund and the other investment companies
that the Board oversees (the "MFS Funds"). The independent Trustees were
assisted in their evaluation of the Fund's investment advisory agreement by
independent legal counsel, from whom they received separate legal advice and
with whom they met separately from MFS during various contract review
meetings. The independent Trustees were also assisted in this process by the
MFS Funds' Independent Chief Compliance Officer, a full-time senior officer
appointed by and reporting to the independent Trustees.
In connection with their deliberations regarding the continuation of the
investment advisory agreement, the Trustees, including the independent
Trustees, considered such information and factors as they believed, in light
of the legal advice furnished to them and their own business judgment, to be
relevant. The investment advisory agreement for the Fund was considered
separately, although the Trustees also took into account the common interests
of all MFS Funds in their review. As described below, the Trustees considered
the nature, quality, and extent of the various investment advisory,
administrative, and shareholder services performed by MFS under the existing
investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees received and
relied upon materials which included, among other items: (i) information
provided by Lipper Inc. on the investment performance of the Fund for various
time periods ended December 31, 2005 and the investment performance of a group
of funds with substantially similar investment classifications/objectives (the
"Lipper performance universe"), as well as the investment performance of a
group of funds identified by objective criteria suggested by MFS ("MFS peer
funds"), (ii) information provided by Lipper Inc. on the Fund's advisory fees
and other expenses and the advisory fees and other expenses of comparable
funds identified by Lipper (the "Lipper expense group"), as well as the
advisory fees and other expenses of MFS peer funds, (iii) information provided
by MFS on the advisory fees of comparable portfolios of other clients of MFS,
including institutional separate accounts and other clients, (iv) information
as to whether and to what extent applicable expense waivers, reimbursements or
fee "breakpoints" are observed for the Fund, (v) information regarding MFS'
financial results and financial condition, including MFS' and certain of its
affiliates' estimated profitability from services performed for the Fund and
the MFS Funds as a whole, (vi) MFS' views regarding the outlook for the mutual
fund industry and the strategic business plans of MFS, (vii) descriptions of
various functions performed by MFS for the Funds, such as compliance
monitoring and portfolio trading practices, and (viii) information regarding
the overall organization of MFS, including information about MFS' senior
management and other personnel providing investment advisory, administrative
and other services to the Fund and the other MFS Funds. The comparative
performance, fee and expense information prepared and provided by Lipper Inc.
was not independently verified and the independent Trustees did not
independently verify any information provided to them by MFS.
The Trustees' conclusion as to the continuation of the investment advisory
agreement was based on a comprehensive consideration of all information
provided to the Trustees and not the result of any single factor. Some of the
factors that figured particularly in the Trustees' deliberations are described
below, although individual Trustees may have evaluated the information
presented differently from one another, giving different weights to various
factors. It is also important to recognize that the fee arrangements for the
Fund and other MFS Funds are the result of years of review and discussion
between the independent Trustees and MFS, that certain aspects of such
arrangements may receive greater scrutiny in some years than others, and that
the Trustees' conclusions may be based, in part, on their consideration of
these same arrangements during the course of the year and in prior years.
Based on information provided by Lipper Inc. and MFS, the Trustees reviewed
the Fund's total return investment performance as well as the performance of
peer groups of funds over various time periods. The Trustees placed particular
emphasis on the total return performance of the Fund's Class A shares in
comparison to the performance of funds in its Lipper performance universe over
the three-year period ended December 31, 2005, which the Trustees believed was
a long enough period to reflect differing market conditions. The Fund's
performance was in the 4th quintile relative to the other funds in the
universe for this three-year period (the 1st quintile being the best
performers and the 5th quintile being the worst performers). The total return
performance of the Fund's Class A shares was in the 4th quintile for each of
the one and five-year periods ended December 31, 2005 relative to the Lipper
performance universe. Because of the passage of time, these performance
results may differ from the performance results for more recent periods,
including those shown elsewhere in this report.
The Trustees expressed concern to MFS about the ongoing substandard investment
performance of the Fund. In the course of their deliberations, the Trustees
took into account information provided by MFS in connection with the contract
review meetings, as well as during investment review meetings conducted with
portfolio management personnel during the course of the year, as to MFS'
efforts to improve the Fund's performance, including the recent restructuring
of responsibilities among MFS' senior investment management executives and
changes to the Fund's portfolio management team in 2004 and 2005, including
the replacement of one of the Fund's portfolio managers in 2005. In addition,
the Trustees requested that they receive a separate update on the Fund's
performance at each of their meetings. After reviewing these and related
factors, the Trustees concluded, within the context of their overall
conclusions regarding the investment advisory agreement, that MFS' responses
and efforts and plans to improve investment performance were sufficient to
support approval of the continuance of the investment advisory agreement for
an additional one year period, but that they would continue to closely monitor
the performance of the Fund.
In assessing the reasonableness of the Fund's advisory fee, the Trustees
considered, among other information, the Fund's advisory fee and the total
expense ratio of the Fund's Class A shares as a percentage of average net
assets and the advisory fee and total expense ratios of peer groups of funds
based on information provided by Lipper Inc. and MFS. The Trustees considered
that, according to the Lipper data, the Fund's effective advisory fee rate and
total expense ratio were each lower than the Lipper expense group median.
The Trustees also considered the advisory fees charged by MFS to institutional
accounts. In comparing these fees, the Trustees considered information
provided by MFS as to the generally broader scope of services provided by MFS
to the Fund in comparison to institutional accounts, the higher demands placed
on MFS' investment personnel and trading infrastructure as a result of the
daily cash in-flows and out-flows of the Fund, and the impact on MFS and
expenses associated with the more extensive regulatory regime to which the
Fund is subject in comparison to institutional accounts.
The Trustees also considered whether the Fund is likely to benefit from any
economies of scale in the management of the Fund in the event of growth in
assets of the Fund. They noted that the Fund's advisory fee rate schedule is
not currently subject to any breakpoints. Taking into account that the Fund's
effective advisory fee rate was lower than the Lipper expense group median
noted above, the Trustees determined not to recommend any advisory fee
breakpoints for the Fund at this time.
The Trustees also considered information prepared by MFS relating to MFS'
costs and profits with respect to the Fund, the MFS Funds considered as a
group, and other investment companies and accounts advised by MFS, as
well as MFS' methodologies used to determine and allocate its costs to the MFS
Funds, the Fund and other accounts and products for purposes of estimating
profitability.
After reviewing these and other factors described herein, the Trustees
concluded, within the context of their overall conclusions regarding the
investment advisory agreement, that the advisory fees charged to the Fund
represent reasonable compensation in light of the services being provided by
MFS to the Fund.
In addition, the Trustees considered MFS' resources and related efforts to
continue to retain, attract and motivate capable personnel to serve the Fund.
The Trustees also considered current and developing conditions in the
financial services industry, including the entry into the industry of large
and well-capitalized companies which are spending, and appear to be prepared
to continue to spend, substantial sums to engage personnel and to provide
services to competing investment companies. In this regard, the Trustees also
considered the financial resources of MFS and its ultimate parent, Sun Life
Financial Inc. The Trustees also considered the advantages and possible
disadvantages to the Fund of having an adviser which also serves other
investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and extent of
administrative, transfer agency, and distribution services provided to the Fund
by MFS and its affiliates under agreements and plans other than the investment
advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the
nature, extent and quality of certain other services MFS performs or arranges
for on the Fund's behalf, which may include securities lending programs,
directed expense payment programs, class action recovery programs, and MFS'
interaction with third-party service providers, principally custodians and
sub-custodians. The Trustees concluded that the various non-advisory services
provided by MFS and its affiliates on behalf of the Funds were satisfactory.
The Trustees also considered benefits to MFS from the use of the Fund's
portfolio brokerage commissions, if applicable, to pay for investment research
(excluding third-party research, for which MFS pays directly) and various
other factors. Additionally, the Trustees considered so-called "fall-out
benefits" to MFS such as reputational value derived from serving as investment
manager to the Fund.
Based on their evaluation of factors that they deemed to be material,
including those factors described above, the Board of Trustees, including a
majority of the independent Trustees, concluded that the Fund's investment
advisory agreement with MFS should be continued for an additional one-year
period, commencing August 1, 2006.
A discussion regarding the Board's most recent review and renewal of the
Fund's investment advisory agreement is available by clicking on the fund's
name under "Select a fund" on the MFS Web site (mfs.com).
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
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The fund's Form N-Q is
available on the EDGAR database on the Commission's Internet Web site 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.
FEDERAL TAX INFORMATION (unaudited)
The fund will notify shareholders of amounts for use in preparing 2006 income
tax forms in January 2007.
MFS(R) PRIVACY NOTICE
Privacy is a concern for every investor today. At MFS Investment Management(R)
and the MFS funds, we take this concern very seriously. We want you to
understand our policies about the investment products and services that we
offer, and how we protect the nonpublic personal information of investors who
have a direct relationship with us and our wholly owned subsidiaries.
Throughout our business relationship, you provide us with personal
information. We maintain information and records about you, your investments,
and the services you use. Examples of the nonpublic personal information we
maintain include
o data from investment applications and other forms
o share balances and transactional history with us, our affiliates, or
others
o facts from a consumer reporting agency
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. We may share nonpublic
personal information with third parties or certain of our affiliates in
connection with servicing your account or processing your transactions. We may
share information with companies or financial institutions that perform
marketing services on our behalf or with other financial institutions with
which we have joint marketing arrangements, subject to any legal requirements.
Authorization to access your nonpublic personal information is limited to
appropriate personnel who provide products, services, or information to you.
We maintain physical, electronic, and procedural safeguards to help protect
the personal information we collect about you.
If you have any questions about the MFS privacy policy, please call
1-800-225-2606 any business day between 8 a.m. and 8 p.m. Eastern time.
Note: If you own MFS products or receive MFS services in the name of a third
party such as a bank or broker-dealer, their privacy policy may apply to you
instead of ours.
CONTACT US
WEB SITE MAILING ADDRESS
mfs.com MFS Service Center, Inc.
P.O. Box 55824
MFS TALK Boston, MA 02205-5824
1-800-637-8255
24 hours a day OVERNIGHT MAIL
MFS Service Center, Inc.
ACCOUNT SERVICE AND 500 Boylston Street
LITERATURE Boston, MA 02116-3741
SHAREHOLDERS
1-800-225-2606
8 a.m. to 8 p.m. ET
INVESTMENT PROFESSIONALS
1-800-343-2829
8 a.m. to 8 p.m. ET
RETIREMENT PLAN SERVICES
1-800-637-1255
8 a.m. to 8 p.m. ET
- -------------------------------------------------------------------------------
Go paperless with eDELIVERY: Arrange to have MFS send prospectuses, reports,
and proxies directly to your e-mail inbox. You'll get timely information and
less clutter in your mailbox (not to mention help your fund save printing and
postage costs).
SIGN UP: If your account is registered with us, simply go to mfs.com, log in to
your account via MFS Access, and select the eDelivery sign up options.
If you own your MFS fund shares through a financial institution or a retirement
plan, MFS TALK, MFS Access, and eDelivery may not be available to you.
- -------------------------------------------------------------------------------
M F S(R)
INVESTMENT MANAGEMENT
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a Code of Ethics pursuant to Section 406 of the
Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the
Registrant's principal executive officer and principal financial and accounting
officer. The Registrant has not amended any provision in its Code of Ethics
(the "Code") that relates to an element of the Code's definitions enumerated in
paragraph (b) of Item 2 of this Form N-CSR.
A copy of the code of Ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Robert E. Butler and Robert W. Uek and Ms. Laurie J. Thomsen, members
of the Audit Committee, have been determined by the Board of Trustees in their
reasonable business judgment to meet the definition of "audit committee
financial expert" as such term is defined in Form N-CSR. In addition, Messrs.
Butler and Uek and Ms. Thomsen are "independent" members of the Audit Committee
(as such term has been defined by the Securities and Exchange Commission in
regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The
Securities and Exchange Commission has stated that the designation of a person
as an audit committee financial expert pursuant to this Item 3 on the Form
N-CSR does not impose on such a person any duties, obligations or liability
that are greater than the duties, obligations or liability imposed on such
person as a member of the Audit Committee and the Board of Trustees in the
absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
ITEMS 4(a) THROUGH 4(d) AND 4(g):
The Board of Trustees has appointed Ernst & Young LLP ("E&Y") to serve as
independent accountants to the series of the Registrant (the series referred to
as the "Fund"). The tables below set forth the audit fees billed to the Fund as
well as fees for non-audit services provided to the Fund and/or to the Fund's
investment adviser, Massachusetts Financial Services Company ("MFS") and to
various entities either controlling, controlled by, or under common control
with MFS that provide ongoing services to the Fund ("MFS Related Entities").
For the fiscal years ended November 30, 2006 and 2005, audit fees billed to the
Fund by E&Y were as follows:
Audit Fees
FEES BILLED BY E&Y: 2006 2005
---- ----
MFS Massachusetts Investors
Growth Stock Fund 40,970 38,970
For the fiscal years ended November 30, 2006 and 2005, fees billed by E&Y for
audit-related, tax and other services provided to the Fund and for
audit-related, tax and other services provided to MFS and MFS Related Entities
were as follows:
Audit-Related Fees(1) Tax Fees(2) All Other Fees(4)
FEES BILLED BY E&Y: 2006 2005 2006 2005 2006 2005
---- ---- ---- ---- ---- ----
To MFS Massachusetts 0 0 9,027 10,015 144 5,771
Investors Growth Stock Fund
To MFS and MFS Related 0 0 0 15,500 0 670,399
Entities of MFS
Massachusetts Investors
Growth Stock Fund*
AGGREGATE FEES FOR NON-AUDIT SERVICES:
2006 2005
---- ----
TO MFS MASSACHUSETTS INVESTORS 112,234 733,685
GROWTH STOCK FUND, MFS AND
MFS RELATED ENTITIES#
* This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly
to the operations and financial reporting of the Fund (portions of which services also related to the
operations and financial reporting of other funds within the MFS Funds complex).
# This amount reflects the aggregate fees billed by E&Y for non-audit services rendered to the Fund and for
non-audit services rendered to MFS and the MFS Related Entities.
(1) The fees included under "Audit-Related Fees" are fees related to assurance and related services that are
reasonably related to the performance of the audit or review of financial statements, but not reported under
"Audit Fees," including accounting consultations, agreed-upon procedure reports, attestation reports, comfort
letters and internal control reviews.
(2) The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning,
including services relating to the filing or amendment of federal, state or local income tax returns,
regulated investment company qualification reviews and tax distribution and analysis.
(3) The fees included under "All Other Fees" are fees for products and services provided by E&Y other than those
reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees," including fees for the subscription to tax
treatise and for services related to analysis of fund administrative expenses, compliance program and records
management projects.
ITEM 4(e)(1):
Set forth below are the policies and procedures established by the Audit
Committee of the Board of Trustees relating to the pre-approval of audit and
non-audit related services: To the extent required by applicable law,
pre-approval by the Audit Committee of the Board is needed for all audit and
permissible non-audit services rendered to the Fund and all permissible
non-audit services rendered to MFS or MFS Related Entities if the services
relate directly to the operations and financial reporting of the Registrant.
Pre-approval is currently on an engagement-by-engagement basis. In the event
pre-approval of such services is necessary between regular meetings of the
Audit Committee and it is not practical to wait to seek pre-approval at the
next regular meeting of the Audit Committee, pre-approval of such services may
be referred to the Chair of the Audit Committee for approval; provided that the
Chair may not pre-approve any individual engagement for such services exceeding
$50,000 or multiple engagements for such services in the aggregate exceeding
$100,000 between such regular meetings of the Audit Committee. Any engagement
pre-approved by the Chair between regular meetings of the Audit Committee shall
be presented for ratification by the entire Audit Committee at its next
regularly scheduled meeting.
ITEM 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and
All Other Fees paid by the Fund and MFS and MFS Related Entities relating
directly to the operations and financial reporting of the Registrant disclosed
above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X (which permits audit committee approval after
the start of the engagement with respect to services other than audit, review
or attest services, if certain conditions are satisfied).
ITEM 4(f): Not applicable.
ITEM 4(h): The Registrant's Audit Committee has considered whether the
provision by a Registrant's independent registered public accounting firm of
non-audit services to MFS and MFS Related Entities that were not pre-approved
by the Committee (because such services did not relate directly to the
operations and financial reporting of the Registrant) was compatible with
maintaining the independence of the independent registered public accounting
firm as the Registrant's principal auditors.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments 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 407(c)(2)(iv) of Regulation S-K (as required by Item 22
(b)(15) of Schedule 14A), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the effectiveness of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as conducted within 90 days of
the filing date of this report on 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 of the period covered by the report that have
materially affected, or are 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.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
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)* MARIA F. DWYER
---------------------------------
Maria F. Dwyer, President
Date: January 18, 2007
----------------
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)* MARIA F. DWYER
-----------------------------------------------------
Maria F. Dwyer, President (Principal Executive
Officer)
Date: January 18, 2007
----------------
By (Signature and Title)* TRACY ATKINSON
-----------------------------------------------------
Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: January 18, 2007
----------------
* Print name and title of each signing officer under his or her signature.