N-CSRS 1 d649061.txt MASS INVESTORS GROWTH STOCK FUND 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 ------------------------------------------------------------------------------- MASSACHUSETTS INVESTORS GROWTH STOCK FUND ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 500 Boylston Street, Boston, Massachusetts 02116 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Susan S. Newton Massachusetts Financial Services Company 500 Boylston Street Boston, Massachusetts 02116 ------------------------------------------------------------------------------- (Name and address of agents for service) Registrant's telephone number, including area code: (617) 954-5000 ------------------------------------------------------------------------------- Date of fiscal year end: November 30 ------------------------------------------------------------------------------- Date of reporting period: May 31, 2006 ------------------------------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. MASSACHUSETTS INVESTORS GROWTH STOCK FUND 5/31/06 SEMIANNUAL REPORT ------------------------------------------------------------------------------- LETTER FROM THE CEO 1 --------------------------------------------------- PORTFOLIO COMPOSITION 2 --------------------------------------------------- EXPENSE TABLE 3 --------------------------------------------------- PORTFOLIO OF INVESTMENTS 5 --------------------------------------------------- FINANCIAL STATEMENTS 10 --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 26 --------------------------------------------------- BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 37 --------------------------------------------------- PROXY VOTING POLICIES AND INFORMATION 37 --------------------------------------------------- QUARTERLY PORTFOLIO DISCLOSURE 37 --------------------------------------------------- CONTACT INFORMATION BACK COVER --------------------------------------------------- THE REPORT IS PREPARED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. IT IS INTENDED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. M F S(SM) INVESTMENT MANAGEMENT(R) LETTER FROM THE CEO [Photo of Robert J. Manning] Dear Shareholders, It has been said that change is the only constant in life. As investors have seen, that theme is still accurate today as we recently have experienced shifting economic cycles because of natural disasters and political instability around the globe. Markets worldwide have fluctuated in the past year as devastating hurricanes had a dramatic effect on the international economy, particularly on oil prices. We witnessed political unrest in the Middle East, highlighted by instability in Iraq, and in Africa, the usually stable Nigeria also experienced violence. As a result, energy prices have bounced up and down, with crude oil prices at one point topping a record $70 per barrel. Such cycles are not uncommon and in fact have almost become the norm in our everyday lives. What does all of this mean to you as an investor? In times like these, it helps to know that you're working with a seasoned investment professional who has experience to guide you through difficult times. At MFS(R), we believe our investment management team has the knowledge and confidence to navigate through difficult cycles and at the same time see through adversity to find investment opportunities for our clients and shareholders. Our investment management process, honed over 80 years, combines a unique concept of teamwork with our unwavering focus on the long term. We firmly believe that the best way to realize long-term financial goals - be it a college education, a comfortable retirement, or a secure family legacy - is to follow a three-pronged approach that focuses on longer time horizons. Allocate holdings across the major asset classes - including stocks, bonds, and cash. Diversify within each class to take advantage of different market segments and investing styles. Rebalance assets regularly to maintain a desired asset allocation. Of course, these strategies cannot guarantee a profit or protect against a loss. This long-term approach requires diligence and patience, two traits that in our experience are essential to capitalizing on the many opportunities the financial markets can offer - through both up and down economic cycles. Respectfully, /s/ Robert J. Manning Robert J. Manning Chief Executive Officer and Chief Investment Officer MFS Investment Management(R) July 17, 2006 The opinions expressed in this letter are those of MFS, and no forecasts can be guaranteed. PORTFOLIO COMPOSITION PORTFOLIO STRUCTURE Stocks 96.8% Cash & Other Net Assets 3.2% TOP TEN HOLDINGS General Electric Co. 3.6% ------------------------------------------------ Cisco Systems, Inc. 3.0% ------------------------------------------------ Wal-Mart Stores, Inc. 2.5% ------------------------------------------------ EMC Corp. 2.3% ------------------------------------------------ Johnson & Johnson 2.3% ------------------------------------------------ Intel Corp. 2.1% ------------------------------------------------ Procter & Gamble Co. 2.1% ------------------------------------------------ Wyeth 2.1% ------------------------------------------------ Corning, Inc. 2.0% ------------------------------------------------ Oracle Corp. 1.8% ------------------------------------------------ EQUITY SECTORS Technology 26.1% ------------------------------------------------ Health Care 18.7% ------------------------------------------------ Retailing 11.5% ------------------------------------------------ Industrial Goods & Services 7.4% ------------------------------------------------ Leisure 7.1% ------------------------------------------------ Financial Services 6.7% ------------------------------------------------ Special Products & Services 5.6% ------------------------------------------------ Consumer Staples 4.5% ------------------------------------------------ Energy 3.7% ------------------------------------------------ Basic Materials 2.5% ------------------------------------------------ Transportation 1.5% ------------------------------------------------ Autos & Housing 0.9% ------------------------------------------------ Utilities & Communications 0.6% ------------------------------------------------ Percentages are based on net assets as of 5/31/06. The portfolio is actively managed, and current holdings may be different. EXPENSE TABLE FUND EXPENSES BORNE BY THE SHAREHOLDERS DURING THE PERIOD, DECEMBER 1, 2005 THROUGH MAY 31, 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 December 1, 2005 through May 31, 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. ------------------------------------------------------------------------------- Expenses Paid During Annualized Beginning Ending Period(p) Share Expense Account Value Account Value 12/01/05- Class Ratio 12/01/05 5/31/06 5/31/06 -------------------------------------------------------------------------------- Actual 0.96% $1,000.00 $992.20 $4.77 A ------------------------------------------------------------------------ Hypothetical (h) 0.96% $1,000.00 $1,020.14 $4.84 -------------------------------------------------------------------------------- Actual 1.61% $1,000.00 $988.00 $7.98 B ------------------------------------------------------------------------- Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10 -------------------------------------------------------------------------------- Actual 1.61% $1,000.00 $988.80 $7.98 C ------------------------------------------------------------------------ Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10 -------------------------------------------------------------------------------- Actual 0.61% $1,000.00 $993.10 $3.03 I ------------------------------------------------------------------------ Hypothetical (h) 0.61% $1,000.00 $1,021.89 $3.07 -------------------------------------------------------------------------------- Actual 1.61% $1,000.00 $987.90 $7.98 J ------------------------------------------------------------------------ Hypothetical (h) 1.61% $1,000.00 $1,016.90 $8.10 -------------------------------------------------------------------------------- Actual 1.11% $1,000.00 $990.60 $5.51 R ------------------------------------------------------------------------ Hypothetical (h) 1.11% $1,000.00 $1,019.40 $5.59 -------------------------------------------------------------------------------- Actual 1.71% $1,000.00 $987.10 $8.47 R1 ------------------------------------------------------------------------ Hypothetical (h) 1.71% $1,000.00 $1,016.40 $8.60 -------------------------------------------------------------------------------- Actual 1.35% $1,000.00 $989.70 $6.70 R2 ------------------------------------------------------------------------ Hypothetical (h) 1.35% $1,000.00 $1,018.20 $6.79 -------------------------------------------------------------------------------- Actual 1.26% $1,000.00 $990.50 $6.25 R3 ------------------------------------------------------------------------ Hypothetical (h) 1.26% $1,000.00 $1,018.65 $6.34 -------------------------------------------------------------------------------- Actual 1.01% $1,000.00 $991.40 $5.01 R4 ------------------------------------------------------------------------ Hypothetical (h) 1.01% $1,000.00 $1,019.90 $5.09 -------------------------------------------------------------------------------- Actual 0.71% $1,000.00 $993.00 $3.53 R5 ------------------------------------------------------------------------ Hypothetical (h) 0.71% $1,000.00 $1,021.39 $3.58 -------------------------------------------------------------------------------- Actual 1.21% $1,000.00 $989.70 $6.00 529A ------------------------------------------------------------------------ Hypothetical (h) 1.21% $1,000.00 $1,018.90 $6.09 -------------------------------------------------------------------------------- Actual 1.86% $1,000.00 $987.10 $9.21 529B ------------------------------------------------------------------------ Hypothetical (h) 1.86% $1,000.00 $1,015.66 $9.35 -------------------------------------------------------------------------------- Actual 1.86% $1,000.00 $987.00 $9.21 529C ------------------------------------------------------------------------ Hypothetical (h) 1.86% $1,000.00 $1,015.66 $9.35 -------------------------------------------------------------------------------- (h) 5% class return per year before expenses. (p) Expenses paid is equal to each class' annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year. Expenses paid do not include any applicable sales charges (loads) or redemption fees. If these transaction costs had been included, your costs would have been higher. PORTFOLIO OF INVESTMENTS (unaudited) - 5/31/06 The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
Common Stocks - 96.8% -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) -------------------------------------------------------------------------------------------------- Advertising & Broadcasting - 0.3% -------------------------------------------------------------------------------------------------- Grupo Televisa S.A., ADR (l) 989,620 $ 18,199,112 -------------------------------------------------------------------------------------------------- Aerospace - 1.8% -------------------------------------------------------------------------------------------------- United Technologies Corp. 1,892,360 $ 118,310,344 -------------------------------------------------------------------------------------------------- Apparel Manufacturers - 1.6% -------------------------------------------------------------------------------------------------- NIKE, Inc., "B" 1,325,590 $ 106,458,133 -------------------------------------------------------------------------------------------------- Automotive - 0.9% -------------------------------------------------------------------------------------------------- Harman International Industries, Inc. (l) 730,340 $ 61,881,708 -------------------------------------------------------------------------------------------------- Banks & Credit Companies - 3.8% -------------------------------------------------------------------------------------------------- American Express Co. 2,110,930 $ 114,750,155 SLM Corp. 1,344,380 72,273,869 UBS AG (l) 566,236 64,009,287 --------------- $ 251,033,311 -------------------------------------------------------------------------------------------------- Biotechnology - 5.8% -------------------------------------------------------------------------------------------------- Amgen, Inc. (l)(n) 1,712,840 $ 115,770,856 Celgene Corp. (n) 1,811,400 75,082,530 Genzyme Corp. (n) 1,896,740 112,856,030 Gilead Sciences, Inc. (n) 1,272,310 72,941,532 --------------- $ 376,650,948 -------------------------------------------------------------------------------------------------- Brokerage & Asset Managers - 2.6% -------------------------------------------------------------------------------------------------- Chicago Mercantile Exchange Holdings, Inc. (l) 214,980 $ 94,870,674 Merrill Lynch & Co., Inc. 318,350 23,051,724 Morgan Stanley 830,900 49,538,258 --------------- $ 167,460,656 -------------------------------------------------------------------------------------------------- Business Services - 4.4% -------------------------------------------------------------------------------------------------- Accenture Ltd., "A" 796,920 $ 22,433,298 Amdocs Ltd. (n) 2,984,810 111,840,831 Automatic Data Processing, Inc. 364,700 16,582,909 Cintas Corp. (l) 834,820 35,362,975 First Data Corp. 2,204,200 101,635,662 --------------- $ 287,855,675 -------------------------------------------------------------------------------------------------- Chemicals - 2.2% -------------------------------------------------------------------------------------------------- 3M Co. 424,920 $ 35,548,807 Ecolab, Inc. (l) 1,008,300 39,031,293 Monsanto Co. 798,400 67,193,344 --------------- $ 141,773,444 -------------------------------------------------------------------------------------------------- Computer Software - 5.0% -------------------------------------------------------------------------------------------------- Adobe Systems, Inc. (n) 2,950,542 $ 84,474,017 Microsoft Corp. 5,205,440 117,903,216 Oracle Corp. (n) 8,483,290 120,632,384 --------------- $ 323,009,617 -------------------------------------------------------------------------------------------------- Computer Software - Systems - 2.3% -------------------------------------------------------------------------------------------------- Apple Computer, Inc. (n) 1,201,220 $ 71,796,919 Dell, Inc. (n) 551,340 13,993,009 Hewlett-Packard Co. 1,102,700 35,705,426 LG.Philips LCD Co. Ltd., ADR (l)(n) 1,458,280 27,371,916 --------------- $ 148,867,270 -------------------------------------------------------------------------------------------------- Conglomerates - 0.4% -------------------------------------------------------------------------------------------------- Textron, Inc. 306,400 $ 27,860,952 -------------------------------------------------------------------------------------------------- Consumer Goods & Services - 3.4% -------------------------------------------------------------------------------------------------- Colgate-Palmolive Co. 495,100 $ 29,874,334 eBay, Inc. (n) 1,509,600 49,529,976 Procter & Gamble Co. 2,565,336 139,169,478 --------------- $ 218,573,788 -------------------------------------------------------------------------------------------------- Electrical Equipment - 5.0% -------------------------------------------------------------------------------------------------- Cooper Industries Ltd., "A" 252,740 $ 22,509,024 Danaher Corp. (l) 603,700 38,703,207 General Electric Co. 6,880,630 235,730,384 Rockwell Automation, Inc. 435,400 29,729,112 --------------- $ 326,671,727 -------------------------------------------------------------------------------------------------- Electronics - 6.9% -------------------------------------------------------------------------------------------------- Analog Devices, Inc. 765,530 $ 25,821,327 Intel Corp. 7,752,990 139,708,880 Marvell Technology Group Ltd. (n) 1,325,900 63,205,653 Samsung Electronics Co. Ltd., GDR 311,070 98,298,120 SanDisk Corp. (n) 947,250 53,301,758 Xilinx, Inc. 2,712,480 70,524,480 --------------- $ 450,860,218 -------------------------------------------------------------------------------------------------- Food & Drug Stores - 1.2% -------------------------------------------------------------------------------------------------- CVS Corp. 2,876,820 $ 80,263,278 -------------------------------------------------------------------------------------------------- Food & Non Alcoholic Beverages - 1.9% -------------------------------------------------------------------------------------------------- PepsiCo, Inc. 1,224,970 $ 74,061,686 SYSCO Corp. 1,720,200 52,603,716 --------------- $ 126,665,402 -------------------------------------------------------------------------------------------------- Gaming & Lodging - 5.1% -------------------------------------------------------------------------------------------------- Carnival Corp. (l) 633,010 $ 25,263,429 Harrah's Entertainment, Inc. 724,100 55,060,564 International Game Technology 2,120,800 78,957,384 Las Vegas Sands Corp. (l)(n) 778,550 54,973,416 MGM Mirage (l)(n) 1,177,000 48,798,420 Starwood Hotels & Resorts, Inc. 1,158,100 70,759,910 --------------- $ 333,813,123 -------------------------------------------------------------------------------------------------- General Merchandise - 4.8% -------------------------------------------------------------------------------------------------- Kohl's Corp. (n) 1,521,800 $ 81,705,442 Target Corp. 1,344,400 65,768,048 Wal-Mart Stores, Inc. 3,400,760 164,766,822 --------------- $ 312,240,312 -------------------------------------------------------------------------------------------------- Health Maintenance Organizations - 0.5% -------------------------------------------------------------------------------------------------- UnitedHealth Group, Inc. 749,400 $ 32,943,624 -------------------------------------------------------------------------------------------------- Insurance - 0.3% -------------------------------------------------------------------------------------------------- American International Group, Inc. 270,720 $ 16,459,776 -------------------------------------------------------------------------------------------------- Internet - 2.3% -------------------------------------------------------------------------------------------------- Google, Inc., "A" (n) 182,820 $ 67,976,132 Yahoo!, Inc. (n) 2,688,500 84,929,715 --------------- $ 152,905,847 -------------------------------------------------------------------------------------------------- Leisure & Toys - 1.7% -------------------------------------------------------------------------------------------------- Electronic Arts, Inc. (n) 2,650,140 $ 111,491,390 -------------------------------------------------------------------------------------------------- Machinery & Tools - 0.6% -------------------------------------------------------------------------------------------------- Deere & Co. 448,900 $ 38,425,840 -------------------------------------------------------------------------------------------------- Medical Equipment - 4.7% -------------------------------------------------------------------------------------------------- Advanced Medical Optics, Inc. (l)(n) 1,990,110 $ 90,191,785 C.R. Bard, Inc. (l) 554,800 41,060,748 DENTSPLY International, Inc. 972,600 58,161,480 Medtronic, Inc. (l) 2,031,600 102,575,484 St. Jude Medical, Inc. (n) 436,000 14,867,600 --------------- $ 306,857,097 -------------------------------------------------------------------------------------------------- Network & Telecom - 7.3% -------------------------------------------------------------------------------------------------- Cisco Systems, Inc. (n) 9,971,040 $ 196,230,067 Corning, Inc. (n) 5,447,400 132,099,450 Juniper Networks, Inc. (n) 940,800 14,986,944 Nokia Corp., ADR 1,912,290 41,056,866 QUALCOMM, Inc. 2,074,850 93,803,969 --------------- $ 478,177,296 -------------------------------------------------------------------------------------------------- Oil Services - 3.7% -------------------------------------------------------------------------------------------------- GlobalSantaFe Corp. 1,558,170 $ 93,692,762 Noble Corp. 696,450 48,424,169 Transocean, Inc. (n) 217,700 17,714,249 Weatherford International Ltd. (n) 1,594,000 82,951,760 --------------- $ 242,782,940 -------------------------------------------------------------------------------------------------- Personal Computers & Peripherals - 2.3% -------------------------------------------------------------------------------------------------- EMC Corp. (n) 11,877,070 $ 152,026,496 -------------------------------------------------------------------------------------------------- Pharmaceuticals - 7.7% -------------------------------------------------------------------------------------------------- Allergan, Inc. 342,890 $ 32,512,830 Eli Lilly & Co. 1,326,920 68,522,149 Johnson & Johnson 2,465,940 148,498,907 Roche Holding AG (l) 482,570 75,097,235 Sanofi-Aventis (l) 222,300 20,938,851 Teva Pharmaceutical Industries Ltd., ADR (l) 532,810 19,399,612 Wyeth 2,928,020 133,927,635 --------------- $ 498,897,219 -------------------------------------------------------------------------------------------------- Railroad & Shipping - 0.2% -------------------------------------------------------------------------------------------------- Norfolk Southern Corp. 187,200 $ 9,876,672 -------------------------------------------------------------------------------------------------- Specialty Chemicals - 0.3% -------------------------------------------------------------------------------------------------- Praxair, Inc. 324,880 $ 17,121,176 -------------------------------------------------------------------------------------------------- Specialty Stores - 3.9% -------------------------------------------------------------------------------------------------- Chico's FAS, Inc. (n) 1,360,300 $ 40,768,191 Home Depot, Inc. 2,185,100 83,296,012 Lowe's Cos., Inc. 520,970 32,446,012 Staples, Inc. 2,033,195 47,759,751 Williams-Sonoma, Inc. 1,376,800 49,771,320 --------------- $ 254,041,286 -------------------------------------------------------------------------------------------------- Telecommunications - Wireless - 0.6% -------------------------------------------------------------------------------------------------- America Movil S.A. de C.V., "L", ADR 1,139,740 $ 37,223,908 -------------------------------------------------------------------------------------------------- Trucking - 1.3% -------------------------------------------------------------------------------------------------- FedEx Corp. 772,450 $ 84,405,612 -------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST, $6,478,136,843) $ 6,312,085,197 -------------------------------------------------------------------------------------------------- Repurchase Agreement - 3.6% -------------------------------------------------------------------------------------------------- Goldman Sachs, 5.02%, dated 5/31/06, due 6/01/06, total to be received $232,735,449 (secured by various U.S. Treasury and Federal Agency obligations in a jointly traded account), at Cost $232,703,000 $ 232,703,000 -------------------------------------------------------------------------------------------------- Collateral for Securities Loaned - 2.3% -------------------------------------------------------------------------------------------------- ISSUER SHARES/PAR VALUE ($) -------------------------------------------------------------------------------------------------- Morgan Stanley 5.0825%, dated 5/31/06, due 6/01/06, total to be received $57,826,228 (secured by various U.S. Treasury and Federal Agency obligations in an individually traded account), at Cost $ 57,818,065 $ 57,818,065 Navigator Securities Lending Prime Portfolio, at Cost and Net Asset Value 95,364,787 95,364,787 -------------------------------------------------------------------------------------------------- TOTAL COLLATERAL FOR SECURITIES LOANED, AT COST AND VALUE $ 153,182,852 -------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST, $6,864,022,695) $ 6,697,971,049 -------------------------------------------------------------------------------------------------- Other Assets, Less Liabilities - (2.7)% (175,837,894) -------------------------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 6,522,133,155 -------------------------------------------------------------------------------------------------- (l) All or a portion of this security is on loan. (n) Non-income producing security. The following abbreviations are used in the Portfolio of Investments and are defined: ADR American Depository Receipt GDR Global Depository Receipt SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (unaudited) This statement represents your fund's balance sheet, which details the assets and liabilities comprising the total value of the fund. AT 5/31/06 ASSETS ------------------------------------------------------------------------------------------------------- Investments, at value, including $148,484,780 of securities on loan (identified cost, $6,864,022,695) $6,697,971,049 Cash 158 Receivable for investments sold 16,285,517 Receivable for fund shares sold 3,606,064 Interest and dividends receivable 6,610,901 Other assets 72,046 ------------------------------------------------------------------------------------------------------- Total assets $6,724,545,735 ------------------------------------------------------------------------------------------------------- LIABILITIES ------------------------------------------------------------------------------------------------------- Payable for investments purchased $15,986,276 Payable for fund shares reacquired 29,777,723 Collateral for securities loaned, at value 153,182,852 Payable to affiliates Management fee 58,806 Shareholder servicing costs 1,881,606 Distribution and service fees 97,660 Administrative services fee 1,319 Program manager fees 33 Retirement plan administration and services fees 421 Payable for independent trustees' compensation 306,213 Accrued expenses and other liabilities 1,119,671 ------------------------------------------------------------------------------------------------------- Total liabilities $202,412,580 ------------------------------------------------------------------------------------------------------- Net assets $6,522,133,155 ------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: ------------------------------------------------------------------------------------------------------- Paid-in capital $11,159,894,737 Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (166,035,047) Accumulated net realized gain (loss) on investments and foreign currency transactions (4,469,001,166) Accumulated net investment loss (2,725,369) ------------------------------------------------------------------------------------------------------- Net assets $6,522,133,155 ------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 531,180,556 -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class A shares ------------------------------------------------------------------------------------------------------- Net assets $4,140,655,328 Shares outstanding 326,930,866 ------------------------------------------------------------------------------------------------------- Net asset value per share $12.67 ------------------------------------------------------------------------------------------------------- Offering price per share (100/94.25Xnet asset value per share) $13.44 ------------------------------------------------------------------------------------------------------- Class B shares ------------------------------------------------------------------------------------------------------- Net assets $1,607,160,235 Shares outstanding 139,283,959 ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $11.54 ------------------------------------------------------------------------------------------------------- Class C shares ------------------------------------------------------------------------------------------------------- Net assets $486,757,738 Shares outstanding 42,370,290 ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $11.49 ------------------------------------------------------------------------------------------------------- Class I shares ------------------------------------------------------------------------------------------------------- Net assets $95,227,005 Shares outstanding 7,379,989 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $12.90 ------------------------------------------------------------------------------------------------------- Class J shares ------------------------------------------------------------------------------------------------------- Net assets $1,532,906 Shares outstanding 134,220 ------------------------------------------------------------------------------------------------------- Net asset value and redemption price per share $11.42 ------------------------------------------------------------------------------------------------------- Class R shares ------------------------------------------------------------------------------------------------------- Net assets $51,544,728 Shares outstanding 4,078,299 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $12.64 ------------------------------------------------------------------------------------------------------- Class R1 shares ------------------------------------------------------------------------------------------------------- Net assets $1,655,363 Shares outstanding 143,827 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $11.51 ------------------------------------------------------------------------------------------------------- Class R2 shares ------------------------------------------------------------------------------------------------------- Net assets $330,291 Shares outstanding 28,553 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $11.57 ------------------------------------------------------------------------------------------------------- Class R3 shares ------------------------------------------------------------------------------------------------------- Net assets $7,346,418 Shares outstanding 586,867 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $12.52 -------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) - continued Class R4 shares ------------------------------------------------------------------------------------------------------- Net assets $7,171,798 Shares outstanding 566,477 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $12.66 ------------------------------------------------------------------------------------------------------- Class R5 shares ------------------------------------------------------------------------------------------------------- Net assets $117,688,871 Shares outstanding 9,260,898 ------------------------------------------------------------------------------------------------------- Net asset value, offering price, and redemption price per share $12.71 ------------------------------------------------------------------------------------------------------- Class 529A shares ------------------------------------------------------------------------------------------------------- Net assets $3,489,069 Shares outstanding 278,353 ------------------------------------------------------------------------------------------------------- Net asset value per share $12.53 ------------------------------------------------------------------------------------------------------- Offering price per share (100/94.25Xnet asset value per share) $13.29 ------------------------------------------------------------------------------------------------------- Class 529B shares ------------------------------------------------------------------------------------------------------- Net assets $604,319 Shares outstanding 52,841 ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $11.44 ------------------------------------------------------------------------------------------------------- Class 529C shares ------------------------------------------------------------------------------------------------------- Net assets $969,086 Shares outstanding 85,117 ------------------------------------------------------------------------------------------------------- Net asset value and offering price per share $11.39 ------------------------------------------------------------------------------------------------------- On sales of $50,000 or more, the offering price of Class A and Class 529A shares is reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B and Class 529C shares. SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited) This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations. SIX MONTHS ENDED 5/31/06 NET INVESTMENT LOSS ------------------------------------------------------------------------------------------------------- Income Dividends $32,798,740 Interest 7,312,493 Foreign taxes withheld (740,328) ------------------------------------------------------------------------------------------------------- Total investment income $39,370,905 ------------------------------------------------------------------------------------------------------- Expenses Management fee $11,959,589 Distribution and service fees 20,118,530 Program manager fees 6,331 Shareholder servicing costs 8,545,746 Administrative services fee 234,476 Retirement plan administration and services fees 69,375 Independent trustees' compensation 83,326 Custodian fee 484,667 Shareholder communications 522,145 Auditing fees 32,181 Legal fees 67,942 Miscellaneous 97,106 ------------------------------------------------------------------------------------------------------- Total expenses $42,221,414 ------------------------------------------------------------------------------------------------------- Fees paid indirectly (327,474) Reduction of expenses by investment adviser (29,491) ------------------------------------------------------------------------------------------------------- Net expenses $41,864,449 ------------------------------------------------------------------------------------------------------- Net investment loss $(2,493,544) ------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ------------------------------------------------------------------------------------------------------- Realized gain (loss) (identified cost basis) Investment transactions $176,055,564 Foreign currency transactions (36,882) ------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions $176,018,682 ------------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) Investments $(208,541,958) Translation of assets and liabilities in foreign currencies 26,197 ------------------------------------------------------------------------------------------------------- Net unrealized gain (loss) on investments and foreign currency translation $(208,515,761) ------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency $(32,497,079) ------------------------------------------------------------------------------------------------------- Change in net assets from operations $(34,990,623) ------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets This statement describes the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
SIX MONTHS ENDED YEAR ENDED 5/31/06 11/30/05 (UNAUDITED) CHANGE IN NET ASSETS ------------------------------------------------------------------------------------------------------- FROM OPERATIONS ------------------------------------------------------------------------------------------------------- Net investment loss $(2,493,544) $(20,227,001) Net realized gain (loss) on investments and foreign currency transactions 176,018,682 765,811,696 Net unrealized gain (loss) on investments and foreign currency translation (208,515,761) (143,728,535) ------------------------------------------------------------------------------------------------------- Change in net assets from operations $(34,990,623) $601,856,160 ------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS ------------------------------------------------------------------------------------------------------- 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 $(1,031,256,350) $(1,859,041,090) ------------------------------------------------------------------------------------------------------- Redemption fees $-- $19,402 ------------------------------------------------------------------------------------------------------- Total change in net assets $(1,066,246,973) $(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 of $2,725,369 and accumulated distributions in excess of net investment income of $231,825, respectively) $6,522,133,155 $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 semiannual period and the past 5 fiscal 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. SIX MONTHS YEARS ENDED 11/30 ENDED -------------------------------------------------------------------------------- CLASS A 5/31/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.77 $11.88 $11.02 $9.98 $12.73 $18.47 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.01 $(0.00)(w) $0.05 $0.00(w) $(0.02) $(0.00)(w) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.94 0.81 1.04 (2.73) (4.02) ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.10) $0.94 $0.86 $1.04 $(2.75) $(4.02) ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.05) $-- $-- $-- $-- From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.47) From paid-in capital -- -- -- -- -- (0.25) ----------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $-- $(0.05) $-- $-- $-- $(1.72) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.67 $12.77 $11.88 $11.02 $9.98 $12.73 ----------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (0.78)(n) 7.93 7.80(b) 10.42(j) (21.60) (24.20) ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 0.96(a) 0.96 0.92 0.95 0.94 0.94 Expenses after expense reductions (f) 0.96(a) 0.96 0.92 0.95 0.94 0.94 Net investment income (loss) 0.14(a) (0.03) 0.44 0.01 (0.14) (0.03) Portfolio turnover 58 125 141 283 227 305 Net assets at end of period (000 Omitted) $4,140,655 $4,771,192 $5,540,056 $7,079,160 $6,327,026 $8,336,750 ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------------------------- CLASS B 5/31/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $11.68 $10.88 $10.16 $9.27 $11.89 $17.37 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------------- Net investment loss (d) $(0.03) $(0.08) $(0.02) $(0.06) $(0.08) $(0.09) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.88 0.74 0.95 (2.54) (3.77) ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.14) $0.80 $0.72 $0.89 $(2.62) $(3.86) ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $-- $-- $-- $-- $-- $(1.39) From paid-in capital -- -- -- -- -- (0.23) ----------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $-- $-- $-- $-- $-- $(1.62) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.54 $11.68 $10.88 $10.16 $9.27 $11.89 ----------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (1.20)(n) 7.35 7.09(b) 9.60(j) (22.04) (24.71) ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.61(a) 1.61 1.56 1.60 1.59 1.59 Expenses after expense reductions (f) 1.61(a) 1.61 1.56 1.60 1.59 1.59 Net investment loss (0.51)(a) (0.68) (0.17) (0.64) (0.79) (0.68) Portfolio turnover 58 125 141 283 227 305 Net assets at end of period (000 Omitted) $1,607,160 $1,947,597 $2,415,346 $2,778,509 $2,820,241 $4,280,270 ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------------------- CLASS C 5/31/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $11.62 $10.83 $10.11 $9.23 $11.84 $17.31 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------------- Net investment loss (d) $(0.03) $(0.08) $(0.02) $(0.06) $(0.08) $(0.09) Net realized and unrealized gain (loss) on investments and foreign currency (0.10) 0.87 0.74 0.94 (2.53) (3.75) ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.13) $0.79 $0.72 $0.88 $(2.61) $(3.84) ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments and foreign currency transactions $-- $-- $-- $-- $-- $(1.40) From paid-in capital -- -- -- -- -- (0.23) ----------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $-- $-- $-- $-- $-- $(1.63) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.49 $11.62 $10.83 $10.11 $9.23 $11.84 ----------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (1.12)(n) 7.29 7.12(b) 9.53(j) (22.04) (24.69) ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.61(a) 1.61 1.56 1.60 1.59 1.59 Expenses after expense reductions(f) 1.61(a) 1.61 1.56 1.60 1.59 1.59 Net investment loss (0.51)(a) (0.68) (0.19) (0.64) (0.79) (0.68) Portfolio turnover 58 125 141 283 227 305 Net assets at end of period (000 Omitted) $486,758 $584,360 $739,534 $911,333 $917,809 $1,446,087 ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED -------------------------------------------------------------------- CLASS I 5/31/06 2005 2004 2003 2002 2001 (UNAUDITED) Net asset value, beginning of period $12.99 $12.08 $11.17 $10.08 $12.81 $18.58 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------------- Net investment income (d) $0.03 $0.04 $0.08 $0.04 $0.03 $0.05 Net realized and unrealized gain (loss) on investments and foreign currency (0.12) 0.97 0.83 1.05 (2.76) (4.03) ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.09) $1.01 $0.91 $1.09 $(2.73) $(3.98) ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ----------------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.10) $-- $-- $-- $-- From net realized gain on investments and foreign currency transactions -- -- -- -- -- (1.53) From paid-in capital -- -- -- -- -- (0.26) ----------------------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders $-- $(0.10) $-- $-- $-- $(1.79) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.90 $12.99 $12.08 $11.17 $10.08 $12.81 ----------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (0.69)(n) 8.38 8.15(b) 10.81(j) (21.31) (23.93) ----------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 0.61(a) 0.61 0.57 0.60 0.59 0.59 Expenses after expense reductions (f) 0.61(a) 0.61 0.57 0.60 0.59 0.59 Net investment income 0.48(a) 0.32 0.67 0.36 0.21 0.32 Portfolio turnover 58 125 141 283 227 305 Net assets at end of period (000 Omitted) $95,227 $122,728 $133,502 $285,467 $196,501 $195,542 ----------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------------------- CLASS J 5/31/06 2005 2004 2003 2002 2001(i) (UNAUDITED) Net asset value, beginning of period $11.56 $10.77 $10.06 $9.17 $11.77 $15.98 ------------------------------------------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS ------------------------------------------------------------------------------------------------------------------------------ Net investment loss (d) $(0.03) $(0.07) $(0.03) $(0.06) $(0.08) $(0.09) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.86 0.74 0.95 (2.52) (4.12) ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations $(0.14) $0.79 $0.71 $0.89 $(2.60) $(4.21) ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.42 $11.56 $10.77 $10.06 $9.17 $11.77 ------------------------------------------------------------------------------------------------------------------------------ Total return (%) (r)(s)(t) (1.21)(n) 7.34 7.06(b) 9.71(j) (22.09) (26.35)(n) ------------------------------------------------------------------------------------------------------------------------------ RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ------------------------------------------------------------------------------------------------------------------------------ Expenses before expense reductions (f) 1.61(a) 1.60 1.56 1.61 1.59 1.59(a) Expenses after expense reductions (f) 1.61(a) 1.60 1.56 1.61 1.59 1.59(a) Net investment loss (0.51)(a) (0.67) (0.25) (0.66) (0.79) (0.68)(a) Portfolio turnover 58 125 141 283 227 305 Net assets at end of period (000 Omitted) $1,533 $1,952 $7,630 $10,368 $3,284 $6,861 ------------------------------------------------------------------------------------------------------------------------------ SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------- CLASS R 5/31/06 2005 2004 2003(i) (UNAUDITED) 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 (0.12) 0.95 0.80 1.80 --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.12) $0.93 $0.85 $1.79 --------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS --------------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.04) $-- $-- --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.64 $12.76 $11.87 $11.02 --------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (0.94)(n) 7.89 7.71(b) 19.39(j)(n) --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.11(a) 1.12 1.07 1.10(a) Expenses after expense reductions (f) 1.11(a) 1.12 1.07 1.10(a) Net investment income (loss) (0.00)(a) (0.17) 0.42 (0.15)(a) Portfolio turnover 58 125 141 283 Net assets at end of period (000 Omitted) $51,545 $51,749 $29,239 $14,105 ---------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED CLASS R1 ENDED 5/31/06 11/30/05(i) (UNAUDITED) Net asset value, beginning of period $11.66 $10.86 --------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS --------------------------------------------------------------------------------------------------------------------------- Net investment loss (d) $(0.03) $(0.06) Net realized and unrealized gain (loss) on investments and foreign currency (0.12) 0.86 --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.15) $0.80 --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.51 $11.66 --------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (1.29)(n) 7.37(n) --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.81(a) 1.82(a) Expenses after expense reductions (f) 1.71(a) 1.78(a) Net investment loss (0.58)(a) (0.80)(a) Portfolio turnover 58 125 Net assets at end of period (000 Omitted) $1,655 $1,008 --------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R2 ENDED 5/31/06 11/30/05(i) (UNAUDITED) Net asset value, beginning of period $11.69 $10.86 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------------------- Net investment loss (d) $(0.01) $(0.04) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.87 ----------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.12) $0.83 ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.57 $11.69 ----------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (1.03)(n) 7.64(n) ----------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.50(a) 1.51(a) Expenses after expense reductions (f) 1.35(a) 1.47(a) Net investment loss (0.24)(a) (0.54)(a) Portfolio turnover 58 125 Net assets at end of period (000 Omitted) $330 $274 ----------------------------------------------------------------------------------------------------------------------- SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------- CLASS R3 5/31/06 2005 2004 2003(i) (UNAUDITED) 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 (0.11) 0.94 0.80 (0.00)(g)(w) ------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.12) $0.90 $0.80 $(0.00)(w) ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS ------------------------------------------------------------------------------------------------------------------------- From net investment income $-- $(0.08) $-- $-- ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.52 $12.64 $11.82 $11.02 ------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (0.95)(n) 7.64 7.26(b) 0.00(n) ------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.36(a) 1.37 1.33 1.44(a) Expenses after expense reductions (f) 1.26(a) 1.34 1.33 1.44(a) Net investment income (loss) (0.14)(a) (0.37) 0.03 (0.34)(a) Portfolio turnover 58 125 141 283 Net assets at end of period (000 Omitted) $7,346 $4,216 $708 $5 ------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEAR ENDED CLASS R4 ENDED 5/31/06 11/30/05(i) (UNAUDITED) Net asset value, beginning of period $12.77 $11.83 ----------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------- Net investment income (loss) (d) $0.01 $(0.01) Net realized and unrealized gain (loss) on investments and foreign currency (0.12) 0.95 ----------------------------------------------------------------------------------------------------------- Total from investment operations $(0.11) $0.94 ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.66 $12.77 ----------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (0.86)(n) 7.95(n) ----------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.01(a) 1.03(a) Expenses after expense reductions (f) 1.01(a) 1.03(a) Net investment income (loss) 0.17(a) (0.11)(a) Portfolio turnover 58 125 Net assets at end of period (000 Omitted) $7,172 $1,016 ----------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED CLASS R5 ENDED 5/31/06 11/30/05(i) (UNAUDITED) Net asset value, beginning of period $12.80 $11.83 ----------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------------------------- Net investment income (d) $0.03 $0.03 Net realized and unrealized gain (loss) on investments and foreign currency (0.12) 0.94 ----------------------------------------------------------------------------------------------------------- Total from investment operations $(0.09) $0.97 ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.71 $12.80 ----------------------------------------------------------------------------------------------------------- Total return (%) (r)(s) (0.70)(n) 8.20(n) ----------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: ----------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 0.71(a) 0.70(a) Expenses after expense reductions (f) 0.71(a) 0.70(a) Net investment income 0.41(a) 0.48(a) Portfolio turnover 58 125 Net assets at end of period (000 Omitted) $117,689 $97,541 ----------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------- CLASS 529A 5/31/06 2005 2004 2003 2002(i) (UNAUDITED) 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 (0.12) 0.94 0.79 1.01 0.25 --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.13) $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 $12.53 $12.66 $11.79 $10.96 $9.97 --------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (1.03)(n) 7.77 7.57(b) 9.93(j) 2.57(n) --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.21(a) 1.22 1.17 1.20 1.19(a) Expenses after expense reductions (f) 1.21(a) 1.22 1.17 1.20 1.19(a) Net investment income (loss) (0.10)(a) (0.27) 0.39 (0.24) (0.16)(a) Portfolio turnover 58 125 141 283 227 Net assets at end of period (000 Omitted) $3,489 $3,203 $2,070 $1,068 $95 --------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------- CLASS 529B 5/31/06 2005 2004 2003 2002(i) (UNAUDITED) 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) $(0.04) $(0.10) $(0.03) $(0.08) $(0.02) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.86 0.73 0.95 0.23 --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.15) $0.76 $0.70 $0.87 $0.21 --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.44 $11.59 $10.83 $10.13 $9.26 --------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (1.29)(n) 7.02 6.91(b) 9.40(j) 2.32(n) --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.86(a) 1.87 1.81 1.85 1.84(a) Expenses after expense reductions (f) 1.86(a) 1.87 1.81 1.85 1.84(a) Net investment loss (0.75)(a) (0.92) (0.30) (0.89) (0.78)(a) Portfolio turnover 58 125 141 283 227 Net assets at end of period (000 Omitted) $604 $589 $478 $285 $24 --------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS
Financial Highlights - continued
SIX MONTHS YEARS ENDED 11/30 ENDED ---------------------------------------------------------- CLASS 529C 5/31/06 2005 2004 2003 2002(i) (UNAUDITED) 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) $(0.04) $(0.10) $(0.04) $(0.08) $(0.02) Net realized and unrealized gain (loss) on investments and foreign currency (0.11) 0.86 0.73 0.95 0.23 --------------------------------------------------------------------------------------------------------------------------- Total from investment operations $(0.15) $0.76 $0.69 $0.87 $0.21 --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.39 $11.54 $10.78 $10.09 $9.22 --------------------------------------------------------------------------------------------------------------------------- Total return (%) (r)(s)(t) (1.30)(n) 7.05 6.84(b) 9.44(j) 2.33(n) --------------------------------------------------------------------------------------------------------------------------- RATIOS (%) (TO AVERAGE NET ASSETS) AND SUPPLEMENTAL DATA: --------------------------------------------------------------------------------------------------------------------------- Expenses before expense reductions (f) 1.86(a) 1.87 1.81 1.86 1.84(a) Expenses after expense reductions (f) 1.86(a) 1.87 1.81 1.86 1.84(a) Net investment loss (0.75)(a) (0.92) (0.34) (0.88) (0.81)(a) Portfolio turnover 58 125 141 283 227 Net assets at end of period (000 Omitted) $969 $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, Class R3, Class 529A, Class 529B 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 amount of per share realized and unrealized gains and losses at such time. (i) For the period from the class' inception, December 18, 2000 (Class J), December 31, 2002 (Class R), July 31, 2002 (Classes 529A, 529B, and 529C), 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 (unaudited) (1) BUSINESS AND ORGANIZATION Massachusetts Investors Growth Stock Fund (the fund) is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as 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 397 days or less are generally 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. 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 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. 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 J.P. Morgan Chase and Co. ("Chase"), as lending agents, may loan the securities of the fund to certain qualified institutions (the "Borrowers") approved by the fund. The loans are collateralized at all times by cash and/or U.S. Treasury securities in an amount at least equal to the market value of the securities loaned. State Street and Chase provide the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or short-term securities. A portion of the income generated upon investment of the collateral is remitted to the Borrowers, and the remainder is allocated between the fund and the lending agents. On loans collateralized by U.S. Treasury securities, a fee is received from the Borrower, and is allocated between the fund and the lending agents. Income from securities lending is included in interest income on the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. SHORT TERM FEES - For purchases made on or after July 1, 2004 and before April 1, 2005, the fund 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 six months ended May 31, 2006, the fund's custodian fees were reduced by $204,764 under this arrangement. The fund has entered into a commission recapture agreement, under which certain brokers will credit the fund a portion of the commissions generated, to offset certain expenses of the fund. For the six months ended May 31, 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 continue 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 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 foreign currency transactions, net operating losses and wash sale loss deferrals. The tax character of distributions declared to shareholders is as follows: NOVEMBER 30, 2005 NOVEMBER 30, 2004 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 MAY 31, 2006 Cost of investments $7,054,772,261 ---------------------------------------------------------- Gross appreciation $112,435,506 Gross depreciation (469,236,718) ---------------------------------------------------------- Net unrealized appreciation (depreciation) $(356,801,212) AS OF NOVEMBER 30, 2005 Capital loss carryforwards (4,447,639,027) Post-October capital loss deferral (5,182,105) Other temporary differences (1,690,573) Net unrealized appreciation (depreciation) (148,259,254) The aggregate cost above includes prior fiscal year end tax adjustments. As of November 30, 2005, the fund had available capital loss carryforwards to offset future realized gains. Such losses expire as follows: November 30, 2009 $(2,147,917,828) November 30, 2010 $(2,299,721,199) -------------------------------------------------- $(4,447,639,027) 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 advisory and administrative services, and general office facilities. The management fee is computed daily and paid monthly at an annual rate of 0.33% of the fund's average daily net assets. DISTRIBUTOR - MFS Fund Distributors, Inc. (MFD), a wholly owned subsidiary of MFS, as distributor, received $122,037 and $1,334 for the six months ended May 31, 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% $7,971,545 Class B 0.75% 0.25% 1.00% 1.00% 9,214,249 Class C 0.75% 0.25% 1.00% 1.00% 2,750,620 Class J(f) 0.75% 0.25% 1.00% 1.00% 8,552 Class R 0.25% 0.25% 0.50% 0.50% 133,524 Class R1 0.50% 0.25% 0.75% 0.75% 4,947 Class R2 0.25% 0.25% 0.50% 0.50% 886 Class R3 0.25% 0.25% 0.50% 0.50% 14,424 Class R4 -- 0.25% 0.25% 0.25% 5,716 Class 529A 0.25% 0.25% 0.50% 0.35% 6,060 Class 529B 0.75% 0.25% 1.00% 1.00% 3,071 Class 529C 0.75% 0.25% 1.00% 1.00% 4,936 --------------------------------------------------------------------------------------------------------------------- Total Distribution and Service Fees $20,118,530 (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 six months ended May 31, 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 implemented and will commence 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 six months ended May 31, 2006, were as follows: AMOUNT Class A $43,967 Class B 1,510,133 Class C 23,808 Class 529B 117 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% from the fund based solely upon the value of the fund's 529 share classes attributable to tuition programs to which MFD, or a third party which contracts with MFD, provides administrative services. The current fee has been established at 0.25% annually of average net assets of the fund's 529 share classes. 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 six months ended May 31, 2006, were as follows: AMOUNT Class 529A $4,329 Class 529B 768 Class 529C 1,234 -------------------------------------------------- Total Program Manager Fees $6,331 SHAREHOLDER SERVICING AGENT - The fund pays a portion of shareholder servicing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS. MFSC receives a fee from the fund, for its services as shareholder servicing agent, set periodically under the supervision of the fund's Board of Trustees. For the six months ended May 31, 2006, the fee was $3,552,500, which equated to 0.0980% 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 six months ended May 31, 2006, these costs amounted to $4,114,372. ADMINISTRATOR - MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to certain funds for which MFS acts as investment adviser. Under an administrative services agreement, the funds may partially reimburse MFS the costs incurred to provide these services, subject to review and approval by the Board of Trustees. Each 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 six months ended May 31, 2006 was equivalent to an annual effective rate of 0.0065% 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 six months ended May 31, 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% $2,968 Class R2 0.40% 0.25% 709 Class R3 0.25% 0.15% 7,212 Class R4 0.15% 0.15% 3,429 Class R5 0.10% 0.10% 55,057 ------------------------------------------------------------------------------- Total Retirement Plan Administration and Services Fees $69,375 (g) Effective October 1, 2005, MFS has contractually agreed 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, 2007. For the six months ended May 31, 2006, this waiver amounted to $3,810 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 $7,160. The fund also has an unfunded retirement benefit deferral plan for certain Independent Trustees which resulted in an expense of $9,720. Both amounts are included in Independent trustees' compensation for the six months ended May 31, 2006. The deferred liability for retirement benefits payable to certain Trustees under both plans amounted to $219,211 at May 31, 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 $72,046 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 six months ended May 31, 2006, the fee paid to Tarantino LLC was $31,171. MFS has agreed to reimburse the fund for a portion of the payments made by the funds to Tarantino LLC in the amount of $25,681, 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 $3,960,258,227 and $4,916,728,079, 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:
SIX MONTHS ENDED YEAR ENDED MAY 31, 2006 NOVEMBER 30, 2005 (i) SHARES AMOUNT SHARES AMOUNT Shares sold Class A 27,935,035 $367,152,914 55,645,086 $676,685,537 Class B 2,957,780 35,492,234 7,838,909 87,410,962 Class C 1,248,473 14,905,192 3,949,856 43,910,441 Class I 1,220,569 16,349,205 2,570,105 31,792,172 Class J 8,700 103,683 158,188 1,753,770 Class R 612,113 8,042,425 2,787,174 33,440,279 Class R1 74,255 893,157 102,839 1,166,806 Class R2 31,192 374,654 45,105 518,278 Class R3 345,842 4,514,313 389,440 4,803,665 Class R4 563,096 7,432,718 102,545 1,274,648 Class R5 3,179,836 42,265,327 7,794,198 95,886,699 Class 529A 40,838 531,057 118,438 1,426,324 Class 529B 3,345 39,736 10,421 114,047 Class 529C 7,409 88,054 17,579 195,384 -------------------------------------------------------------------------------------------------------- 38,228,483 $498,184,669 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 (74,529,760) $(979,425,868) (150,046,165) $(1,830,111,618) Class B (30,490,770) (365,397,555) (62,980,210) (704,001,606) Class C (9,150,172) (109,266,014) (21,936,036) (243,908,986) Class I (3,288,443) (44,116,952) (4,244,673) (52,647,907) Class J (43,410) (512,500) (697,540) (7,724,445) Class R (590,493) (7,743,700) (1,201,977) (14,737,604) Class R1 (16,921) (203,690) (16,346) (189,267) Class R2 (26,110) (316,530) (21,634) (241,727) Class R3 (92,591) (1,208,549) (116,199) (1,438,617) Class R4 (76,179) (1,004,752) (22,985) (286,201) Class R5 (1,539,226) (19,968,755) (173,910) (2,191,260) Class 529A (15,557) (202,858) (41,544) (499,007) Class 529B (1,355) (16,020) (3,697) (40,871) Class 529C (4,850) (57,276) (5,956) (66,391) --------------------------------------------------------------------------------------------------------- (119,865,837) $(1,529,441,019) (241,508,872) $(2,858,085,507) Net change Class A (46,594,725) $(612,272,954) (92,956,494) $(1,135,802,042) Class B (27,532,990) (329,905,321) (55,141,301) (616,590,644) Class C (7,901,699) (94,360,822) (17,986,180) (199,998,545) Class I (2,067,874) (27,767,747) (1,600,418) (19,938,500) Class J (34,710) (408,817) (539,352) (5,970,675) Class R 21,620 298,725 1,594,243 18,813,020 Class R1 57,334 689,467 86,493 977,539 Class R2 5,082 58,124 23,471 276,551 Class R3 253,251 3,305,764 273,741 3,371,100 Class R4 486,917 6,427,966 79,560 988,447 Class R5 1,640,610 22,296,572 7,620,288 93,695,439 Class 529A 25,281 328,199 77,532 935,051 Class 529B 1,990 23,716 6,724 73,176 Class 529C 2,559 30,778 11,623 128,993 --------------------------------------------------------------------------------------------------------- (81,637,354) $(1,031,256,350) (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 affiliated funds 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 affiliated funds 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, 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. The commitment fee allocated to the fund for the six months ended May 31, 2006 was $32,539 and is included in miscellaneous expense on the Statement of Operations. The fund had no significant borrowings during the six months ended May 31, 2006. BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT 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 trust 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 trust'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 trust'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. CONTACT INFORMATION INVESTOR SERVICE Write to us at: MFS Service Center, Inc. P.O. Box 55824 Boston, MA 02205-5824 Type of Information Phone number Hours, Eastern Time -------------------------------------------------------------------------------- General information 1-800-225-2606 8 a.m. to 8 p.m., any business day -------------------------------------------------------------------------------- Speech- or hearing-impaired 1-800-637-6576 9 a.m. to 5 p.m., any business day -------------------------------------------------------------------------------- Shares prices, account 1-800-MFS-TALK balances exchanges (1-800-637-8255) 24 hours a day, 365 days a or stock and bond outlooks touch-tone required year -------------------------------------------------------------------------------- M F S(SM) INVESTMENT MANAGEMENT(R) MFS Investment Management(R) MFS(R) investment products are offered through MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116. MIG-SEM-07/06 470M ITEM 2. CODE OF ETHICS. The Registrant has not amended any provision in its Code of Ethics (the "Code") that relates to any element of the Code's definition enumerated in paragraph (b) of Item 2 of this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant's Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) Based upon their evaluation of the 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 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. (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: July 21, 2006 ------------- 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: July 21, 2006 ------------- By (Signature and Title)* TRACY ATKINSON ----------------------------------------------------- Tracy Atkinson, Treasurer (Principal Financial Officer and Accounting Officer) Date: July 21, 2006 ------------- * Print name and title of each signing officer under his or her signature.