<PAGE>
As filed with the Securities and Exchange Commission on April 28, 1995
1933 Act File No. 2-11401
1940 Act File No. 811-203
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 68
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 19
MASSACHUSETTS INVESTORS TRUST
(Exact Name of Registrant as Specified in Charter)
500 Boylston, Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 617-954-5000
Stephen E. Cavan, Massachusetts Financial Services Co.,
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on April 30, 1995 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on [date] pursuant to paragraph (a)(i)
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on [date] pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
NUMBER PROPOSED PROPOSED
OF SHARES MAXIMUM MAXIMUM
TITLE OF SECURITIES BEING OFFERING AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Shares of Beneficial Interest
(par value $0.33 1/3 per share) 13,774,467 $11.03 $290,000 $100
</TABLE>
Registrant elects to calculate the maximum aggregate offering price pursuant to
Rule 24e-2. 13,748,175 shares were redeemed during the fiscal year ended
December 31, 1994, all of which are being used for reduction in this
Post-Effective Amendment. Pursuant to Rule 457(d) under the Securities Act of
1933, the maximum public offering price of $11.03 per share on April 17, 1995 is
the price used as the basis for calculating the registration fee. While no fee
is required for the 13,748,175 shares, Registrant has elected to register, for
$100, an additional $290,000 of shares (26,292 shares at $11.03 per share).
<PAGE>
<TABLE>
MASSACHUSETTS INVESTORS TRUST
CROSS REFERENCE SHEET
(Pursuant to Rule 404 showing location in Prospectus and/or Statement of
Additional Information of the responses to the Items in Parts A and B of Form
N-1A)
<CAPTION>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION CAPTION
<C> <S> <C>
1 (a), (b) Front Cover Page *
2 (a) Expense Summary *
(b), (c) * *
3 (a) Condensed Financial Information *
(b) * *
(c) Information Concerning Shares *
of the Trust - Performance
Information
(d) Condensed Financial Information *
4 (a) Front Cover Page; The Trust; *
Investment Objectives and
Policies
(b), (c) Investment Objectives and Policies *
5 (a) The Trust; Management of the Trust - *
Investment Adviser
(b) Front Cover Page; Management of *
the Trust - Investment Adviser;
Back Cover Page
(c) Management of the Fund - *
Investment Adviser
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION CAPTION
(d) Management of the Fund - *
Investment Adviser; Back
Cover Page
(e) Management of the Fund - Back *
Cover Page
(f) Expense Summary *
(g) Information Concerning Shares *
of the Trust - Purchases
5A (a), (b), (c) ** **
6 (a) Information Concerning Shares of *
the Trust - Description of Shares,
Voting Rights and Liabilities,
Redemptions and Repurchases;
Purchases
(b), (c), (d) * *
(e) Shareholder Services *
(f) Information Concerning Shares of *
the Trust - Dividends and Capital
Gain Distributions; Shareholder
Services - Distribution Options
(g) Information Concerning Shares of *
the Trust - Tax Status; Dividends
and Capital Gain Distributions
7 (a) Front Cover Page; Management *
of the Trust - Distributor; Back
Cover Page
(b) Information Concerning Shares of *
the Trust - Purchases, Net Asset
Value
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART A PROSPECTUS CAPTION INFORMATION CAPTION
(c) Information Concerning Shares of *
the Trust - Purchases, Exchanges;
Shareholder Services
(d) Front Cover Page; Information *
Concerning Shares of the Trust -
Purchases
(e) Information Concerning Shares of *
the Trust - Distribution Plan;
Expense Summary
(f) Information Concerning Shares of *
the Trust - Distribution Plan
8 (a) Information Concerning Shares of *
the Trust - Redemptions and
Repurchases, Purchases
(b), (c), (d) Information Concerning Shares of *
the Trust - Redemptions and
Repurchases
9 * *
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART B PROSPECTUS CAPTION INFORMATION CAPTION
10 (a), (b) * Front Cover Page
11 * Front Cover Page
12 * Definitions
13 (a), (b), (c) * Investment Objectives; Policies
and Restrictions
(d) * *
14 (a), (b) * Management of the Trust -
Trustees and Officers
(c) * Management of the Trust -
Trustees and Officers;
Appendix A
15 (a) * *
(b), (c) * Management of the Trust -
Trustees and Officers
16 (a) Management of the Trust - Management of the Trust -
Investment Adviser Investment Adviser,
Trustees and Officers
(b) Management of the Trust - Management of the Trust -
Investment Adviser Investment Adviser
(c) * *
(d) * Management of the Trust-
Investment Adviser
(e) * Portfolio Transactions and
Brokerage Commissions
(f) * Distribution Plan
(g) * *
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART B PROSPECTUS CAPTION INFORMATION CAPTION
(h) * Management of the Trust-
Custodian; Independent
Accountants and Financial
Statements; Back Cover Page
(i) * Management of the Trust -
Shareholder Servicing Agent
17 (a), (b), * Portfolio Transactions and
(c), (d), (e) Brokerage Commissions
18 (a) Information Concerning Shares Description of Shares; Voting
of the Trust - Description of Rights and Liabilities
Shares, Voting Rights and
Liabilities
(b) * *
19 (a) Information Concerning Shares Shareholder Services
of the Trust - Purchases
(b) Information Concerning Shares Management of the Trust -
of the Trust - Net Asset Value; Distributor; Determination of
Purchases Net Asset Value and
Performance - Net Asset Value
(c) * *
20 * Tax Status
21 (a), (b) * Management of the Trust -
Distributor; Distribution Plan
(c) * *
22 (a) * *
(b) * Determination of Net Asset
Value and Performance
<PAGE>
STATEMENT OF
ITEM NUMBER ADDITIONAL
FORM N-1A, PART B PROSPECTUS CAPTION INFORMATION CAPTION
23 * Independent Accountants and
Financial Statements
- --------------------------
* Not Applicable
** Contained in Annual Report
</TABLE>
<PAGE>
MASSACHUSETTS PROSPECTUS
INVESTORS TRUST May 1, 1995
(A member of the MFS Family Class A Shares of Beneficial Interest
of Fund(R)) Class B Shares of Beneficial Interest
- --------------------------------------------------------------------------------
Page
----
1. Expense Summary .............................................. 2
2. The Fund .................................................... 3
3. Condensed Financial Information ............................. 3
4. Investment Objectives and Policies .......................... 4
5. Management of the Fund ...................................... 9
6. Information Concerning Shares of the Fund ................... 11
Purchases ............................................... 11
Exchanges ............................................... 16
Redemptions and Repurchases ............................. 17
Distribution Plans ...................................... 19
Distributions ........................................... 20
Tax Status .............................................. 20
Net Asset Value ......................................... 21
Description of Shares, Voting Rights and Liabilities 21
Performance Information ................................. 21
7. Shareholder Services ........................................ 22
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MASSACHUSETTS INVESTORS TRUST
500 Boylston Street, Boston, Massachusetts 02116 (617) 954-5000
America's First Open-End Investment Company, Organized March 21, 1924 as a
Common Law Trust under the Laws of The Commonwealth of Massachusetts.
Massachusetts Investors Trust (the "Fund") is an open-end diversified investment
company. The Fund's investment objectives are to provide reasonable current
income and long-term growth of capital and income. See "Investment Objectives
and Policies". The minimum initial investment is generally $1,000 per account
(see "Purchases").
The Fund's investment adviser and distributor are Massachusetts Financial
Services Company ("MFS" or the "Adviser") and MFS Fund Distributors, Inc.
("MFD"), respectively, both of which are located at 500 Boylston Street, Boston,
Massachusetts 02116.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
This Prospectus sets forth concisely the information concerning the Fund that a
prospective investor ought to know before investing. The Fund has filed with the
Securities and Exchange Commission (the "SEC") a Statement of Additional
Information, dated May 1, 1995, which contains more detailed information about
the Fund and is incorporated into this Prospectus by reference. See page 23 for
a further description of the information set forth in the Statement of
Additional Information. A copy of the Statement of Additional Information may be
obtained without charge by contacting the Shareholder Servicing Agent (see back
cover for address and phone number).
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
<TABLE>
<CAPTION>
1. EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS B
------- -------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchases of Fund Shares (as a
percentage of offering price) ......................................... 5.75% 0.00%
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) ................. See Below<F1> 4.00%
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
Management Fees ......................................................... 0.26% 0.26%
Rule 12b-1 Fees (after applicable fee waiver) ........................... 0.23%<F2> 1.00%<F3>
Other Expenses .......................................................... 0.22% 0.35%
---- ----
Total Operating Expenses (after applicable fee waiver)................... 0.71%<F4> 1.61%
- ---------
<FN>
<F1>Purchases of $1 million or more are not subject to an initial sales charge; however, a contingent
deferred sales charge (a "CDSC") of 1% will be imposed on such purchases in the event of certain
redemption transactions within 12 months following such purchases (see "Purchases" below).
<F2>The Fund has adopted a Distribution Plan for its Class A shares in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides that it will pay
distribution/ service fees aggregating up to (but not necessarily all of) 0.35% per annum of the
average daily net assets attributable to the Class A shares (see "Distribution Plans"). Currently,
0.10% of the distribution/service fee is being waived. After a substantial period of time, distribution
expenses paid under this Plan, together with the initial sales charge, may total more than the maximum
sales charge that would have been permissible if imposed entirely as an initial sales charge.
<F3>The Fund has adopted a Distribution Plan for its Class B shares in accordance with Rule 12b-1 under the
1940 Act, which provides that it will pay distribution/service fees aggregating up to 1.00% per annum
of the average daily net assets attributable to Class B shares (see "Distribution Plans"). After a
substantial period of time, distribution expenses paid under this Plan, together with any CDSC, may
total more than the maximum sales charge that would have been permissible if imposed entirely as an
initial sales charge.
<F4>Absent any fee waiver, "Total Operating Expenses" would have been 0.81% for Class A shares.
</TABLE>
EXAMPLE OF EXPENSES
-------------------
An investor would pay the following dollar amounts of expenses on a $1,000
investment in the Fund, assuming (a) 5% annual return and (b) redemption at the
end of each of the time periods indicated (unless otherwise noted):
<TABLE>
<CAPTION>
PERIOD CLASS A CLASS B
------ ------- --------------------
<F1>
<S> <C> <C> <C>
1 year ...................................................... $ 64 $ 56 $ 16
3 years ..................................................... 79 81 51
5 years ..................................................... 95 108 88
10 years ..................................................... 141 167<F2> 167<F2>
- ---------
<FN>
<F1>Assumes no redemption.
<F2>Class B shares convert to Class A shares approximately eight years after
purchase; therefore, years nine and ten reflect Class A expenses.
</TABLE>
The purpose of the expense table above is to assist investors in
understanding the various costs and expenses that a shareholder of the Fund will
bear directly or indirectly. More complete descriptions of the following
expenses are set forth in the following sections of the Prospectus: (i) varying
sales charges on share purchases -- "Purchases"; (ii) varying CDSCs --
"Purchases"; (iii) management fees -- "Investment Adviser"; and (iv) Rule 12b- 1
(i.e., distribution plan) fees -- "Distribution Plans".
THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF THE FUND; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
2. THE FUND
The Fund is an open-end, diversified management investment company which was
organized as a common law trust under the laws of The Commonwealth of
Massachusetts in 1924. Shares of the Fund are continuously sold to the public,
and the Fund uses the proceeds to buy securities (common stocks and other
instruments) for its portfolio. Two classes of shares of the Fund currently are
offered to the general public. Class A shares are offered at net asset value
plus an initial sales charge (or a CDSC in the case of certain purchases of $1
million or more) and subject to a Distribution Plan providing for a distribution
fee and a service fee. Class B shares are offered at net asset value without an
initial sales charge but subject to a CDSC and a Distribution Plan providing for
a distribution fee and a service fee which is greater than the Class A
distribution fee and service fee. Class B shares will convert to Class A shares
approximately eight years after purchase.
The Fund's Board of Trustees provides broad supervision over the affairs of the
Fund. A majority of the Trustees are not affiliated with the Adviser. The
Adviser is responsible for the management of the Fund's assets and the officers
of the Fund are responsible for its operations. The Adviser manages the
portfolio from day to day in accordance with the Fund's investment objectives
and policies. The selection of investments and the way they are managed depend
on the conditions and trends in the economy and the financial marketplaces. The
Fund also offers to buy back (redeem) its shares from its shareholders at any
time at net asset value, less any applicable CDSC.
3. CONDENSED FINANCIAL INFORMATION
The following information should be read in conjunction with the financial
statements included in the Fund's Annual Report to shareholders which are
incorporated by reference into the Statement of Additional Information in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- CLASS A AND CLASS B SHARES
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1994 1993<F9>
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
CLASS A CLASS B
------------------------------------------------------------------------------------- ---------------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value --
beginning of period... $11.50 $12.31 $13.87 $12.28 $13.55 $11.22 $11.26 $12.09 $12.12 $11.02 $11.48 $13.02
----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from investment operations<F4> --
Net investment
income<F6>........... $ 0.25 $ 0.39 $ 0.32 $ 0.38 $ 0.43 $ 0.45 $ 0.40 $ 0.38 $ 0.40 $ 0.46 $ 0.15 $ 0.04
Net realized and
unrealized gain
(loss) on
investments......... (0.36) 0.86 0.69 2.95 (0.45) 3.56 0.76 0.57 1.72 2.18 (0.36) 0.32
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Total from
investment
operations ........ $(0.11) $ 1.25 $ 1.01 $ 3.33 $(0.02) $ 4.01 $ 1.16 $ 0.95 $ 2.12 $ 2.64 $(0.21) $ 0.36
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Less distributions declared to shareholders --
From net investment
income<F5>........... $(0.25) $(0.39) $(0.33) $(0.39) $(0.43) $(0.45) $(0.39) $(0.39) $(0.40) $(0.46) $(0.17) $(0.23)
From net realized
gain on
investments<F8> ..... (1.05) (1.67) (2.22) (1.32) (0.82) (1.22) (0.81) (1.39) (1.73) (1.06) (1.05) (1.67)
In excess of net
realized gain on
investments ......... (0.02) -- -- -- -- -- -- -- -- -- (0.02) --
From paid-in
capital<F7> ......... -- -- (0.02) (0.03) -- (0.01) -- -- (0.02) (0.02) -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Total distributions
declared to
shareholders ...... $(1.32) $(2.06) $(2.57) $(1.74) $(1.25) $(1.68) $(1.20) $(1.78) $(2.15) $(1.54) $(1.24) $(1.90)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Net asset value -- end
of period ............ $10.07 $11.50 $12.31 $13.87 $12.28 $13.55 $11.22 $11.26 $12.09 $12.12 $10.03 $ 11.48
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ======
Total return<F3> ...... (1.02)% 10.03% 7.68% 27.41% (0.33)% 35.80% 10.12% 7.25% 16.97% 24.21% (1.88)% 2.62%<F2>
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:<F6>
Expenses ............. 0.71% 0.68% 0.62% 0.62% 0.47% 0.50% 0.55% 0.45% 0.49% 0.55% 1.61% 1.56%<F1>
Net investment
income............... 2.20% 3.04% 2.30% 2.73% 3.28% 3.40% 3.39% 2.63% 2.99% 3.91% 1.37% 1.05%<F1>
PORTFOLIO TURNOVER .... 87% 41% 46% 44% 26% 20% 19% 23% 26% 33% 87% 41%
NET ASSETS AT END OF
PERIOD (000,000
OMITTED).............. $1,535 $1,626 $1,548 $1,530 $1,265 $1,382 $1,139 $1,177 $1,186 $1,155 $69 $15
- ---------
<FN>
<F1>Annualized.
<F2>Not annualized.
<F3>Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to January
2, 1991). If the charge had been included, the results would have been lower.
<F4>For the periods subsequent to December 31, 1992, the per share data is based on average shares outstanding for both Class A
and Class B shares.
<F5>For the year ended December 31, 1994, the per share distribution in excess of net investment income was $0.0004 and $0.0003
for Class A and Class B shares, respectively.
<F6>The distributor did not impose a portion of its distribution fee, attributable to Class A shares, for the periods indicated.
Furthermore, for the year ended December 31, 1993, net investment income for Class A shareholders includes $0.12 per share
applicable to nonrecurring dividend income. Had such dividend not been included and the management fee related to such income
and a portion of the distribution fee related to Class A shareholders not been waived, the net investment income per share and
the ratios would have been:
Net investment income $0.24 $ 0.27 -- -- -- -- -- -- -- -- -- --
RATIOS (TO AVERAGE NET ASSETS):
Expenses 0.81% 0.74% -- -- -- -- -- -- -- -- -- --
Net investment
income 2.10% 2.05% -- -- -- -- -- -- -- -- -- --
For the year ended December 31, 1993, net investment income for Class B shareholders includes $0.007 per share applicable to
nonrecurring dividend income. Had such dividend not been included and the management fee related to such income not been
waived, the net investment income share and the ratios would have been:
Net investment
income -- -- -- -- -- -- -- -- -- -- -- $ 0.03
RATIOS (TO AVERAGE NET ASSETS):
Expenses -- -- -- -- -- -- -- -- -- -- -- 1.66%<F1>
Net investment
income -- -- -- -- -- -- -- -- -- -- -- 0.29%<F1>
<F7>For the year ended December 31, 1988, the per share distribution from paid-in capital was $0.001.
<F8>For the year ended December 31, 1991, the per share distribution in excess of net realized gain on investments was $0.0041.
<F9>For the period from the commencement of offering of Class B shares, September 7, 1993 to December 31, 1993.
</TABLE>
4. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES -- The Fund's investment objectives are to provide
reasonable current income and long-term growth of capital and income. Any
investment involves risk and there can be no assurance that the Fund will
achieve its investment objectives.
INVESTMENT POLICIES -- The Fund is believed to constitute a conservative medium
for that portion of an investor's capital which he wishes to have invested in
securities considered to be of high or improving investment quality. The term
"conservative medium" indicates that the Fund attempts to exercise prudence,
discretion and intelligence in the selection of investments with due regard for
both probable income and probable safety of capital. The words "high investment
quality" reflect the intention of the Fund to avoid the acquisition of
speculative securities or those of doubtful character even if immediate
prospects are tempting.
The assets of the Fund are normally invested in common stocks or securities
convertible into common stocks. However, the Fund may hold its assets in cash or
invest in commercial paper, repurchase agreements or other forms of debt
securities either to provide reserves for future purchases of common stock or as
a defensive measure in certain economic environments. Since shares of the Fund
represent an investment in securities with fluctuating market prices,
shareholders should understand that the value of shares of the Fund will vary as
the aggregate value of the Fund's portfolio securities increases or decreases.
Moreover, the amount of dividends the Fund pays to its shareholders will vary in
relation to the amount of dividends and interest the Fund receives from its
portfolio securities.
FOREIGN SECURITIES: The Fund may invest up to 35% (and expects generally to
invest between 5% and 15%) of its total assets in foreign securities which are
not traded on a U.S. exchange (not including American Depositary Receipts
("ADRs")). Investing in securities of foreign issuers generally involves risks
not ordinarily associated with investing in securities of domestic issuers.
These include changes in currency rates, exchange control regulations,
governmental administration or economic or monetary policy (in the United States
or abroad) or circumstances in dealings between nations. Costs may be incurred
in connection with conversions between various currencies. Special
considerations may also include more limited information about foreign issuers,
higher brokerage costs, different accounting standards and thinner trading
markets. Foreign securities markets may also be less liquid, more volatile and
less subject to government supervision than in the United States. Investments in
foreign countries could be affected by other factors including expropriation,
confiscatory taxation and potential difficulties in enforcing contractual
obligations and could be subject to extended settlement periods. The Fund may
hold foreign currency received in connection with investments in foreign
securities when, in the judgment of the Adviser, it would be beneficial to
convert such currency into U.S. dollars at a later date, based on anticipated
changes in the relevant exchange rate. The Fund may also hold foreign currency
in anticipation of purchasing foreign securities.
AMERICAN DEPOSITARY RECEIPTS: The Fund may invest in ADRs, which are
certificates issued by a U.S. depository (usually a bank) and represent a
specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. Because ADRs trade on United States securities
exchanges, the Adviser does not treat them as foreign securities. However, they
are subject to many of the risks of foreign securities such as changes in
exchange rates and more limited information about foreign issuers. See the
Statement of Additional Information for further discussion of foreign securities
and the holding of foreign currency, as well as the associated risks.
EMERGING MARKET SECURITIES: Consistent with the Fund's investment objective and
policies and its ability to invest in foreign securities, the Fund may invest in
countries or regions with relatively low gross national product per capita
compared to the world's major economies, and in countries or regions with the
potential for rapid economic growth (emerging markets). Emerging markets will
include any country: (i) having an "emerging stock market" as defined by the
International Finance Corporation; (ii) with low- to middle-income economies
according to the International Bank for Reconstruction and Development (the
World Bank); (iii) listed in World Bank publications as developing; or (iv)
determined by the Adviser to be an emerging market as defined above. The Fund
may invest in securities of: (i) companies the principal securities trading
market for which is an emerging market country; (ii) companies organized under
the laws of, and with a principal office in, an emerging market country, (iii)
companies whose principal activities are located in emerging market countries;
or (iv) companies traded in any market that derive 50% or more of their total
revenue from either goods or services produced in an emerging market or sold in
an emerging market.
The risks of investing in foreign securities may be intensified in the case of
investments in emerging markets. Securities of many issuers in emerging markets
may be less liquid and more volatile than securities of comparable domestic
issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Fund is uninvested and no
return is earned thereon. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of the portfolio security, or, if the Fund has entered into a
contract to sell the security, in possible liability to the purchaser. Certain
markets may require payment for securities before delivery. Securities prices in
emerging markets can be significantly more volatile than in the more developed
nations of the world, reflecting the greater uncertainties of investing in less
established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, presenting the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increses in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements.
Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation of capital, as well as by the application to the Fund of any
restrictions on investments.
Investment in certain foreign emerging market debt obligations may be restricted
or controlled to varying degrees. These restrictions or controls may at times
preclude investment in certain foreign emerging market debt obligations and
increase the expenses of the Fund.
REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements in order to
earn additional income on available cash or as a temporary defensive measure.
Under a repurchase agreement, the Fund acquires securities subject to the
seller's agreement to repurchase at a specified time and price. If the seller
becomes subject to a proceeding under the bankruptcy laws or its assets are
otherwise subject to a stay order, the Fund's right to liquidate the securities
may be restricted (during which time the value of the securities could decline).
As discussed in the Statement of Additional Information, the Fund has adopted
certain procedures intended to minimize any risk.
RESTRICTED SECURITIES: The Fund may purchase securities that are not registered
("restricted securities") under the Securities Act of 1933, as amended (the
"1933 Act"), but can be offered and sold to "qualified institutional buyers"
under Rule 144A under the 1933 Act ("Rule 144A"). However, the Fund will not
invest more than 15% of its net assets in illiquid investments, which include
repurchase agreements maturing in more than seven days and restricted
securities, unless the Board of Trustees determines, based upon a continuing
review of the trading markets for the specific restricted security, that such
restricted securities are liquid. The Board of Trustees has adopted guidelines
and has delegated to the Adviser the daily function of determining and
monitoring liquidity of restricted securities available pursuant to Rule 144A.
The Board, however, retains sufficient oversight and is ultimately responsible
for the determinations. Since it is not possible to predict with assurance
exactly how this market for Rule 144A restricted securities will develop, the
Board will carefully monitor the Fund's investments in these securities,
focusing on such important factors, among others, as valuation, liquidity, and
availability of information. Investments in restricted securities could have the
effect of increasing the level of illiquidity in the Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities. Subject to the Fund's 15% limitation on investments
in illiquid investments, the Fund may also invest in restricted securities that
may not be sold under Rule 144A.
"WHEN-ISSUED" SECURITIES: In order to help ensure the availability of suitable
securities for its portfolio, the Fund may purchase securities on a "when
issued" or on a "forward delivery" basis, which means that the securities will
be delivered to the Fund at a future date usually beyond customary settlement
time. In general, the Fund does not pay for such securities until received and
does not start earning interest or dividends on the securities until the
contractual settlement date. In order to invest its assets immediately, while
awaiting delivery of securities purchased on such bases, the Fund will normally
invest in cash, short-term money market instruments and high grade debt
securities. See the Statement of Additional Information for a further discussion
of the nature of such transactions and risks associated therewith.
ZERO COUPON BONDS: The Fund may also invest in securities which are convertible
into zero coupon bonds. Zero coupon bonds are debt obligations which are issued
or purchased at a significant discount from face value. The discount
approximates the total amount of interest the bonds will accrue and compound
over the period until maturity, at a rate of interest reflecting the market rate
of the security at the time of issuance. Zero coupon bonds do not require the
periodic payment of interest. Such investments benefit the issuer by mitigating
its need for cash to meet debt service, but also require a higher rate of return
to attract investors who are willing to defer receipt of such cash. Such
investments may experience greater volatility in market value due to changes in
interest rates than debt obligations which make regular payments of interest.
The Fund will accrue income on such investments for tax and accounting purposes,
which is distributable to shareholders and which, because no cash is received at
the time of accrual, may require the liquidation of other portfolio securities
to satisfy the Fund's distribution obligations.
OPTIONS ON SECURITIES: The Fund may write (sell) covered put and call options on
securities and purchase put and call options on securities. The Fund will write
such options for the purpose of increasing its return and/or to protect the
value of its portfolio. In particular, where the Fund writes an option which
expires unexercised or is closed out by the Fund at a profit, it will retain the
premium paid for the option, which will increase its gross income and will
offset in part the reduced value of a portfolio security in connection with
which the option may have been written or the increased cost of portfolio
securities to be acquired. In contrast, however, if the price of the security
underlying the option moves adversely to the Fund's position, the option may be
exercised and the Fund will be required to purchase or sell the security at a
disadvantageous price, resulting in losses which may only be partially offset by
the amount of the premium. The Fund may also write combinations of put and call
options on the same security, known as "straddles." Such transactions can
generate additional premium income but also present increased risk.
The Fund may purchase put or call options in anticipation of declines in the
value of portfolio securities or increases in the value of securities to be
acquired. In the event that such declines or increases occur, the Fund may be
able to offset the resulting adverse effect on its portfolio, in whole or in
part, through the options purchased. The risk assumed by the Fund in connection
with such transactions is limited to the amount of the premium and related
transaction costs associated with the option, although the Fund may be required
to forfeit such amounts in the event that the prices of securities underlying
the options do not move in the direction or to the extent anticipated.
OPTIONS ON STOCK INDICES: The Fund may write (sell) covered call and put options
and purchase call and put options on stock indices. The Fund may write options
on stock indices for the purpose of increasing its gross income and to protect
its portfolio against declines in the value of securities it owns or increases
in the value of securities to be acquired. When the Fund writes an option on a
stock index, and the value of the index moves adversely to the holder's
position, the option will not be exercised, and the Fund will either close out
the option at a profit or allow it to expire unexercised. The Fund will thereby
retain the amount of the premium, which will increase its gross income and
offset part of the reduced value of portfolio securities or the increased cost
of securities to be acquired. Such transactions, however, will constitute only
partial hedges against adverse price fluctuations, since any such fluctuations
will be offset only to the extent of the premium received by the Fund for the
writing of the option. In addition, if the value of an underlying index moves
adversely to the Fund's option position, the option may be exercised, and the
Fund will experience a loss which may only be partially offset by the amount of
the premium received.
The Fund may also purchase put or call options on stock indices in order,
respectively, to hedge its investments against a decline in value or to attempt
to reduce the risk of missing a market or industry segment advance. The Fund's
possible loss in either case will be limited to the premium paid for the option,
plus related transaction costs.
OPTIONS ON FOREIGN CURRENCIES: The Fund may also purchase and write options on
foreign currencies ("Options on Foreign Currencies") for the purpose of
protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. As in the
case of other types of options, however, the writing of an Option on Foreign
Currency will constitute only a partial hedge, up to the amount of the premium
received, and the Fund may be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
Option on Foreign Currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to the Fund's position, it may forfeit the entire amount of the premium paid for
the option plus related transaction costs. The Fund may also choose to, or be
required to, receive delivery of the foreign currencies underlying Options on
Foreign Currencies it has entered into. Under certain circumstances, such as
where the Adviser believes that the applicable exchange rate is unfavorable at
the time the currencies are received or the Adviser anticipates, for any other
reason, that the exchange rate will improve, the Fund may hold such currencies
for an indefinite period of time. See "Investment Objectives and Policies --
Foreign Securities" in the Statement of Additional Information for information
on the risks associated with holding foreign currency.
FUTURES CONTRACTS: The Fund may enter into stock index and foreign currency
futures contracts (collectively "Futures Contracts"). Such transactions may be
entered into for hedging purposes, in order to protect the Fund's current or
intended investments from the effects of changes in exchange rates or declines
in the stock market, and for non-hedging purposes subject to applicable law. The
Fund will incur brokerage fees when it purchases and sells Futures Contracts,
and will be required to maintain margin deposits. In addition, Futures Contracts
entail risks. Although the Adviser believes that use of such contracts will
benefit the Fund, if its investment judgment about the general direction of
exchange rates or the stock market is incorrect, the Fund's overall performance
may be poorer than if it had not entered into any such contract and the Fund may
realize a loss. The Fund will not enter into any Futures Contract if immediately
thereafter the value of securities and other obligations underlying all such
Futures Contracts would exceed 50% of the value of its total assets.
OPTIONS ON FUTURES CONTRACTS: The Fund may purchase and write options on Futures
Contracts ("Options on Futures Contracts") in order to protect against declines
in the values of portfolio securities or against increases in the cost of
securities to be acquired and for non-hedging purposes, subject to applicable
law, which involves greater risk and may result in losses which are not offset
by gains on other portfolio assets. Purchases of Options on Futures Contracts
may present less risk in hedging the Fund's portfolio than the purchase or sale
of the underlying Futures Contracts since the potential loss is limited to the
amount of the premium plus related transaction costs, although it may be
necessary to exercise the option to realize any profit, which results in the
establishment of a futures position. The writing of Options on Futures
Contracts, however, does not present less risk than the trading of Futures
Contracts and will constitute only a partial hedge, up to the amount of the
premium received. In addition, if an option is exercised, the Fund may suffer a
loss on the transaction.
In order to assure that the Fund will not be deemed to be a "commodity pool" for
purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission (the "CFTC") require that the Fund enter into transactions in
Futures Contracts and Options on Futures Contracts only (i) for bona fide
hedging purposes (as defined in CFTC regulations), or (ii) for non-hedging
purposes, provided that the aggregate initial margin and premiums on such
non-hedging positions does not exceed 5% of the liquidation value of the Fund's
assets. In addition, the Fund must comply with the requirements of various state
securities laws in connection with such transactions.
FORWARD CONTRACTS ON FOREIGN CURRENCY: The Fund may enter into forward foreign
currency exchange contracts for the purchase or sale of a fixed quantity of a
foreign currency at a future date ("Forward Contracts"). The Fund may enter into
Forward Contracts for hedging purposes as well as for non-hedging purposes
(i.e., speculative purposes). By entering into transactions in Forward
Contracts, for hedging purposes, the Fund may be required to forego the benefits
of advantageous changes in exchange rates and, in the case of Forward Contracts
entered into for non-hedging purposes, the Fund may sustain losses which will
reduce its gross income. Such transactions, therefore, could be considered
speculative. Forward Contracts are traded over-the-counter and not on organized
commodities or securities exchanges. As a result, Forward Contracts operate in a
manner distinct from exchange-traded instruments, and their use involves certain
risks beyond those associated with transactions in Futures Contracts or options
traded on exchanges. The Fund may choose to, or be required to, receive delivery
of the foreign currencies underlying Forward Contracts it has entered into.
Under certain circumstances, such as where the Adviser believes that the
applicable exchange rate is unfavorable at the time the currencies are received
or the Adviser anticipates, for any other reason, that the exchange rate will
improve, the Fund may hold such currencies for an indefinite period of time. The
Fund may also enter into a Forward Contract on one currency to hedge against
risk of loss arising from fluctuations in the value of a second currency
(referred to as a "cross hedge") if, in the judgment of the Adviser, a
reasonable degree of correlation can be expected between movements in the values
of the two currencies. The Fund has established procedures consistent with
statements of the SEC and its staff regarding the use of Forward Contracts by
registered investment companies, which requires the use of segregated assets or
"cover" in connection with the purchase and sale of such contracts. See
"Investment Objective and Policies -- Foreign Securities" in the Statement of
Additional Information for information on the risks associated with holding
foreign currency.
RISKS OF OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS: Although the Fund
will enter into certain transactions in options, Futures Contracts, Options on
Futures Contracts, Forward Contracts and Options on Foreign Currencies for
hedging purposes, such transactions nevertheless involve certain risks. For
example, a lack of correlation between the instrument underlying an option or
Futures Contract and the assets being hedged, or unexpected adverse price
movements, could render the Fund's hedging strategy unsuccessful and could
result in losses. The Fund also may enter into transactions in such instruments
for other than hedging purposes, subject to applicable law, which involves
greater risk. In particular, such transactions may result in losses for the Fund
which are not offset by gains on other portfolio positions, thereby reducing
gross income. In addition, foreign currency markets may be extremely volatile
from time to time. There also can be no assurance that a liquid secondary market
will exist for any contract purchased or sold, and the Fund may be required to
maintain a position until exercise or expiration, which could result in losses.
The Statement of Additional Information contains a description of the nature and
trading mechanics of options, Futures Contracts, Options on Futures Contracts,
Forward Contracts and Options on Foreign Currencies, and includes a discussion
of the risks related to transactions therein.
Transactions in Forward Contracts may be entered into only in the
over-the-counter market. Futures Contracts and Options on Futures Contracts may
be entered into on U.S. exchanges regulated by the Commodity Futures Trading
Commission and on foreign exchanges. In addition, the securities underlying
options, Futures Contracts and Options on Futures Contracts traded by the Fund
will include both domestic and foreign securities.
PORTFOLIO TRADING: The primary consideration in placing portfolio security
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Consistent with the foregoing primary consideration,
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (the "NASD") and such other policies as the Trustees may determine, the
Adviser may consider sales of shares of the Fund and of the other investment
company clients of MFD as a factor in the selection of broker-dealers to execute
the Fund's portfolio transactions. From time to time, the Adviser may direct
certain portfolio transactions to broker-dealer firms which, in turn, have
agreed to pay a portion of the Fund's operating expenses (e.g., fees charged by
the custodian of the Fund's assets). For a further discussion of portfolio
trading, see "Portfolio Transactions and Brokerage Commissions" in the Statement
of Additional Information.
--------------
The investment objectives and policies described above are not fundamental and
may be changed without shareholder approval.
The Statement of Additional Information includes a discussion of other
investment policies and a listing of specific investment restrictions which
govern the Fund's investment policies. The specific investment restrictions
listed in the Statement of Additional Information may be changed without
shareholder approval unless indicated otherwise (see "Investment Restrictions"
in the Statement of Additional Information). The Fund's investment limitations
and policies are adhered to at the time of purchase or utilization of assets; a
subsequent change in circumstances will not be considered to result in a
violation of policy.
5. MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Adviser manages the Fund pursuant to an Investment
Advisory Agreement, dated May 20, 1982 (the "Advisory Agreement"). The Adviser
provides the Fund with overall investment advisory and administrative services,
as well as general office facilities. Kevin R. Parke, a Senior Vice President of
the Adviser, and John D. Laupheimer, Jr., a Senior Vice President of the
Adviser, have been the Fund's portfolio managers since 1992. Mitchell D. Dynan,
a Vice President of the Adviser, has also been a portfolio manager of the Fund
since March, 1995. Mr. Parke has been employed by the Adviser since 1985. Mr.
Dynan has been employed by the Adviser since 1986. Mr. Laupheimer has been
employed by the Adviser since 1981. Subject to such policies as the Trustees may
determine, the Adviser makes investment decisions for the Fund. For these
services and facilities, the Adviser receives a management fee, computed and
paid monthly on the basis of a formula based upon a percentage of the Fund's
average daily net assets plus a percentage of the Fund's gross income (i.e.,
income other than gains from the sale of securities), in each case on an
annualized basis for the Fund's then-current fiscal year. The applicable
percentages are reduced as assets and income reach the following levels:
ANNUAL RATE OF MANAGEMENT FEE ANNUAL RATE OF MANAGEMENT FEE
BASED ON AVERAGE DAILY NET ASSETS BASED ON GROSS INCOME
- --------------------------------- -----------------------------
0.30% of the first $200 million 6.67% of the first $6 million
0.24% of the next $300 million 5.33% of the next $9 million
0.12% of average daily net assets 2.67% of gross income in
in excess of $500 million excess of $15 million
For the Fund's fiscal year ended December 31, 1994, MFS received management fees
under the Advisory Agreement of $4,385,702, equivalent on an annualized basis to
0.27% of the Fund's average daily net assets.
Management fees received by MFS for the Fund's fiscal year ended December 31,
1994 were comprised of $2,710,161 based on average daily net asset and
$1,776,427 based on gross income. However the Advisory Agreement provides that
the compensation of the Adviser will be reduced by an annual sum representing
the Fund's share of the fair value of the use of office furniture, furnishings
and equipment purchased over the years with funds furnished by the Fund and
Massachusetts Investors Growth Stock Fund as part of shared expenses. The total
annual use value of this property for the period ending December 31, 1994 has
been determined pursuant to a formula devised by an independent supplier to be
$100,886 for the Fund.
MFS also serves as investment adviser to each of the other funds in the MFS
Family of Funds (the "MFS Funds"), to MFS(R) Municipal Income Trust, MFS
Multimarket Income Trust, MFS Government Markets Income Trust, MFS Intermediate
Income Trust, MFS Charter Income Trust, MFS Special Value Trust, MFS Union
Standard Trust, MFS Institutional Trust, MFS Variable Insurance Trust, MFS/Sun
Life Series Trust, Sun Growth Variable Annuity Fund, Inc. and seven variable
accounts, each of which is a registered investment company established by Sun
Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)") in
connection with the sale of Compass-2 and Compass-3 combination fixed/variable
annuity contracts. MFS and its wholly owned subsidiary, MFS Asset Management,
Inc., provide investment advice to substantial private clients.
MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924, and the
founding of the Fund as the first mutual fund in the United States. Net assets
under the management of the MFS organization were approximately $35 billion on
behalf of approximately 1.6 million investor accounts as of March 31, 1995. MFS
is a subsidiary of Sun Life of Canada (U.S.) which in turn is a subsidiary of
Sun Life Assurance Company of Canada ("Sun Life"). The Directors of MFS are A.
Keith Brodkin, Jeffrey L. Shames, Arnold D. Scott, John R. Gardner and John D.
McNeil. Mr. Brodkin is the Chairman, Mr. Shames is the President and Mr. Scott
is the Secretary and a Senior Executive Vice President of MFS. Messrs. McNeil
and Gardner are the Chairman and President, respectively, of Sun Life. Sun Life,
a mutual life insurance company, is one of the largest international life
insurance companies and has been operating in the United States since 1895,
establishing a headquarters office here in 1973. The executive officers of MFS
report to the Chairman of Sun Life.
A. Keith Brodkin, the Chairman and a Director of MFS, is also the Chairman,
President and a Trustee of the Fund. W. Thomas London, Stephen E. Cavan, James
O. Yost and James R. Bordewick, Jr., all of whom are officers of MFS, are
officers of the Fund.
DISTRIBUTOR -- MFD, a wholly owned subsidiary of MFS, is the distributor of
shares of the Fund and also serves as distributor for each of the other MFS
Funds.
SHAREHOLDER SERVICING AGENT -- MFS Service Center, Inc. ("Shareholder Servicing
Agent"), a wholly owned subsidiary of MFS, performs transfer agency, certain
dividend disbursing agency and other services for the Fund.
6. INFORMATION CONCERNING SHARES OF THE FUND
PURCHASES
Shares of the Fund may be purchased at the public offering price through any
securities dealer, certain banks and other financial institutions having selling
agreements with MFD. Non-securities dealer financial institutions will receive
transaction fees that are the same as commission fees to dealers. Securities
dealers and other financial institutions may also charge their customers fees
relating to investments in the Fund.
The Fund offers two classes of shares which bear sales charges and distribution
fees in different forms and amounts:
CLASS A SHARES. Class A shares are offered at net asset value per share plus an
initial sales charge (or CDSC in the case of certain purchases of $1 million or
more) as follows:
- ------------------------------------------------------------------------------
SALES CHARGE* AS DEALER
PERCENTAGE OF ALLOWANCE
----------------- AS A
NET PERCENTAGE OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
Less than $50,000 ........................ 5.75% 6.10% 5.00%
$50,000 but less than $100,000 ........... 4.75 4.99 4.00
$100,000 but less than $250,000 .......... 4.00 4.17 3.20
$250,000 but less than $500,000 .......... 2.95 3.04 2.25
$500,000 but less than $1,000,000 ........ 2.20 2.25 1.70
$1,000,000 or more ....................... None** None** See Below**
- ---------
*Because of rounding in the calculation of offering price, actual sales charges
may be more or less than those calculated using the percentages above.
**A CDSC may apply in certain circumstances. MFD will pay a commission on
purchases of $1 million or more (see below).
No sales charge is payable at the time of purchase of Class A shares on
investments of $1 million or more. However, a CDSC shall be imposed on such
investments in the event of a share redemption within 12 months following the
share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the total cost of such shares.
In determining whether a CDSC on such Class A shares is payable, and, if so, the
amount of the charge, it is assumed that shares not subject to the CDSC are the
first redeemed followed by other shares held for the longest period of time. All
investments made during a calendar month, regardless of when during the month
the investment occurred, will age one month on the last day of that month and
each subsequent month. Except as noted below, the CDSC on Class A shares will be
waived in the case of: (i) exchanges (except that if the shares acquired by
exchange were then redeemed within 12 months of the initial purchase (other than
in connection with subsequent exchanges to other MFS Funds), the charge would
not be waived); (ii) distributions to participants from a retirement plan
qualified under section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), (a "Retirement Plan"), due to: (a) a loan from the plan
(repayments of loans, however, will constitute new sales for purposes of
assessing the CDSC); (b) "financial hardship" of the participant in the plan, as
that term is defined in Treasury Regulation Section 1.401(k)-1(d)(2), as amended
from time to time; or (c) the death of a participant in such a plan; (iii)
distributions from a 403(b) plan or an Individual Retirement Account ("IRA") due
to death, disability, or attainment of age 59 1/2; (iv) tax-free returns of
excess contributions to an IRA; (v) distributions by other employee benefit
plans to pay benefits; and (vi) certain involuntary redemptions and redemptions
in connection with certain automatic withdrawals from a qualified Retirement
Plan. The CDSC on Class A shares will not be waived, however, if the Retirement
Plan withdraws from the Fund except if that Retirement Plan has invested its
assets in Class A shares of one or more of the MFS Funds for more than 10 years
from the later to occur of (i) January 1, 1993 or (ii) the date such Retirement
Plan first invests its assets in Class A shares of one or more of the MFS Funds,
the CDSC on Class A shares will be waived in the case of a redemption of all of
the Retirement Plan's shares (including shares of any other class) in all MFS
Funds (i.e., all the assets of the Retirement Plan invested in the MFS Funds are
withdrawn), unless, immediately prior to the redemption, the aggregate amount
invested by the Retirement Plan in Class A shares of the MFS Funds (excluding
the reinvestment of distributions) during the prior four-year period equals 50%
or more of the total value of the Retirement Plan's assets in the MFS Funds, in
which case the CDSC will not be waived. The CDSC on Class A shares will be
waived upon redemption by a Retirement Plan where the redemption proceeds are
used to pay expenses of the Retirement Plan or certain expenses of participants
under the Retirement Plan (e.g., participant account fees), provided that the
Retirement Plan's sponsor subscribes to the MFS Fundamental 401(k) Plan\s/\m/ or
another similar recordkeeping system made available by the Shareholder Servicing
Agent. The CDSC on Class A shares will be waived upon the transfer of
registration from shares held by a Retirement Plan through a single account
maintained by the Shareholder Servicing Agent to multiple Class A share accounts
maintained by the Shareholder Servicing Agent on behalf of individual
participants in the Retirement Plan, provided that the Retirement Plan's sponsor
subscribes to the MFS Fundamental 401(k) Plan \s/\m/ or another similar
recordkeeping system made available by the Shareholder Servicing Agent. Any
applicable CDSC will be deferred upon an exchange of Class A shares of the Fund
for units of participation of the MFS Fixed Fund (a bank collective investment
fund) (the "Units"), and the CDSC will be deducted from the redemption proceeds
when such Units are subsequently redeemed (assuming the CDSC is then payable).
No CDSC will be assessed upon an exchange of Units for Class A shares of the
Fund. For purposes of calculating the CDSC payable upon redemption of Class A
shares of the Fund or Units acquired pursuant to one or more exchanges, the
period during which the Units are held will be aggregated with the period during
which the Class A shares are held. MFD shall receive all CDSCs which it intends
to apply for the benefit of the Fund.
MFD allows discounts to dealers (which are alike for all dealers) from the
applicable public offering price, as shown in the above table. In the case of
the maximum sales charge, the dealer retains 5% and MFD retains approximately
3/4 of 1% of the public offering price. The sales charge may vary depending on
the number of shares of the Fund as well as certain other MFS Funds and other
funds owned or being purchased, the existence of an agreement to purchase
additional shares during a 13-month period (or a 36-month period for purchases
of $1 million or more) or other special purchase programs. A description of the
Right of Accumulation, Letter of Intent and Group Purchases privileges by which
the sales charge may be reduced is set forth in the Statement of Additional
Information. In addition, MFD will pay a commission to dealers who initiate and
are responsible for purchases of $1 million or more as follows: 1.00% on sales
up to $5 million, plus 0.25% on the amount in excess of $5 million. Purchases of
$1 million or more for each shareholder account will be aggregated over a
12-month period (commencing from the date of the first such purchase) for
purposes of determining the level of commissions to be paid during that period
with respect to such account.
Class A shares of the Fund may be sold at their net asset value to the officers
of the Fund, to any of the subsidiary companies of Sun Life, to eligible
Directors, officers, employees (including retired employees) and agents of MFS,
Sun Life or any of their subsidiary companies, to any trust, pension,
profit-sharing or any other benefit plan for such persons, to any trustees and
retired trustees of any investment company for which MFD serves as distributor
or principal underwriter, and to certain family members of such persons and
their spouses, provided the shares will not be resold except to the Fund. Class
A shares of the Fund may be sold at net asset value to any employee, partner,
officer or trustee of any sub-adviser to any MFS Fund and to certain family
members of such individuals and their spouses, or to any trust, pension,
profit-sharing or other retirement plan for the sole benefit of such employee or
representative, provided such shares will not be resold except to the Fund.
Class A shares of the Fund may also be sold at their net asset value to any
employee or registered representative of any dealer or other financial
institution which has a sales agreement with MFD or its affiliates, to certain
family members of such employees or representatives and their spouses, or to any
trust, pension, profit-sharing or other retirement plan for the sole benefit of
such employee or representative, as well as to clients of the MFS Asset
Management, Inc. Class A shares may be sold at net asset value, subject to
appropriate documentation, through a dealer where the amount invested represents
redemption proceeds from a registered open-end management investment company not
distributed or managed by MFD or its affiliates if: (i) the redeemed shares were
subject to an initial sales charge or a deferred sales charge (whether or not
actually imposed); (ii) such redemption has occurred no more than 90 days prior
to the purchase of Class A shares of the Fund; and (iii) the Fund, MFD or its
affiliates have not agreed with such company or its affiliates, formally or
informally, to sell Class A shares at net asset value or provide any other
incentive with respect to such redemption and sale. Class A shares of the Fund
may also be sold at net asset value where the amount invested represents
redemption proceeds from the MFS Fixed Fund. In addition, Class A shares of the
Fund may be sold at net asset value in connection with the acquisition or
liquidation of the assets of other investment companies or personal holding
companies. Insurance company separate accounts may purchase Class A shares of
the Fund at their net asset value. Class A shares of the Fund may be purchased
at net asset value by retirement plans whose third party administrators have
entered into an administrative services agreement with MFD or one or more of its
affiliates to perform certain administrative services, subject to certain
operational requirements specified from time to time by MFD or one of more of
its affiliates. Class A shares of the Fund may be purchased at net asset value
through certain broker-dealers and other financial institutions which have
entered into an agreement with MFD, which includes a requirement that such
shares be sold for the benefit of clients participating in a "wrap account" or a
similar program under which such clients pay a fee to such broker-dealer or
other financial institution.
Class A shares of the Fund may be purchased at net asset value by certain
retirement plans subject to the Employee Retirement Income Security Act of 1974,
as amended, subject to the following:
(i) The sponsoring organization must demonstrate to the satisfaction of MFD
that either (a) the employer has at least 25 employees or (b) the aggregate
purchases by the retirement plan of Class A shares of the MFS Funds will be
in an amount of at least $250,000 within a reasonable period of time, as
determined by MFD in its sole discretion; and
(ii) a CDSC of 1% will be imposed on such purchases in the event of certain
redemption transactions within 12 months following such purchases.
Dealers who initiate and are responsible for purchases of Class A shares of the
Fund in this manner will be paid a commission by MFD, as follows: 1.00% on sales
up to $5 million, plus 0.25% on the amount in excess of $5 million; provided,
however, that MFD may pay a commission, on sales in excess of $5 million to
certain retirement plans, of 1.00% to certain dealers which, at MFD's
invitation, enter into an agreement with MFD in which the dealer agrees to
return any commission paid to it on the sale (or on a pro rata portion thereof)
if the shareholder redeems his or her shares within a period of time after
purchase as specified by MFD. Purchases of $1 million or more for each
shareholder account will be aggregated over a 12-month period (commencing from
the date of the first such purchase) for purposes of determining the level of
commissions to be paid during that period with respect to such account. Class A
shares of the Fund may be sold at net asset value through the automatic
reinvestment of Class A and Class B distributions which constitute required
withdrawals from qualified retirement plans. Furthermore, Class A shares of the
Fund may be sold at net asset value through the automatic reinvestment of
distributions of dividends and capital gains of other MFS Funds pursuant to the
Distribution Investment Program (see "Shareholder Services" in the Statement of
Additional Information).
Class A shares of the Fund may be purchased at net asset value by retirement
plans qualified under Section 401(k) of the Code through certain broker-dealers
and other financial institutions which have entered into an agreement with MFD
which includes certain minimum size qualifications for such retirement plans and
provides that the broker-dealer or other financial institution will perform
certain administrative services with respect to the plan's account.
CLASS B SHARES: Class B shares are offered at net asset value without an initial
sales charge but subject to a CDSC as follows:
YEAR OF CONTINGENT
REDEMPTION DEFERRED SALES
AFTER PURCHASE CHARGE
- -------------- -------------
First .......................................................... 4%
Second ......................................................... 4%
Third .......................................................... 3%
Fourth ......................................................... 3%
Fifth .......................................................... 2%
Sixth .......................................................... 1%
Seventh and following .......................................... 0%
For Class B shares purchased prior to January 1, 1993, the Fund imposes a CDSC
as a percentage of the original purchase price or redemption proceeds as
applicable:
YEAR OF CONTINGENT
REDEMPTION DEFERRED SALES
AFTER PURCHASE CHARGE
- -------------- -------------
First .......................................................... 6%
Second ......................................................... 5%
Third .......................................................... 4%
Fourth ......................................................... 3%
Fifth .......................................................... 2%
Sixth .......................................................... 1%
Seventh and following .......................................... 0%
No CDSC is paid upon an exchange of shares. For purposes of calculating the CDSC
upon redemption of shares acquired in an exchange, the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares. See "Redemptions and Repurchases --
Contingent Deferred Sales Charge" for further discussion of the CDSC.
The CDSC on Class B shares will be waived upon the death or disability (as
defined in Section 72(m)(7) of the Code) of any investor, provided the account
is registered (i) in the case of a deceased individual, solely in the deceased
individual's name, (ii) in the case of a disabled individual, solely or jointly
in the disabled individual's name or (iii) in the name of a living trust for the
benefit of the deceased or disabled individual. The CDSC on Class B shares will
also be waived in the case of redemptions of shares of the Fund pursuant to a
systematic withdrawal plan. In addition, the CDSC on Class B shares will be
waived in the case of distributions from an IRA, SAR-SEP or any other retirement
plan qualified under Section 401(a) or 403(b) of the Code due to death or
disability, or in the case of required minimum distributions from any such
retirement plan due to attainment of age 70 1/2. The CDSC on Class B shares will
be waived in the case of distributions from a retirement plan qualified under
Sections 401(a) of the Code due to (i) returns of excess contribution to the
plan, (ii) retirement of a participant in the plan, (iii) a loan from the plan
(repayments of loans, however, will constitute new sales for purposes of
assessing the CDSC), (iv) "financial hardship" of the participant in the plan,
as that term is defined in Treasury Regulation Section 1.401(k)-1(d)(2), as
amended from time to time, and (v) termination of employment of the participant
in the plan (excluding, however, a partial or other termination of the plan).
The CDSC on Class B shares will be waived in the case of distributions from a
SAR-SEP due to (i) returns of excess contributions to the plan, (ii) retirement
of participant in the plan and (iii) termination of employment of the
participant in the plan (excluding, however, a partial or other termination of
the plan). The CDSC on Class B shares will also be waived upon redemption by (i)
officers of the Fund, (ii) any of the subsidiary companies of Sun Life, (iii)
eligible Directors, officers, employees (including retired employees) and agents
of MFS, Sun Life or any of their subsidiary companies, (iv) any trust, pension,
profit-sharing or any other benefit plan for such persons, (v) any trustees and
retired trustees of any investment company for which MFD serves as distributor
or principal underwriter, and (vi) certain family members of such individuals
and their spouses, provided in each case that the shares will not be resold
except to the Fund. The CDSC on Class B shares will also be waived in the case
of redemptions by any employee or registered representative of any dealer or
other financial institution which has a sales agreement with MFD, by certain
family members of any such employee or representative and their spouses, by any
trust, pension, profit-sharing or other retirement plan for the sole benefit of
such employee or representative and by clients of the MFS Asset Management, Inc.
A retirement plan qualified under section 401(a) of the Code (a "Retirement
Plan") that has invested its assets in Class B shares of one or more of the MFS
Funds for more than 10 years from the later to occur of (i) January 1, 1993 or
(ii) the date the Retirement Plan first invests its assets in Class B shares of
one or more of the MFS Funds will have the CDSC on Class B shares waived in the
case of a redemption of all the Retirement Plan's shares (including any shares
of any other class) in all MFS Funds (i.e., all the assets of the Retirement
Plan invested in the MFS Funds are withdrawn), except that if, immediately prior
to the redemption, the aggregate amount invested by the Retirement Plan in Class
B shares of the MFS Funds (excluding the reinvestment of distributions) during
the prior four year period equals 50% or more of the total value of the
Retirement Plan's assets in the MFS Funds, then the CDSC will not be waived. The
CDSC on Class B shares will be waived upon redemption by a Retirement Plan where
the redemption proceeds are used to pay expenses of the Retirement Plan or
certain expenses of participants under the Retirement Plan (e.g., participant
account fees), provided that the Retirement Plan's sponsor subscribes to the MFS
Fundamental 401(k) Plan\s/\m/ or another similar recordkeeping system made
available by the Shareholder Servicing Agent. The CDSC on Class B shares will be
waived upon the transfer of registration from shares held by a Retirement Plan
through a single account maintained by the Shareholder Servicing Agent to
multiple Class A share accounts maintained by the Shareholder Servicing Agent on
behalf of individual participants in the Retirement Plan, provided that the
Retirement Plan's sponsor subscribes to the MFS Fundamental 401(k) Plan \s/\m/
or another similar recordkeeping system made available by the Shareholder
Servicing Agent. The CDSC on Class B shares may also be waived in connection
with the acquisition or liquidation of the assets of other investment companies
or personal holding companies.
CONVERSION OF CLASS B SHARES. Class B shares of the Fund will convert to Class A
shares of the Fund approximately eight years after purchase. Shares purchased
through the reinvestment of distributions paid in respect of Class B shares will
be treated as Class B shares for purposes of the payment of the distribution and
service fees under the Distribution Plan applicable to Class B shares. However,
for purposes of conversion to Class A shares, all shares in a shareholder's
account that were purchased through the reinvestment of dividends and
distributions paid in respect of Class B shares (and which have not converted to
Class A shares as provided in the following sentence) will be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A shares, a portion of the Class
B shares then in the sub-account will also convert to Class A shares. The
portion will be determined by the ratio that the shareholder's Class B shares
not acquired through reinvestment of dividends and distributions that are
converting to Class A bear to the shareholder's total Class B shares not
acquired through such reinvestment. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service or an opinion of counsel that such conversion will not
constitute taxable events for Federal tax purposes. There can be no assurance
that such ruling or opinion will be available, and the conversion of Class B
shares to Class A shares will not occur if such ruling or opinion is not
available. In such event, Class B shares would continue to be subject to higher
expenses than Class A shares for an indefinite period.
GENERAL: Except as described below, the minimum initial investment is $1,000 per
account and the minimum additional investment is $50 per account. Accounts being
established for monthly automatic investments and under payroll savings programs
and tax-deferred retirement programs (other than IRAs) involving the submission
of investments by means of group remittal statements are subject to a $50
minimum on initial and additional investments per account. The minimum initial
investment for IRAs is $250 per account and the minimum additional investment is
$50 per account. Accounts being established for participation in the Automatic
Exchange Plan are subject to a $50 minimum on initial and additional investments
per account. There are also other limited exceptions to these minimums for
certain tax-deferred retirement programs. Any minimums may be changed at any
time at the discretion of MFD. The Fund reserves the right to cease offering its
shares at any time.
For shareholders who elect to participate in certain investment programs (e.g.,
the Automatic Investment Plan) or other shareholder services, MFD or its
affiliates may either (i) give a gift of nominal value, such as a hand-held
calculator, or (ii) make a nominal charitable contribution on their behalf.
A shareholder whose shares are held in the name of, or controlled by, an
investment dealer might not receive many of the privileges and services from the
Fund (such as Right of Accumulation, Letter of Intent and certain recordkeeping
services) that the Fund ordinarily provides.
Purchases and exchanges should be made for investment purposes only. The Fund
and MFD each reserve the right to reject any specific purchase order or to
restrict purchases by a particular purchaser (or group of related purchasers).
The Fund or MFD may reject or restrict any purchases by a particular purchaser
or group, for example, when such purchase is contrary to the best interests of
the Fund's other shareholders or otherwise would disrupt the management of the
Fund.
MFD may enter into an agreement with shareholders who intend to make exchanges
among certain classes of certain MFS Funds (as determined by MFD) which follow a
timing pattern, and with individuals or entities acting on such shareholders'
behalf (collectively, "market timers"), setting forth the terms, procedures and
restrictions with respect to such exchanges. In the absence of such an
agreement, it is the policy of the Fund and MFD to reject or restrict purchases
by market timers if (i) more than two exchange purchases are effected in a timed
account in the same calendar quarter or (ii) a purchase would result in shares
being held in timed accounts by market timers representing more than (x) one
percent of the Fund's net assets or (y) specified dollar amounts in the case of
certain MFS Funds which may include the Fund and which may change from time to
time. The Fund and MFD each reserve the right to request market timers to redeem
their shares at net asset value, less any applicable CDSC, if either of these
restrictions is violated.
Securities dealers and other financial institutions may receive different
compensation with respect to sales of Class A and Class B shares. In some
instances, promotional incentives to dealers may be offered only to certain
dealers who have sold or may sell significant amounts of Fund shares. From time
to time, MFD may pay dealers 100% of the applicable sales charge on sales of
Class A shares of certain specified MFS Funds sold by such dealer during a
specified sales period. In addition, MFD or its affiliates may, from time to
time, pay dealers an additional commission equal to 0.50% of the net asset value
of all of the Class B shares of certain specified MFS Funds sold by such dealer
during a specified sales period. In addition, from time to time MFD, at its
expense, may provide additional commissions, compensation or promotional
incentives ("concessions") to dealers which sell shares of the Fund. The staff
of the SEC has indicated that dealers who receive more than 90% of the sales
charge may be considered underwriters. Such concessions provided by MFD may
include financial assistance to dealers in connection with preapproved
conferences or seminars, sales or training programs for invited registered
representatives, payment for travel expenses, including lodging, incurred by
registered representatives and members of their families or other invited guests
to various locations for such seminars or training programs, seminars for the
public, advertising and sales campaigns regarding one or more MFS Funds, and/or
other dealer-sponsored events. In some instances, these concessions may be
offered to dealers or only to certain dealers who have sold or may sell, during
specified periods, certain minimum amounts of shares of the Fund. From time to
time, MFD may make expense reimbursements for special training of a dealer's
registered representatives in group meetings or to help pay the expenses of
sales contests. Other concessions may be offered to the extent not prohibited by
the laws of any state or any self-regulatory organization, such as the National
Association of Securities Dealers, Inc. (the "NASD").
The Glass-Steagall Act prohibits national banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of the
prohibition has not been clearly defined, MFD believes that such Act should not
preclude banks from entering into agency agreements with MFD (as described
above). If, however, a bank were prohibited from so acting, the Trustees would
consider what actions if any, would be necessary to continue to provide
efficient and effective shareholder services. It is not expected that
shareholders would suffer any adverse financial consequence as a result of these
occurrences. In addition, state securities laws on this issue may differ from
the interpretation of federal law expressed herein and banks and financial
institutions may be required to register as broker-dealers pursuant to state
law.
EXCHANGES
Subject to the requirements set forth below, some or all of the shares in an
account with the Fund for which payment has been received by the Fund (i.e., an
established account) may be exchanged for shares of the same class of any of the
other MFS Funds, if available for sale, at net asset value. Shares of one class
may not be exchanged for shares of any other class. Exchanges will be made only
after instructions in writing or by telephone (an "Exchange Request") are
received for an established account by the Shareholder Servicing Agent in proper
form (i.e., if in writing -- signed by the record owner(s) exactly as the shares
are registered; if by telephone -- proper account identification is given by the
dealer or shareholder of record) and each exchange must involve either shares
having an aggregate value of at least $1,000 ($50 in the case of retirement plan
participants whose sponsoring organizations subscribe to the MFS FUNDamental
401(k) Plan or another similar 401(k) recordkeeping system made available by the
Shareholder Servicing Agent) or all the shares in the account. If an Exchange
Request is received by the Shareholder Servicing Agent on any business day prior
to the close of regular trading on the New York Stock Exchange (the "Exchange"),
the exchange usually will occur on that day if all the requirements set forth
above have been complied with at that time. No more than five exchanges may be
made in any one Exchange Request by telephone. Additional information concerning
this exchange privilege and prospectuses for any of the other MFS Funds may be
obtained from investment dealers or the Shareholder Servicing Agent. A
shareholder should read the prospectus of the other MFS Fund and consider the
differences in objectives and policies before making any exchange. For federal
and (generally) state income tax purposes, an exchange is treated as a sale of
the shares exchanged and, therefore, an exchange could result in a gain or loss
to the shareholder making the exchange. Exchanges by telephone are automatically
available to most non-retirement plan accounts and certain retirement plan
accounts. For further information regarding exchanges by telephone, see
"Redemptions by Telephone". The exchange privilege (or any aspect of it) may be
changed or discontinued and is subject to certain limitations, including certain
restrictions on purchases by market timers. Special procedures, privileges and
restrictions with respect to exchanges may apply to market timers who enter into
an agreement with MFD, as set forth in such agreement (see "Purchases").
REDEMPTIONS AND REPURCHASES
A shareholder may withdraw all or any portion of the amount in his account on
any date on which the Fund is open for business by redeeming shares at their net
asset value or by selling such shares to the Fund through a dealer (a
repurchase). Since the net asset value of shares of the account fluctuate,
redemptions or repurchases, which are taxable transactions, are likely to result
in gains or losses to the shareholder. When a shareholder withdraws an amount
from his account, the shareholder is deemed to have tendered for redemption a
sufficient number of full and fractional shares in his account to cover the
amount withdrawn. The proceeds of a redemption or repurchase will normally be
available within seven days, except for shares purchased or received in exchange
for shares purchased by check (including certified checks or cashier's checks);
payment of redemption proceeds may be delayed for up to 15 days from the
purchase date in an effort to assure that such check has cleared. Payment of
redemption proceeds may be delayed for up to seven days from the redemption date
if the Fund determines that such a delay would be in the best interest of all
its shareholders.
A. REDEMPTION BY MAIL -- Each shareholder has the right to redeem all or any
portion of the shares in his account by mailing or delivering to the Shareholder
Servicing Agent (see back cover for address) a stock power with a written
request for redemption or a letter of instruction, together with his share
certificates (if any were issued), all in "good order" for transfer. "Good
order" generally means that a stock power, written request for redemption,
letter of instruction or certificate must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed in
the manner set forth below under the caption "Signature Guarantee." In addition,
in some cases, "good order" may require the furnishing of additional documents.
The Shareholder Servicing Agent may make certain de minimis exceptions to the
above requirements for redemption. Within seven days after receipt of a
redemption request by the Shareholder Servicing Agent in "good order", the Fund
will make payment in cash of the net asset value of the shares next determined
after such redemption request was received, reduced by the amount of any
applicable CDSC described above and the amount of any income tax required to be
withheld, except during any period in which the right of redemption is suspended
or date of payment is postponed because the Exchange is closed or trading on the
Exchange is restricted, or, to the extent otherwise permitted by the 1940 Act,
if an emergency exists.
B. REDEMPTION BY TELEPHONE -- Each shareholder may redeem an amount from his
account by telephoning toll-free at (800) 225-2606. Shareholders wishing to
avail themselves of this telephone redemption privilege must so elect on their
Account Application, designate thereon a commercial bank and account number to
receive the proceeds of such redemption, and sign the Account Application Form
with the signature(s) guaranteed in the manner set forth below under the caption
"Signature Guarantee." The proceeds of such a redemption, reduced by the amount
of any applicable CDSC described above and the amount of any income tax required
to be withheld, are mailed by check to the designated account, without charge.
As a special service, investors may arrange to have proceeds in excess of $1,000
wired in federal funds to the designated account. If a telephone redemption
request is received by the Shareholder Servicing Agent by the close of regular
trading on the Exchange on any business day, shares will be redeemed at the
closing net asset value of the Fund on that day. Subject to the conditions
described in this section, proceeds of a redemption are normally mailed or wired
on the next business day following the date of receipt of the order for
redemption. The Shareholder Servicing Agent will not be responsible for any
losses resulting from unauthorized telephone transactions if it follows
reasonable procedures designed to verify the identity of the caller. The
Shareholder Servicing Agent will request personal or other information from the
caller, and will normally also record calls. Shareholders should verify the
accuracy of confirmation statements immediately after their receipt.
C. REPURCHASE THROUGH A DEALER -- If a shareholder desires to sell his shares at
their net asset value through his securities dealer (a repurchase), the
shareholder can place a repurchase order with his dealer, who may charge the
shareholder a fee. IF THE DEALER RECEIVES THE SHAREHOLDER'S ORDER PRIOR TO THE
CLOSE OF REGULAR TRADING ON THE EXCHANGE AND COMMUNICATES IT TO MFD ON THE SAME
DAY BEFORE MFD CLOSES FOR BUSINESS, THE SHAREHOLDER WILL RECEIVE THE NET ASSET
VALUE CALCULATED ON THAT DAY.
GENERAL: Shareholders of the Fund who have redeemed their shares have a one-time
right to reinvest the redemption proceeds in the same class of shares of any of
the MFS Funds (if shares of such Fund are available for sale) at net asset value
(with a credit for any CDSC paid) within 90 days of the redemption pursuant to
the Reinstatement Privilege. If the shares credited for any CDSC paid are then
redeemed within six years of the initial purchase in the case of Class B shares,
or within 12 months of the initial purchase for certain Class A share purchases,
a CDSC will be imposed upon redemption. Such purchases under the Reinstatement
Privilege are subject to all limitations in the Statement of Additional
Information regarding this privilege.
Subject to the Fund's compliance with applicable regulations, the Fund has
reserved the right to pay the redemption or repurchase price of shares of the
Fund, either totally or partially, by a distribution in kind of securities
(instead of cash) from the Fund's portfolio. The securities so distributed would
be valued at the same amount as that assigned to them in calculating the net
asset value for the shares being sold. If a shareholder received a distribution
in kind, the shareholder could incur transaction tax or other charges when
converting the securities to cash.
Due to the relatively high cost of maintaining small accounts, the Fund reserves
the right to redeem shares in any account for their then-current value (which
will be promptly paid to the shareholder) if at any time the total investment in
such account drops below $500 because of redemptions, except in the case of
accounts established for monthly automatic investments and certain payroll
savings programs, Automatic Exchange Plan accounts and tax-deferred retirement
plans, for which there is a lower minimum investment requirement. See
"Purchases." Shareholders will be notified that the value of their account is
less than the minimum investment requirement and allowed 60 days to make an
additional investment before the redemption is processed. No CDSC will be
imposed with respect to such involuntary redemptions.
SIGNATURE GUARANTEE: In order to protect shareholders against fraud to the
greatest extent possible, the Fund requires in certain instances as indicated
above that the shareholder's signature be guaranteed. In these cases the
shareholder's signature must be guaranteed by an eligible bank, broker, dealer,
credit union, national securities exchange, registered securities association,
clearing agency or savings association. Signature guarantees shall be accepted
in accordance with policies established by the Shareholder Servicing Agent.
CONTINGENT DEFERRED SALES CHARGE: Investments ("Direct Purchases") in Class A or
Class B shares will be subject to a CDSC for a period of 12 months (in the case
of purchases of $1 million or more of Class A shares) or six years (in the case
of purchases of Class B shares). Purchases of Class A shares made during a
calendar month, regardless of when during the month the investment occurred,
will age one month on the last day of the month and each subsequent month. Class
B shares purchased on or after January 1, 1993 will be aggregated on a calendar
month basis -- all transactions made during a calendar month, regardless of when
during the month they have occurred, will age one year at the close of business
on the last day of such month in the following calendar year and each subsequent
year. For Class B shares of the Fund purchased prior to January 1, 1993,
transactions will be aggregated on a calendar year basis -- all transactions
made during a calendar year, regardless of when during the year they have
occurred, will age one year at the close of business on December 31 of that year
and each subsequent year. At the time of a redemption, the amount by which the
value of a shareholder's account for a particular class represented by Direct
Purchases exceeds the sum of the six calendar year aggregations (12 months in
the case of purchases of $1 million or more of Class A shares) of Direct
Purchases may be redeemed without charge ("Free Amount"). Moreover, no CDSC is
ever assessed on additional shares acquired through the automatic reinvestment
of dividends or capital gain distributions ("Reinvested Shares").
Therefore, at the time of redemption of shares of a particular class, (i) any
Free Amount is not subject to the CDSC and (ii) the amount of the redemption
equal to the then-current value of Reinvested Shares is not subject to the CDSC
but (iii) any amount of the redemption in excess of the aggregate of the
then-current value of Reinvested Shares and the Free Amount is subject to a
CDSC. The CDSC will first be applied against the amount of Direct Purchases
which will result in any such charge being imposed at the lowest possible rate.
The CDSC to be imposed upon redemptions will be calculated as set forth in
"Purchases" above.
The applicability of a CDSC will be unaffected by exchanges or transfers of
registration, except that, with respect to transfers of registration to an IRA
rollover account, the CDSC will be waived if the shares being reregistered would
have been eligible for a CDSC waiver had they been redeemed.
DISTRIBUTION PLANS
The Trustees have adopted separate distribution plans for Class A and Class B
shares pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Rule"), after having concluded that there is a reasonable likelihood that the
plans would benefit the Fund and its shareholders.
CLASS A DISTRIBUTION PLAN. The Class A Distribution Plan provides that the
Fund will pay MFD a distribution/service fee aggregating up to (but not
necessarily all of) 0.35% of the average daily net assets attributable to Class
A shares annually in order that MFD may pay expenses on behalf of the Fund
related to the distribution and servicing of Class A shares. The expenses to be
paid by MFD on behalf of the Fund include a service fee to securities dealers
which enter into a sales agreement with MFD of up to 0.25% per annum of the
Fund's average daily net assets attributable to Class A shares that are owned by
investors for whom such securities dealer is the holder or dealer of record.
This fee is intended to be partial consideration for all personal services
and/or account maintenance services rendered by the dealer with respect to Class
A shares. MFD may from time to time reduce the amount of the service fee paid
for shares sold prior to a certain date. MFD may also retain a distribution fee
of 0.10% per annum of the Fund's average daily net assets attributable to Class
A shares as partial consideration for services performed and expenses incurred
in the performance of MFD's obligations under its distribution agreement with
the Fund. MFD, however, is currently waiving this 0.10% per annum distribution
fee and will not in the future accept payment of this fee unless it first
obtains the approval of the Fund's Board of Trustees. In addition, to the extent
that the aggregate of the foregoing fees does not exceed 0.35% per annum of the
average daily net assets of the Fund attributable to Class A shares, the Fund is
permitted to pay other distribution-related expenses, including commissions to
dealers and payments to wholesalers employed by MFD for sales at or above a
certain dollar level. Fees payable under the Class A Distribution Plan are
charged to, and therefore reduce, income allocated to Class A shares. Service
fees may be reduced for a securities dealer that is the holder or dealer of
record for an investor who owns shares of the Fund having a net asset value at
or above a certain dollar level. Dealers may from time to time be required to
meet certain criteria in order to receive service fees. MFD or its affiliates
are entitled to retain all service fees payable under the Class A Distribution
Plan for which there is no dealer of record or for which qualification standards
have not been met as partial consideration for personal services and/or account
maintenance services performed by MFD or its affiliates for shareholder
accounts. Certain banks and other financial institutions that have agency
agreements with MFD will receive service fees that are the same as service fees
to dealers.
CLASS B DISTRIBUTION PLAN: The Class B Distribution Plan provides that the
Fund will pay MFD a daily distribution fee equal on an annual basis to 0.75% of
the Fund's average daily net assets attributable to Class B shares and will pay
MFD a service fee of up to 0.25% per annum of the Fund's average daily net
assets attributable to Class B shares (which MFD will in turn pay to securities
dealers which enter into a sales agreement with MFD at a rate of up to 0.25% per
annum of the Fund's average daily net assets attributable to Class B shares
owned by investors for whom that securities dealer is the holder or dealer of
record). This service fee is intended to be additional consideration for all
personal services and/or account maintenance services rendered by the dealer
with respect to Class B shares. Fees payable under the Class B Distribution Plan
are charged to, and therefore reduce, income allocated to Class B shares. The
Class B Distribution Plan also provides that MFD will receive all CDSCs
attributable to Class B shares (see "Redemptions and Repurchases" above), which
do not reduce the distribution fee. MFD will pay commissions to dealers of 3.75%
of the purchase price of Class B shares purchased through dealers. MFD will also
advance to dealers the first year service fee at a rate equal to 0.25% of the
purchase price of such shares, and as compensation therefor, MFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Therefore, the total amount paid to a dealer upon the sale of
shares is 4.00% of the purchase price of the shares (commission rate of 3.75%
plus service fee equal to 0.25% of the purchase price). Dealers will become
eligible for additional service fees with respect to such shares commencing in
the thirteenth month following the purchase. Dealers may from time to time be
required to meet certain criteria in order to receive service fees. MFD or its
affiliates are entitled to retain all service fees payable under the Class B
Distribution Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by MFD or its affiliates
for shareholder accounts. The purpose of the distribution payments to MFD under
the Class B Distribution Plan is to compensate MFD for its distribution services
to the Fund. Since MFD's compensation is not directly tied to its expenses, the
amount of compensation received by MFD during any year may be more or less than
its actual expenses. For this reason, this type of distribution fee arrangement
is characterized by the staff of the SEC as being of the "compensation" variety.
However, the Fund is not liable for any expenses incurred by MFD in excess of
the amount of compensation it receives. The expenses incurred by MFD, including
commissions to dealers, are likely to be greater than the distribution fees for
the next several years, but thereafter such expenses may be less than the amount
of the distribution fees. Certain banks and other financial institutions that
have agency agreements with MFD will receive agency transaction and service fees
that are the same as commissions and service fees to dealers.
DISTRIBUTIONS
The Fund intends to pay shareholders substantially all of its net investment
income as dividends on a quarterly basis. In determining the net investment
income available for distributions, the Fund may rely on projections of its
anticipated net investment income over a longer term, rather than its actual net
investment income for the period. In addition, the Fund may make one or more
distributions during the calendar year to its shareholders from any long-term
capital gains and may make one or more distributions during the calendar year to
its shareholders from short-term capital gains. Shareholders may elect to
receive dividends and capital gain distributions in either cash or additional
shares of the same class with respect to which a distribution is made. See "Tax
Status" and "Shareholder Services -- Distribution Options" below. Distributions
paid by the Fund with respect to Class A shares will generally be greater than
those paid with respect to Class B shares because expenses attributable to Class
B shares will generally be higher.
TAX STATUS
In order to minimize the taxes the Fund would otherwise be required to pay, the
Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Code and to make distributions to its shareholders in
accordance with the timing requirements imposed by the Code. It is expected that
the Fund will not be required to pay entity-level federal income or excise
taxes, although foreign-source income received by the Fund may be subject to
foreign withholding taxes.
Shareholders of the Fund normally will have to pay federal income taxes, and any
state or local taxes, on the dividends and capital gain distributions they
receive from the Fund, whether paid in cash or in additional shares. A portion
of the dividends received from the Fund (but none of the Fund's capital gains
distributions) may qualify for the dividends-received deduction for
corporations. A statement setting forth the federal income status of all
dividends and distributions for each year, including the portion taxable as
ordinary income, any portion taxable as long-term capital gains, any portion
representing a return of capital (which is generally free of current taxes but
results in basis reduction), and the amount, if any, of federal income tax
withheld will be sent to each shareholder promptly after the end of such year.
Fund distributions will reduce the Fund's net asset value per share.
Shareholders who buy shares shortly before the Fund makes a distribution may
thus pay the full price for the shares and then effectively receive a portion of
the purchase price back as a taxable distribution.
The Fund intends to withhold U.S. federal income tax payments at the rate of 30%
on dividends and other payments that are subject to such withholding and that
are made to persons who are neither citizens nor residents of the U.S.,
regardless of whether a lower rate may be permitted under an applicable treaty.
The Fund is also required in certain circumstances to apply backup withholding
at a rate of 31% on taxable dividends and redemption proceeds paid to any
shareholder (including a shareholder who is neither a citizen nor a resident of
the U.S.) who does not furnish to the Fund certain information and
certifications or who is otherwise subject to backup withholding. However,
backup withholding will not be applied to payments which have been subject to
30% withholding.
Prospective investors should read the Fund's Account Application for additional
information regarding backup withholding of federal income tax and should
consult their own tax advisers as to the tax consequences to them of an
investment in the Fund.
NET ASSET VALUE
The net asset value per share of each class of the Fund is determined each day
during which the Exchange is open for trading. This determination is made once
each day as of the close of regular trading on the Exchange by deducting the
amount of the liabilities attributable to the class from the value of the Fund's
assets attributable to the class and dividing the difference by the number of
shares of the class outstanding. Equity securities in the Fund's portfolio are
valued at their market value. For a discussion of the manner in which values of
these and other assets in the Fund's portfolio are determined, see the Statement
of Additional Information. The net asset value per share of each class of shares
is effective for orders received by the dealer prior to its calculation and
received by MFD prior to the close of that business day.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund has two classes of shares, entitled Class A and Class B Shares of
Beneficial Interest. The Trustees have fixed the par value at $0.33 1/3 per
share. The Fund has reserved the right to create and issue additional classes of
shares, in which case each class of shares of the Fund would participate equally
in the earnings, dividends and assets attributable to that class of shares of
the Fund. Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to meetings of
shareholders. Each class of shares of the Fund will vote separately on any
material increase in the fees under its Distribution Plan or on any other matter
that solely affects that class of shares, but will otherwise vote together with
all other classes of shares of the Fund on all other matters. The Fund does not
intend to hold annual meetings. The Fund's Declaration of Trust provides that a
Trustee may be removed from office in certain instances.
Each share of a class represents an equal proportionate interest in the Fund
with each other class share, subject to the liabilities of the particular class.
Shares have no pre-emptive or conversion rights (except as set forth in
"Purchases -- Conversion of Class B Shares"). Shares are fully paid and
non-assessable. Should the Fund be liquidated, shareholders of each class are
entitled to share pro rata in the net assets attributable to that class
available for distribution to shareholders. Shares will remain on deposit with
the Shareholder Servicing Agent and certificates will not be issued except in
connection with pledges and assignments and in certain other limited
circumstances.
The Declaration of Trust has no provision for annual meetings. New Trustees are
appointed by the remaining Trustees (not the shareholders) subject to the
written assent of more than 50% of the shares voting on each appointment.
Shareholders therefore have limited non-cumulative voting rights and holders of
more than 50% of the shares voting may accept or reject each appointment while
holders of less than 50% are not able to reject any appointment. Amendments to
the Declaration of Trust require written consent of the holders of a majority of
the shares. The 1940 Act confers additional voting rights on the shareholders.
PERFORMANCE INFORMATION
From time to time, the Fund will provide yield, current distribution rate and
total rate of return quotations for each class of shares and may also quote fund
rankings in the relevant fund category from various sources, such as the Lipper
Analytical Services, Inc. and Wiesenberger Investment Companies Service. All
performance quotations are based on historical performance and are not intended
to indicate future performance. Yield calculations are based on the annualized
net investment income per share allocated to each class of the Fund over a
30-day period stated as a percent of the maximum public offering price of that
class on the last day of that period. Yield calculations for Class B shares
assume no CDSC is paid. The current distribution rate for each class is
generally based upon the total amount of dividends per share paid by the Fund to
shareholders of that class during the past twelve months and is computed by
dividing the amount of such dividends by the maximum public offering price of
that class at the end of such period. Current distribution rate calculations for
Class B shares assume no CDSC is paid. The current distribution rate differs
from the yield calculation because it may include distributions to shareholders
from sources other than dividends and interest, such as premium income from
option writing, short-term capital gains, and return of invested capital, and is
calculated over a different period of time. Total rate of return quotations will
reflect the average annual percentage change over stated periods in the value of
an investment in a class of shares of the Fund made at the maximum public
offering price of the shares of that class with all distributions reinvested and
which, if quoted for periods of six years or less, will give effect to the
imposition of the CDSC assessed upon redemptions of the Fund's Class B shares.
Such total rate of return quotations may be accompanied by quotations which do
not reflect the reduction in value of the initial investment due to the sales
charge or the deduction of a CDSC, and which will thus be higher. Total rate of
return reflects all components of investment over a stated period of time and
current distribution rate reflects only the rate of distributions paid by the
Fund over a stated period of time. All performance quotations may from time to
time be used in advertisements, shareholder reports or other communications to
shareholders. For a discussion of the manner in which the Fund will calculate
its yield, current distribution rate and total rate of return, see the Statement
of Additional Information. For further information about the Fund's performance
for the fiscal year ended December 31, 1994, please read the Fund's Annual
Report. A copy of the annual report may be obtained without charge by contacting
the Shareholder Servicing Agent (see back cover for address and phone number).
In addition to information provided in shareholder reports, the Fund may, in its
discretion, from time to time, make a list of all or a portion of holdings
available to investors upon request.
7. SHAREHOLDER SERVICES
Shareholders with questions concerning the shareholder services described below
or concerning other aspects of the Fund, should contact the Shareholder
Servicing Agent (see back cover for address and phone number).
ACCOUNT AND CONFIRMATION STATEMENTS -- Each shareholder will receive
confirmation statements showing the transaction activity in his account. At the
end of each calendar year, each shareholder will receive income tax information
regarding reportable dividends and capital gain distributions for that year (see
"Tax Status").
DISTRIBUTION OPTIONS -- The following options are available to all accounts
(except Systematic Withdrawal Plan accounts) and may be changed as often as
desired by notifying the Shareholder Servicing Agent:
-- Dividends and capital gain distributions reinvested in additional shares.
This option will be assigned if no other option is specified;
-- Dividends in cash; capital gain distributions reinvested in additional
shares;
-- Dividends and capital gain distributions in cash.
Reinvestments (net of any tax withholding) will be made in additional full and
fractional shares of the same class of shares at the net asset value in effect
at the close of business on the record date. Dividends and capital gains
distributions in amounts less than $10 will automatically be reinvested in
additional shares of the Fund. If a shareholder has elected to receive dividends
and/or capital gain distributions in cash and the postal or other delivery
service is unable to deliver checks to the shareholder's address of record, such
shareholder's distribution option will automatically be converted to having all
dividends and other distributions reinvested in additional shares. Any request
to change a distribution option must be received by the Shareholder Servicing
Agent by the record date for a dividend or distribution in order to be effective
for that dividend or distribution. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
INVESTMENT AND WITHDRAWAL PROGRAMS -- For the convenience of shareholders, the
Fund makes available the following programs designed to enable shareholders to
add to their investment in an account with the Fund or withdraw from it with a
minimum of paper work. The programs involve no extra charge to shareholders
(other than a sales charge in the case of certain Class A share purchases) and
may be changed or discontinued at any time by a shareholder or the Fund.
LETTER OF INTENT: If a shareholder (other than a group purchaser as
described in the Statement of Additional Information) anticipates purchasing
$50,000 or more of Class A shares of the Fund alone or in combination with
shares of any class of other MFS Funds or MFS Fixed Fund (a bank collective
investment fund) within a 13-month period (or 36-month period for purchases of
$1 million or more), the shareholder may obtain such shares at the same reduced
sales charge as though the total quantity were invested in one lump sum, subject
to escrow agreements and the appointment of an attorney for redemptions from the
escrow amount if the intended purchases are not completed, by completing the
Letter of Intent section of the Account Application.
RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity
discounts on purchases of Class A shares when his new investment, together with
the current offering price value of all holdings of all classes of shares of
that shareholder in the MFS Funds or MFS Fixed Fund (a bank collective
investment fund) reaches a discount level.
DISTRIBUTION INVESTMENT PROGRAM: Shares of a particular class of the Fund
may be sold at net asset value (and without any applicable CDSC) through the
automatic reinvestment of dividend and capital gain distributions from the same
class of any other MFS Fund. Furthermore, distributions made by the Fund may be
automatically invested at net asset value (and without any applicable CDSC) in
shares of the same class of another MFS Fund, if shares of such Fund are
available for sale.
SYSTEMATIC WITHDRAWAL PLAN: A shareholder may direct the Shareholder
Servicing Agent to send him (or anyone he designates) regular periodic payments,
as designated on the Account Application and based upon the value of his
account. Each payment under a Systematic Withdrawal Plan (a "SWP") must be at
least $100, except in certain limited circumstances. The aggregate withdrawals
of Class B shares in any year pursuant to a SWP will not be subject to a CDSC
and are generally limited to 10% of the value of the account at the time of the
establishment of the SWP. The CDSC will not be waived in the case of SWP
redemptions of Class A shares which are subject to a CDSC.
DOLLAR COST AVERAGING PROGRAMS --
AUTOMATIC INVESTMENT PLAN: Cash investments of $50 or more may be made
through a shareholder's checking account twice monthly, monthly or quarterly.
Required forms are available from the Shareholder Servicing Agent or investment
dealers.
AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least
$5,000 in any MFS Fund may exchange their shares for the same class of shares of
the other MFS Funds under the Automatic Exchange Plan. The Automatic Exchange
Plan provides for automatic monthly or quarterly exchanges of funds from the
shareholder's account in an MFS Fund for investment in the same class of shares
of other MFS Funds selected by the shareholder. Under the Automatic Exchange
Plan, exchanges of at least $50 each may be made to up to four different funds.
A shareholder should consider the objectives and policies of a fund and review
its prospectus before electing to exchange money into such fund through the
Automatic Exchange Plan. No transaction fee is imposed in connection with
transfer transactions under the Automatic Exchange Plan. However, exchanges of
shares of MFS Money Market Fund, MFS Government Money Market Fund or Class A
shares of MFS Cash Reserve Fund will be subject to any applicable sales charge.
For federal and (generally) state income tax purposes, an exchange is treated as
a sale of the shares exchanged and, therefore, could result in a capital gain or
loss to the shareholder making the exchange. See the Statement of Additional
Information for further information concerning the Automatic Exchange Plan.
Investors should consult their tax advisers for information regarding the
potential capital gain and loss consequences of transactions under the Automatic
Exchange Plan.
Because a dollar cost averaging program involves periodic purchases of shares
regardless of fluctuating share offering prices, a shareholder should consider
his financial ability to continue his purchases through periods of low price
levels. Maintaining a dollar cost averaging program concurrently with a
withdrawal program could be disadvantageous because of the sales charges
included in share purchases in the case of Class A shares, and because of the
assessment of the CDSC for certain share redemptions in the case of Class A
shares.
TAX-DEFERRED RETIREMENT PLANS -- Shares of the Fund may be purchased by all
types of tax-deferred retirement plans, including IRAs, SEP-IRA plans, 401(k)
plans, 403(b) plans and certain other qualified pension and profit-sharing
plans. Investors should consult with their tax advisers before establishing any
of the tax-deferred retirement plans described above.
-------------------------------------
The Fund's Statement of Additional Information dated May 1, 1995, contains more
detailed information about the Fund, including information related to: (i)
investment policies and restrictions; (ii) Trustees, officers and investment
adviser; (iii) portfolio transactions and brokerage commissions; (iv) the
Distribution Plans; and (v) various services and privileges provided by the Fund
for the benefit of its shareholders, including additional information with
respect to the exchange privilege.
<PAGE>
Investment Adviser
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116
(617) 954-5000
Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116
(617) 954-5000
Custodian and Dividend Disbursing Agent
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Shareholder Servicing Agent
MFS Service Center, Inc.
500 Boylston Street
Boston, MA 02116
Toll-free: (800) 225-2606
Mailing Address:
P.O. Box 2281
Boston, MA 02107-9906
Independent Accountants
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
THE FIRST NAME IN MUTUAL FUNDS
MASSACHUSETTS INVESTORS TRUST
500 Boylston Street
Boston, MA 02116
THE FIRST NAME IN MUTUAL FUNDS
MASSACHUSETTS INVESTORS TRUST
Prospectus
May 1, 1995
MIT-1 5/95/445M 12/212
<PAGE>
MASSACHUSETTS STATEMENT OF
INVESTORS TRUST ADDITIONAL INFORMATION
(A member of the MFS Family of Funds(R)) May 1, 1995
- ------------------------------------------------------------------------------
Page
----
1. Definitions .................................................... 2
2. Investment Objectives, Policies and Restrictions ............... 2
3. Management of the Fund ......................................... 9
Trustees .................................................... 9
Officers .................................................... 9
Investment Adviser .......................................... 10
Custodian ................................................... 11
Shareholder Servicing Agent ................................. 11
Distributor ................................................. 11
4. Portfolio Transactions and Brokerage Commissions ............... 12
5. Shareholder Services ........................................... 13
Investment and Withdrawal Programs .......................... 13
Exchange Privilege .......................................... 15
Tax-Deferred Retirement Plans ............................... 15
6. Tax Status ..................................................... 16
7. Determination of Net Asset Value and Performance ............... 17
8. Distribution Plans ............................................. 19
9. Independent Accountants and Financial Statements ............... 21
MASSACHUSETTS INVESTORS TRUST
500 Boylston Street, Boston, Massachusetts 02116
(617) 954-5000
This Statement of Additional Information (the "SAI") sets forth information
which may be of interest to investors but which is not necessarily included in
the Prospectus, dated May 1, 1995. This Statement of Additional Information
should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge by contacting the Shareholder Servicing Agent (see last
page for address and phone number).
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by a
current prospectus.
1. DEFINITIONS
"Fund" -- Massachusetts Investors Trust, a
common law trust organized under
the laws of The Commonwealth of
Massachusetts.
"MFS" or the "Adviser" -- Massachusetts Financial Services
Company, a Delaware corporation.
"MFD" -- MFS Fund Distributors, Inc., a
Delaware corporation.
"Prospectus" -- The Prospectus, dated May 1, 1995
of the Fund.
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES. The Fund's investment objectives are to provide
reasonable current income and long-term growth of capital and income. Any
investment involves risk and there can be no assurance that the Fund will
achieve its investment objectives.
INVESTMENT POLICIES. The Fund is believed to constitute a conservative medium
for that portion of an investor's capital which he wishes to have invested in
securities considered to be of high or improving investment quality. The term
"conservative medium" indicates that the Fund attempts to exercise prudence,
discretion and intelligence in the selection of investments with due regard for
both probable income and probable safety of capital. The words "high investment
quality" reflect the intention of the Fund to avoid the acquisition of
speculative securities or those of doubtful character even if immediate
prospects are tempting.
The assets of the Fund are normally invested in common stocks or securities
convertible into common stocks. However, the Fund may hold its assets in cash or
invest in commercial paper, repurchase agreements or other forms of debt
securities either to provide reserves for future purchases of common stock or as
a defensive measure in certain economic environments. Since shares of the Fund
represent an investment in securities with fluctuating market prices,
shareholders should understand that the value of shares of the Fund will vary as
the aggregate value of the Fund's portfolio securities increases or decreases.
Moreover, the amount of dividends the Fund pays to its shareholders will vary in
relation to the amount of dividends and interest the Fund receives from its
portfolio securities.
REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements with
sellers who are member firms (or a subsidiary thereof) of the New York Stock
Exchange (the "Exchange") or members of the Federal Reserve System, recognized
primary U.S. Government securities dealers or institutions which the Adviser has
determined to be of comparable creditworthiness. The securities that the Fund
purchases and holds through its agent are U.S. Government securities, the values
of which are equal to or greater than the repurchase price agreed to be paid by
the seller. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a standard rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the U.S. Government securities.
The repurchase agreement provides that in the event the seller fails to pay the
price agreed upon on the agreed upon delivery date or upon demand, as the case
may be, the Fund will have the right to liquidate the securities. If at the time
the Fund is contractually entitled to exercise its right to liquidate the
securities, the seller is subject to a proceeding under the bankruptcy laws or
its assets are otherwise subject to a stay order, the Fund's exercise of its
right to liquidate the securities may be delayed and result in certain losses
and costs to the Fund. The Fund has adopted and follows procedures which are
intended to minimize the risks of repurchase agreements. For example, the Fund
only enters into repurchase agreements after the Adviser has determined that the
seller is creditworthy, and the Adviser monitors that seller's creditworthiness
on an ongoing basis. Moreover, under such agreements, the value of the
securities (which are marked to market every business day) is required to be
greater than the repurchase price, and the Fund has the right to make margin
calls at any time if the value of the securities falls below the agreed upon
margin.
FOREIGN SECURITIES: The Fund may invest up to 35% (and expects generally to
invest between 5% and 15%) of its total assets in foreign securities (not
including American Depository Receipts) considered to be of high or improving
investment quality. As discussed in the Prospectus, investing in foreign
securities generally represent a greater degree of risk than investing in
domestic securities, due to possible exchange rate fluctuations, less publicly
available information, more volatile markets, less securities regulation, less
favorable tax provisions, war or expropriation. As a result of its investments
in foreign securities, the Fund may receive interest or dividend payments, or
the proceeds of the sale or redemption of such securities, in the foreign
currencies in which such securities are denominated. Under certain
circumstances, such as where the Adviser believes that the applicable exchange
rate is unfavorable at the time the currencies are received or the Adviser
anticipates, for any other reason, that the exchange rate will improve, the Fund
may hold such currencies for an indefinite period of time. While the holding of
currencies will permit the Fund to take advantage of favorable movements in the
applicable exchange rate, such strategy also exposes the Fund to risk of loss if
exchange rates move in a direction adverse to the Fund's position. Such losses
could reduce any profits or increase any losses sustained by the Fund from the
sale or redemption of securities and could reduce the dollar value of interest
or dividend payments received. The Fund may also hold foreign currency in
anticipation of purchasing foreign securities.
AMERICAN DEPOSITARY RECEIPTS: American Depositary Receipts ("ADRs") are
certificates issued by a U.S. depository (usually a bank) and represent a
specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. ADRs may be sponsored or unsponsored. A sponsored
ADR is issued by a depository which has an exclusive relationship with the
issuer of the underlying security. An unsponsored ADR may be issued by any
number of U.S. depositories. The Fund may invest in either type of ADR. Although
the U.S. investor holds a substitute receipt of ownership rather than direct
stock certificates, the use of the depository receipts in the United States can
reduce costs and delays as well as potential currency exchange and other
difficulties. The Fund may purchase securities in local markets and direct
delivery of these ordinary shares to the local depository of an ADR agent bank
in the foreign country. Simultaneously, the ADR agents create a certificate
which settles at the Fund's custodian in five days. The Fund may also execute
trades on the U.S. markets using existing ADRs. A foreign issuer of the security
underlying an ADR is generally not subject to the same reporting requirements in
the United States as a domestic issuer. Accordingly the information available to
a U.S. investor will be limited to the information the foreign issuer is
required to disclose in its own country and the market value of an ADR may not
reflect undisclosed material information concerning the issuer of the underlying
security. ADRs may also be subject to exchange rate risks if the underlying
foreign securities are denominated in foreign currency.
"WHEN-ISSUED" SECURITIES: The Fund may purchase securities on a "when-issued" or
on a "forward delivery" basis. It is expected that, under normal circumstances,
the Fund will take delivery of such securities. When the Fund commits to
purchase a security on a "when-issued" or on a "forward delivery" basis, it will
set up procedures consistent with Securities and Exchange Commission ("SEC")
policies concerning such purchases. Since those policies currently recommend
that an amount of the Fund's assets equal to the amount of the purchase be held
aside or segregated to be used to pay for the commitment, the Fund will always
have cash, short-term money market instruments or high grade debt obligations
sufficient to cover any commitments or to limit any potential risk. However,
although the Fund does not intend to make such purchases for speculative
purposes and the Fund does intend to adhere to the provisions of SEC policies,
purchases of securities on such basis may involve more risk than other types of
purchases. For example, the Fund may have to sell assets which have been set
aside in order to meet redemptions. Also, if the Fund determines it necessary to
sell the "when-issued" or "forward delivery" securities before delivery, the
Fund may incur a loss because of market fluctuations since the time the
commitment to purchase such securities was made.
It is not the Fund's policy to invest for the purpose of exercising control or
management or with a view to making short-term trading profits. This operating
policy is not fundamental and may be changed without shareholder approval.
OPTIONS ON SECURITIES: The Fund may write (sell) covered call and put options on
securities and purchase call and put options on securities. The Fund may write
options on securities for the purpose of increasing its return on such
securities and for hedging purposes.
A call option written by the Fund is covered if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire such
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if a Fund holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash or high grade government securities in a segregated account
with its custodian. A put option written by the Fund is covered if the Fund
maintains cash or high grade government securities with a value equal to the
exercise price in a segregated account with its custodian, or else holds a put
on the same security and in the same principal amount as the put written where
the exercise price of the put held (i) is equal to or greater than the exercise
price of the put written or (ii) is less than the exercise price of the put
written if the difference is maintained by the Fund in cash or high grade
government securities in a segregated account with its custodian. Put and call
options written by the Fund may also be covered in such other manner as may be
in accordance with the requirements of the exchange on which, or the
counterparty with which, the option is traded, and applicable laws and
regulations.
Effecting a closing transaction in the case of a written call option will permit
the Fund to write another call option on the underlying security with either a
different exercise price or expiration date or both, or in the case of a written
put option will permit the Fund to write another put option to the extent that
the exercise price thereof is secured by deposited cash or short-term
securities. Such transactions permit the Fund to generate additional premium
income, which will partially offset declines in the value of portfolio
securities or increases in the cost of securities to be acquired. Also,
effecting a closing transaction will permit the proceeds from the concurrent
sale of any securities subject to the option to be used for other investments of
the Fund, provided that another option on such security is not written. If the
Fund desires to sell a particular security from its portfolio on which it has
written a call option, it will effect a closing transaction in connection with
the option prior to or concurrent with the sale of the security.
The Fund will realize a profit from a closing transaction if the premium paid in
connection with the closing of an option written by the Fund is less than the
premium received from writing the option, or if the premium received in
connection with the closing of an option purchased by the Fund is more than the
premium paid for the original purchase. Conversely, the Fund will suffer a loss
if the premium paid or received in connection with a closing transaction is more
or less, respectively, than the premium received or paid in establishing the
option position. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the closing out of a call option previously written by the
Fund is likely to be offset in whole or in part by appreciation of the
underlying security owned by the Fund.
The Fund may write options in connection with buy-and-write transactions; that
is, the Fund may purchase a security and then write a call option against that
security. The exercise price of the call option the Fund determines to write
will depend upon the expected price movement of the underlying security. The
exercise price of a call option may be below ("in-the-money"), equal to ("at-
the-money") or above ("out-of-the-money") the current value of the underlying
security at the time the option is written. If the call options are exercised in
such transactions, the Fund's maximum gain will be the premium received by it
for writing the option, adjusted upwards or downwards by the difference between
the Fund's purchase price of the security and the exercise price, less related
transaction costs. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset in part,
or entirely, by the premium received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. Put options could be used by the
Fund in the same market environments that call options would be used in
equivalent buy-and-write transactions.
The Fund may write combinations of put and call options on the same security, a
practice known as a "straddle." By writing a straddle, the Fund undertakes a
simultaneous obligation to sell and purchase the same security in the event that
one of the options is exercised. If the price of the security subsequently rises
sufficiently above the exercise price to cover the amount of the premium and
transaction costs, the call will likely be exercised and the Fund will be
required to sell the underlying security at a below market price. This loss may
be offset, however, in whole or in part, by the premiums received on the writing
of the two options. Conversely, if the price of the security declines by a
sufficient amount, the put will likely be exercised. The writing of straddles
will likely be effective, therefore, only where the price of a security remains
stable and neither the call nor the put is exercised. In an instance where one
of the options is exercised, the loss on the purchase or sale of the underlying
security may exceed the amount of the premiums received.
By writing a call option, the Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the exercise price
of the option. By writing a put option, the Fund assumes the risk that it may be
required to purchase the underlying security for an exercise price above its
then current market value, resulting in a capital loss unless the security
subsequently appreciates in value. The writing of options on securities will be
undertaken by the Fund for purposes in addition to hedging, and could involve
certain risks which are not present in the case of hedging transactions.
Moreover, even where options are written for hedging purposes, such transactions
will constitute only a partial hedge against declines in the value of portfolio
securities or against increases in the value of securities to be acquired, up to
the amount of the premium.
The Fund also may purchase put and call options on securities. Put options would
be purchased to hedge against a decline in the value of securities held in the
Fund's portfolio. If such a decline occurs, the put options will permit the Fund
to sell the underlying securities at the exercise price, or to close out the
options at a profit. By using put options in this way, the Fund will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and related transaction costs. The Fund
may purchase call options to hedge against an increase in the price of
securities that the Fund anticipates purchasing in the future. If such an
increase occurs, the call option will permit the Fund to purchase the securities
at the exercise price or to close out the option at a profit. The premium paid
for a call or put option plus any transaction costs will reduce the benefit, if
any, realized by the Fund upon exercise of the option, and, unless the price of
the underlying security rose or declined sufficiently, the option may expire
worthless to the Fund.
The staff of the SEC has taken the position that purchased over-the-counter
options and assets used to cover written over-the-counter options are illiquid
and, therefore, together with other illiquid securities, cannot exceed a certain
percentage of the Fund's assets (the "SEC illiquidity ceiling"). Although the
Adviser disagrees with this position, the Adviser intends to limit the Fund's
writing of over-the-counter options in accordance with the following procedure.
Except as provided below, the Fund intends to write over-the-counter options
only with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York. Also, the contracts which the Fund has in place with
such primary dealers will provide that the Fund has the absolute right to
repurchase an option it writes at any time at a price which represents the fair
market value, as determined in good faith through negotiation between the
parties, but which in no event will exceed a price determined pursuant to a
formula in the contract. Although the specific formula may vary between
contracts with different primary dealers, the formula will generally be based on
a multiple of the premium received by the Fund for writing the option, plus the
amount, if any, of the option's intrinsic value (i.e., the amount that the
option is in-the-money). The formula may also include a factor to account for
the difference between the price of the security and the strike price of the
option if the option is written out-of-money. The Fund will treat all or a part
of the formula price as illiquid for purposes of the SEC illiquidity ceiling.
The Fund may also write over-the-counter options with non-primary dealers,
including foreign dealers, and will treat the assets used to cover these options
as illiquid for purposes of such SEC illiquidity ceiling.
OPTIONS ON STOCK INDICES: The Fund may write (sell) covered call and put options
on stock indices and purchase call and put options on stock indices for the
purpose of increasing its gross income and to protect its portfolio against
declines in the value of securities it owns or increases in the value of
securities to be acquired.
The Fund may cover call options on stock indices by owning securities whose
price changes, in the opinion of the Adviser, are expected to be similar to
those of the index, or by having an absolute and immediate right to acquire such
securities without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities in its portfolio. Nevertheless, where the Fund
covers a call option on a stock index through ownership of securities, such
securities may not match the composition of the index and, in that event, the
Fund will not be fully covered and could be subject to risk of loss in the event
of adverse changes in the value of the index. A Fund may also cover call options
on stock indices by holding a call on the same index and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash or high grade government securities in a segregated account
with its custodian. The Fund may cover put options on stock indices by
maintaining cash or high grade government securities with a value equal to the
exercise price in a segregated account with its custodian, or else by holding a
put on the same stock index and in the same principal amount as the put written
where the exercise price of the put held (a) is equal to or greater than the
exercise price of the put written or (b) is less than the exercise price of the
put written if the difference is maintained by the Fund in cash or high grade
government securities in a segregated account with its custodian. Put and call
options on stock indices written by the Fund may also be covered in such other
manner as may be in accordance with the rules of the exchange on which, or the
counterparty with which, the option is traded, and applicable laws and
regulations.
The Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of an index on which the Fund has
written a call option falls or remains the same, the Fund will realize a profit
in the form of the premium received (less transaction costs) that could offset
all or a portion of any decline in the value of the securities it owns. If the
value of the index rises, however, the Fund will realize a loss in its call
option position, which will reduce the benefit of any unrealized appreciation in
the Fund's stock investments. By writing a put option, the Fund assumes the risk
of a decline in the index. To the extent that the price changes of securities
owned by a Fund correlate with changes in the value of the index, writing
covered put options on indices will increase the Fund's losses in the event of a
market decline, although such losses will be offset in part by the premium
received for writing the option.
The purchase of call options on stock indices may be used by the Fund to attempt
to reduce the risk of missing a broad market advance, or an advance in an
industry or market segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options for
this purpose, the Fund will also bear the risk of losing all or a portion of the
premium paid, and related transaction costs, if the value of the index does not
rise. The purchase of call options on stock indexes when the Fund is
substantially fully invested is a form of leverage, up to the amount of the
premium and related transaction costs, and involves risks of loss and of
increased volatility similar to those involved in purchasing calls on securities
the Fund owns.
The Fund also may purchase put options on stock indices to hedge its investments
against a decline in value. By purchasing a put option on a stock index, the
Fund will seek to offset a decline in the value of securities it owns through
appreciation of the put option. If the value of the Fund's investments does not
decline as anticipated, or if the value of the option does not increase, the
Fund's loss will be limited to the premium paid for the option, plus related
transaction costs. The success of this strategy will largely depend on the
accuracy of the correlation between the changes in value of the index and the
changes in value of the Fund's security holdings.
OPTIONS ON FOREIGN CURRENCIES: The Fund may purchase and write put and call
options on foreign currencies ("Options on Foreign Currencies") for the purpose
of protecting against declines in the dollar value of foreign portfolio
securities and against increases in the dollar cost of foreign securities to be
acquired. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Fund may purchase put Options on the Foreign Currency. If the value of the
currency did decline, the Fund would have the right to sell such currency for a
fixed amount in dollars and would thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities, the Fund may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the adverse movements
in exchange rates. As in the case of other types of options, however, the
benefit to the Fund deriving from purchases of Options on Foreign Currencies
would be reduced by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions in Options on
Foreign Currencies which would require it to forego a portion or all of the
benefits of advantageous changes in such rates.
The Fund may write Options on Foreign Currencies for the same types of hedging
purposes. For example, where the Fund anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in exchange rates
it may, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurred, the option would most likely not be
exercised, and the diminution in value of portfolio securities would be offset
by the amount of the premium received less related transaction costs. As in the
case of other types of options, therefore, the writing of Options on Foreign
Currencies will constitute only a partial hedge.
FUTURES CONTRACTS: The Fund may enter into stock index and foreign currency
futures contracts ("Futures Contracts"). A Futures Contract is a bilateral
agreement providing for the purchase and sale of a specified type and amount of
a financial instrument, or foreign currency, or for the making and acceptance of
a cash settlement, at a stated time in the future for a fixed price. By its
terms, a Futures Contract provides for a specified settlement date on which, in
the case of the majority of foreign currency futures contracts, the currency or
the contract are delivered by the seller and paid for by the purchaser, or on
which, in the case of stock index futures contracts and certain foreign currency
futures contracts, the difference between the price at which the contract was
entered into and the contract's closing value is settled between the purchaser
and seller in cash. Futures contracts differ from options in that they are
bilateral agreements, with both the purchaser and the seller equally obligated
to complete the transaction. Futures Contracts call for settlement only on the
expiration date and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract differs from the purchase or sale of
a security or the purchase of an option in that no purchase price is paid or
received. Instead, an amount of cash or cash equivalents, which varies but may
be as low as 5% or less of the value of the contract, must be deposited with the
broker as "initial margin." Subsequent payments to and from the broker, referred
to as "variation margin," are made on a daily basis as the value of the index or
instrument underlying the Futures Contract fluctuates, making positions in the
Futures Contract more or less valuable -- a process known as "marking to the
market".
Purchases or sales of stock index futures contracts may be used to attempt to
protect a Fund's current or intended stock investments from broad fluctuations
in stock prices. For example, a Fund may sell stock index futures contracts in
anticipation of or during a market decline to attempt to offset the decrease in
market value of the Fund's securities portfolio that might otherwise result. If
such decline occurs, the loss in value of portfolio securities may be offset, in
whole or part, by gains on the futures position. When a Fund is not fully
invested in the securities market and anticipates a significant market advance,
it may purchase stock index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the cost of
securities that the Fund intends to purchase. As such purchases are made, the
corresponding positions in stock index futures contracts will be closed out. In
a substantial majority of these transactions, the Fund will purchase such
securities upon termination of the futures position, but under unusual market
conditions, a long futures position may be terminated without a related purchase
of securities. Stock index futures may also be used for non-hedging purposes,
subject to applicable law.
As noted in the Prospectus, a Fund may purchase and sell foreign currency
futures contracts for hedging purposes, to attempt to protect its current or
intended investments from fluctuations in currency exchange rates, and for
non-hedging purposes, subject to applicable law. Such fluctuations could reduce
the dollar value of portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be acquired, even if the
value of such securities in the currencies in which they are denominated remains
constant. A Fund may sell futures contracts on a foreign currency, for example,
where it holds securities denominated in such currency and it anticipates a
decline in the value of such currency relative to the dollar. In the event such
decline occurs, the resulting adverse effect on the value of foreign-denominated
securities may be offset, in whole or in part, by gains on the futures
contracts.
Conversely, a Fund could protect against a rise in the dollar cost of foreign-
denominated securities to be acquired by purchasing futures contracts on the
relevant currency, which could offset, in whole or in part, the increased cost
of such securities resulting from a rise in the dollar value of the underlying
currencies. Where a Fund purchases futures contracts under such circumstances,
however, and the prices of securities to be acquired instead decline, the Fund
will sustain losses on its futures position which could reduce or eliminate the
benefits of the reduced cost of portfolio securities to be acquired.
OPTIONS ON FUTURES CONTRACTS: The Fund may write or purchase options to buy or
sell Futures Contracts ("Options on Futures Contracts"). The writing of a call
Option on a Futures Contract constitutes a partial hedge against declining
prices of the securities or other instruments required to be delivered under the
terms of the Futures Contract. If the futures price at expiration of the option
is below the exercise price, the Fund will retain the full amount of the option
premium, less related transaction costs, which provides a partial hedge against
any decline that may have occurred in the Fund's portfolio holdings. The writing
of a put Option on a Futures Contract constitutes a partial hedge against
increasing prices of the securities or other instruments required to be
delivered under the terms of the Futures Contract. If the futures price at
expiration of the option is higher than the exercise price, the Fund will retain
the full amount of the option premium, less related transaction costs, which
provides a partial hedge against any increase in the price of securities which
the Fund intends to purchase. If a put or call option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between changes in
the value of its portfolio securities and changes in the value of its futures
positions, the Fund's losses from existing Options on Futures Contracts may to
some extent be reduced or increased by changes in the value of portfolio
securities.
The Fund may cover the writing of call Options on Futures Contracts (a) through
purchases of the underlying Futures Contract, (b) through ownership of the
instrument, or instruments included in the index, underlying the Futures
Contract, or (c) through the holding of a call on the same Futures Contract and
in the same principal amount as the call written where the exercise price of the
call held (i) is equal to or less than the exercise price of the call written or
(ii) is greater than the exercise price of the call written if the difference is
maintained by the Fund in cash and high grade government securities in a
segregated account with its custodian. The Fund may cover the writing of put
Options on Futures Contracts (a) through sales of the underlying Futures
Contract, (b) through segregation of cash or cash equivalents in an amount equal
to the value of the security or index underlying the Futures Contract, or (c)
through the holding of a put on the same Futures Contract and in the same
principal amount as the put written where the exercise price of the put held (i)
is equal to or greater than the exercise price of the put written or (ii) is
less than the exercise price of the put written if the difference is maintained
by the Fund in cash or high grade government securities in a segregated account
with its custodian. Put and Call Options on Futures Contracts written by the
Fund may also be covered in such other manner as may be in accordance with the
rules of the exchange on which, or the counterparty with which, the option is
traded, and applicable laws and regulations. Upon the exercise of a call Option
on a Futures Contract written by the Fund, the Fund will be required to sell the
underlying Futures Contract which, if the Fund has covered its obligation
through the purchase of such Contract, will serve to liquidate its futures
position. Similarly, where a put Option on a Futures Contract written by the
Fund is exercised, the Fund will be required to purchase the underlying Futures
Contract which, if the Fund has covered its obligation through the sale of such
Contract, will close out its futures position.
The Fund may purchase Options on Futures Contracts for hedging purposes as an
alternative to purchasing or selling the underlying Futures Contracts. For
example, where a decrease in the value of portfolio securities is anticipated as
a result of a projected market-wide decline or changes in interest or exchange
rates, the Fund could, in lieu of selling Futures Contracts, purchase put
options thereon. In the event that such decrease occurs, it may be offset, in
whole or part, by a profit on the option. Conversely, where it is projected that
the value of securities to be acquired by the Fund will increase prior to
acquisition, due to a market advance or changes in interest or exchange rates,
the Fund could purchase call Options on Futures Contracts, rather than
purchasing the underlying Futures Contracts. The Fund may also use Options on
Futures Contracts for non-hedging purposes subject to applicable law.
FORWARD CONTRACTS: The Fund may enter into forward foreign currency exchange
contracts for the purchase or sale of a specific currency at a future date at a
price set at the time of the contract (a "Forward Contract"). The Fund may enter
into Forward Contracts for hedging purposes as well as for non-hedging purposes.
The Fund may also enter into Forward Contracts for "cross-hedging" as noted in
the Prospectus. Transactions in Forward Contracts entered into for hedging
purposes will include forward purchases or sales of foreign currencies for the
purpose of protecting the dollar value of securities denominated in a foreign
currency or protecting the dollar equivalent of interest or dividends to be paid
on such securities. By entering into such transactions, however, the Fund may be
required to forego the benefits of advantageous changes in exchange rates. The
Fund may also enter into transactions in Forward Contracts for other than
hedging purposes which presents greater profit potential but also involves
increased risk. For example, if the Adviser believes that the value of a
particular foreign currency will increase or decrease relative to the value of
the U.S. dollar, the Fund may purchase or sell such currency, respectively,
through a Forward Contract. If the expected changes in the value of the currency
occur, the Fund will realize profits which will increase its gross income. Where
exchange rates do not move in the direction or to the extent anticipated,
however, the Fund may sustain losses which will reduce its gross income. Such
transactions, therefore, could be considered speculative.
The Fund has established procedures consistent with the statements by the SEC
and its Staff concerning the use of Forward Contracts by registered investment
companies currencies. Since that policy currently recommends that an amount of
the Fund's assets equal to the amount of the commitment be held aside or
segregated or "Cover" to be used to pay for the commitment, the Fund will always
have cash, cash equivalents or high quality debt securities available sufficient
to cover any commitments under contracts to purchase or sell foreign currencies
or to limit any potential risk. The segregated account will be marked to market
on a daily basis. While these contracts are not presently requlated by the
Commodity Futures Trading Commission (the "CFTC"), the CFTC may in the future
assert authority to regulate Forward Contracts. In such event, the Fund's
ability to utilize Forward Contracts in the manner set forth above may be
restricted.
The Fund has established procedures consistent with statements by the SEC and
its staff regarding the use of Forward Contracts by registered investment
companies, which require the use of segregated assets or "cover" in connection
with the purchase and sale of such contracts. In those instances in which the
Fund satisfies this requirement through segregation of assets, it will maintain,
in a segregated account, cash short-term money market instruments or high grade
debt securities, which will be marked to market on a daily basis, in an amount
equal to the value of its commitments under Forward Contracts entered into by
the Fund. Alternatively, the Fund may "cover" its obligations under such
contracts through the ownership of the amount of foreign currency required to be
delivered under a Forward Contract, in the case of a Forward Contract entered
into by the Fund to sell such currency, or through the purchase of a call
option, or a call option on a Futures Contract, on the underlying currency,
provided that, if the strike price of the option is greater than the price
established under the Forward Contract, the Fund will segregate cash, short-term
money market instruments or high grade debt securities with a value equal to the
difference between the strike price of the option and the price of the Forward
Contract. The Fund may cover its obligations under a Forward Contract to
purchase a foreign currency by purchasing a put option, or a put option on a
Futures Contract, on the underlying currency, provided that, if the strike price
of the option is less than the price established under the Forward Contract, the
Fund will segregate cash, short-term money market instruments or high grade debt
securities with a value equal to the difference between the strike price of the
option and the price of the Forward Contract. The Fund may also cover Forward
Contracts in such other manner as may be in accordance with the requirements of
the counter party to the contract and applicable laws and regulations.
RISK FACTORS: IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH THE FUND'S
PORTFOLIO -- The Fund's ability effectively to hedge all or a portion of its
portfolio through transactions in options, Futures Contracts, and Forward
Contracts will depend on the degree to which price movements in the underlying
index or instrument correlate with price movements in the relevant portion of
the Fund's portfolio. Because the securities in the Fund's portfolio will most
likely not be the same as those securities underlying a stock index, the
correlation between movements in the portfolio and in the securities underlying
the index will not be perfect. The trading of Futures Contracts and options
entails the additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or obligation. The
anticipated spread between the prices may be distorted due to the differences in
the nature of the markets, such as differences in margin requirements, the
liquidity of such markets and the participation of speculators in such markets.
In this regard, trading by speculators in options and Futures Contracts has in
the past occasionally resulted in market distortions, which may be difficult or
impossible to predict, particularly near the expiration of such contracts. It
should be noted that Futures Contracts or options based upon a narrower index of
securities, such as those of a particular industry group, may present greater
risk than options or Futures Contracts based on a broad market index, because a
narrower index is more susceptible to rapid and extreme fluctuations as a result
of changes in the value of a small number of securities. The trading of Options
on Futures Contracts also entails the risk that changes in the value of the
underlying Futures Contracts will not be fully reflected in the value of the
option. Further, with respect to options on securities, options on stock indices
and Options on Futures Contracts, the Fund is subject to the risk of market
movements between the time that the option is exercised and the time of
performance thereunder. In writing a covered call option on a security, index or
Futures Contract, the Fund also incurs the risk that changes in the value of the
instruments used to cover the position will not correlate closely with changes
in the value of the option or underlying index or instrument.
The Fund will invest in a hedging instrument only if, in the judgment of its
Adviser, there would be expected to be a sufficient degree of correlation
between movements in the value of the instrument and movements in the value of
the relevant portion of the Fund's portfolio for such hedge to be effective.
There can be no assurance that the Adviser's judgment will be accurate.
It should also be noted that the Fund may purchase and sell options, Futures
Contracts, Options on Future Contracts, Forward Contracts and Options on Foreign
Currencies not only for hedging purposes, but for the purpose of increasing its
return on portfolio securities subject to applicable law. As a result, in the
event of adverse market movements, the Fund might be subject to losses, which
would not be offset by increases in the value of portfolio securities or
declines in the cost of securities to be acquired. In addition, the method of
covering an option employed by the Fund may not fully protect it against risk of
loss and, in any event, the Fund could suffer losses on the option position
which might not be offset by corresponding portfolio gains.
With respect to the writing of straddles on securities, the Fund incurs the risk
that the price of the underlying security will not remain stable, that one of
the options written will be exercised and that the resulting loss will not be
offset by the amount of the premiums received.
POTENTIAL LACK OF A LIQUID SECONDARY MARKET -- Prior to exercise or expiration,
a futures or option position can only be terminated by entering into a closing
purchase or sale transaction. This requires a secondary market for such
instruments on the exchange on which the initial transaction was entered into.
While the Fund will enter into options or futures positions only if there
appears to be a liquid secondary market therefor, there can be no assurance that
such a market will exist for any particular contracts at any specific time. In
that event, it may not be possible to close out a position held by the Fund, and
the Fund could be required to purchase or sell the instrument underlying an
option, make or receive a cash settlement or meet ongoing variation margin
requirements. Under such circumstances, if the Fund had insufficient cash
available to meet margin requirements, it might be necessary to liquidate
portfolio securities at a time when it would be disadvantageous to do so. The
inability to close out options and futures positions, therefore, could have an
adverse impact on the Fund's ability effectively to hedge its portfolios, and
could result in trading losses. The liquidity of a secondary market in a Futures
Contract or options thereon may also be adversely affected by "daily price
fluctuation limits", established by exchanges, which limit the amount of
fluctuation in the price of a contract during a single trading day. The trading
of Futures Contracts and options is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
MARGIN -- Because of low initial margin deposits made upon the opening of a
futures position and the writing of an option, such transactions involve
substantial leverage. As a result, relatively small movements in the price of
the contract can result in substantial unrealized gains or losses. Where the
Fund engages in the purchase or sale of such instruments for hedging purposes,
any losses incurred in connection therewith should, if the hedging strategy is
successful, be offset, in whole or in part, by increases in the value of
securities held by the Fund or decreases in the prices of securities the Fund
intends to acquire. Where the Fund uses such instruments for other than hedging
purposes, the margin requirements associated with such transactions could expose
the Fund to greater risk.
TRADING AND POSITION LIMITS -- The exchanges on which Futures Contracts and
options are traded may impose limitations governing the maximum number of
positions on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting alone or in
concert with others (regardless of whether such contracts are held on the same
or different exchanges or held or written in one or more accounts or through one
or more brokers). In addition, the CFTC and the various contract markets have
established limits referred to as "speculative position limits" on the maximum
net long or net short position which any person may hold or control in a
particular futures or option contract. An exchange may order the liquidation of
positions found to be in violation of these limits and it may impose other
sanctions or restrictions. The Adviser does not believe that these trading and
position limits will have any adverse impact on the strategies for hedging the
portfolio of the Fund.
RISK OF OPTIONS ON FUTURES CONTRACTS -- The amount of risk the Fund assumes when
it purchases an Option on a Futures Contract is the premium paid for the option,
plus related transaction costs. In order to profit from an option purchased,
however, it may be necessary to exercise the option and to liquidate the
underlying Futures Contract, subject to the risks of the availability of a
liquid offset market described herein. The writer of an Option on a Futures
Contract is subject to the risks of commodity futures trading, including the
requirement of initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate with movements
in the price of the underlying index or Futures Contract.
ADDITIONAL RISKS OF TRANSACTIONS NOT CONDUCTED ON EXCHANGES -- Transactions in
Forward Contracts are subject to all of the correlation, liquidity and other
risks outlined above. In addition, however, such transactions are subject to the
risk of governmental actions affecting trading in or the prices of currencies
underlying such contracts, which could restrict or eliminate trading and could
have a substantial adverse effect on the value of positions held by the Fund. In
addition, the value of such positions could be adversely affected by a number of
other complex political and economic factors applicable to the countries issuing
the underlying currencies. Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale information with
respect to the foreign currencies underlying contracts thereon. As a result, the
available information on which trading systems will be based may not be as
complete as the comparable data on which the Fund makes investment and trading
decisions in connection with other transactions. Moreover, because the foreign
currency market is a global, twenty-four hour market, events could occur on that
market which would not be reflected in the forward markets until the following
day, thereby preventing the Fund from responding to such events in a timely
manner. Settlements of exercises of Forward Contracts generally must occur
within the country issuing the underlying currency, which in turn requires
traders to accept or make delivery of such currencies in conformity with any
United States or foreign restrictions and regulations regarding the maintenance
of foreign banking relationships, fees, taxes or other charges.
Forward Contracts, and over-the-counter options on securities, are not traded on
exchanges regulated by the CFTC or the SEC, but through financial institutions
acting as market-makers. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. In
addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Fund's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Fund. Where
no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contracts, and the Fund could be required to retain options
purchased or written, or Forward Contracts entered into, until exercise,
expiration or maturity. This in turn could limit the Fund's ability to profit
from open positions or to reduce losses experienced, and could result in greater
losses. Further, over-the-counter transactions are not subject to the
performance guarantee of an exchange clearing house, and the Fund will therefore
be subject to the risk of default by, or the bankruptcy of, the financial
institution serving as its counterparty.
While Forward Contracts are not presently subject to regulation by the CFTC, the
CFTC may in the future assert or be granted authority to regulate such
instruments. In such event, the Fund's ability to utilize Forward Contracts in
the manner set forth above could be restricted.
RESTRICTIONS ON THE USE OF OPTIONS AND FUTURES: In order to assure that the Fund
will not be deemed to be a "commodity pool" for purposes of the Commodity
Exchange Act, regulations of the CFTC require that the Fund enter into
transactions in Futures Contracts and Options on Futures Contracts only (i) for
bona fide hedging purposes (as defined in CFTC regulations), or (ii) for
non-hedging purposes, provided that the aggregate initial margin and premiums on
such non-hedging positions does not exceed 5% of the liquidation value of the
Fund's assets. In addition, the Fund must comply with the requirements various
state securities laws in connection with such transactions.
The Fund has adopted the additional restriction that it will not enter into a
Futures Contract if, immediately thereafter, the value of securities and other
obligations underlying all such Futures Contracts would exceed 50% of the value
of the Fund's total assets. Moreover, the Fund will not purchase put and call
options if, as a result, more than 5% of its total assets would be invested in
such options.
When the Fund purchases a Futures Contract, an amount of cash and cash
equivalents will be deposited in a segregated account with the Fund's custodian
so that the amount so segregated will at all times equal the value of the
Futures Contract, thereby insuring that the use of such Futures Contract is
unleveraged.
INVESTMENT RESTRICTIONS: The Fund has adopted the following restrictions which
cannot be changed without the approval of the holders of a majority of the
Fund's shares (which, as used in this Statement of Additional Information, means
the lesser of (i) more than 50% of the outstanding shares of the Fund (or a
class, as applicable) or (ii) 67% or more of the outstanding shares of the Fund
(or a class, as applicable), present at a meeting if holders of more than 50% of
the outstanding shares of the Fund (or a class, as applicable) are represented
at such meeting in person or by proxy):
The Fund may not, except temporarily in case of a merger, purchase securities of
any issuer if such purchase would cause more than 5% of its total assets (taken
at market value) to be invested in the securities of such issuer (exclusive of
U.S. or Canadian Government obligations), or if such purchase would cause more
than 10% of any class of securities of an issuer to be held by the Fund. The
Fund may not invest more than 5% of its assets in the securities of an issuer
which, including predecessors, has not been in continuous operation for at least
three years. The Fund may not purchase securities issued by investment companies
except in the open market or in connection with a plan of consolidation or
merger, nor may the Fund purchase or retain securities of a company if one or
more of its Trustees and officers own 1/2 of 1% each and such persons
collectively own more than 5% of that company's securities. The Fund may borrow
money up to 10% of its gross assets (taken at cost) or its net assets (taken at
market value), whichever is less, but only temporarily for extraordinary or
emergency purposes and subject to a 300% asset coverage requirement and may
pledge up to 15% of its gross assets (taken at cost) (for the purpose of this
restriction collateral arrangements with respect to Options on Securities, Stock
Indexes and Foreign Currencies, Future Contracts, Options on Future Contracts
and Forward Contracts, and payments of initial and variation margin in
connection therewith are not considered a pledge of assets). The Fund has
reserved freedom of action to underwrite securities in limited cases, but has
not done so since 1940, and the amount of any one underwriting commitment may
not exceed 5% of its net assets. It is not the Fund's policy to concentrate more
than 25% of its assets in any one industry or to purchase or sell real estate,
commodities or commodity contracts except for Options on Securities, Stock
Indexes and Foreign Currencies, Future Contracts, Options on Future Contracts
and Forward Contracts. The Fund may not make loans to other persons. For these
purposes, the purchase of short-term commercial paper, the purchase of a portion
or all of an issue of debt securities in accordance with the Fund's investment
objectives and policies, the lending of portfolio securities, or the investment
of the Fund's assets in repurchase agreements, shall not be considered the
making of a loan.
These investment restrictions are adhered to at the time of purchase or
utilization of assets; a subsequent change in circumstances will not be
considered to result in a violation of policy.
3. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the affairs of the
Fund. The Adviser is responsible for the management of the Fund's assets and the
officers of the Fund are responsible for its operations. The Trustees and
officers are listed below, together with their principal occupations during the
past five years. (Their titles may have varied during that period.)
TRUSTEES
A. KEITH BRODKIN,* Chairman and President
Massachusetts Financial Services Company, Chairman and Director
RICHARD B. BAILEY*
Private investor; Massachusetts Financial Services Company, former Chairman and
Director (until September 30, 1991)
PETER G. HARWOOD
Private Investor
Address: 211 Lindsay Pond Road, Concord, Massachusetts
J. ATWOOD IVES
Eastern Enterprises (diversified holding company), Chairman and Chief Executive
Officer (since December 1991); General Cinema Corporation, Vice Chairman and
Chief Financial Officer (until December 1991); The Neiman Marcus Group, Inc.,
Vice Chairman and Chief Financial Officer (from August 1987 to December 1991);
United States Filter Corporation, Director
Address: 9 Riverside Road, Weston, Massachusetts
LAWRENCE T. PERERA
Hemenway & Barnes (attorneys), Partner
Address: 60 State Street, Boston, Massachusetts
WILLIAM J. POORVU
Harvard University Graduate School of Business Administration, Adjunct
Professor; CBL & Associates Properties, Inc. (a real estate investment trust),
Director; The Baupost Fund (a registered investment company), Vice Chairman
(since November 1993), Chairman and Trustee (from June 1990 until November
1993)
Address: Harvard Business School, Soldiers Field Road, Cambridge, Massachusetts
CHARLES W. SCHMIDT
Private investor; Raytheon Company (diversified electronics manufacturer),
Senior Vice President and Group Executive (until December 1990); OHM
Corporation, Director; The Boston Company, Director; Boston Safe Deposit and
Fund Company, Director
Address: 30 Colpitts Road, Weston, Massachusetts
ARNOLD D. SCOTT*
Massachusetts Financial Services Company, Senior Executive Vice President and
Secretary
JEFFREY L. SHAMES*
Massachusetts Financial Services Company, President
ELAINE R. SMITH
Independent Consultant; Brigham and Women's Hospital, Executive Vice President
and Chief Operating Officer (from August 1990 to September 1992); Ernst &
Young (accountants), Consultant (from February to July 1990)
Address: Weston, Massachusetts
DAVID B. STONE
North American Management Corp. (investment advisers), Chairman
Address: 10 Post Office Square, Suite 300, Boston, Massachusetts
OFFICERS
W. THOMAS LONDON,* Treasurer
Massachusetts Financial Services Company, Senior Vice President and Assistant
Treasurer
STEPHEN E. CAVAN,* Secretary and Clerk
Massachusetts Financial Services Company, Senior Vice President, General
Counsel and Assistant Secretary
JAMES R. BORDEWICK, JR.,* Assistant Secretary
Massachusetts Financial Services Company, Vice President and Associate General
Counsel (since September 1990); associated with a major law firm (prior to
August 1990)
JAMES O. YOST,* Assistant Treasurer
Massachusetts Financial Services Company, Vice President
- ---------
*"Interested persons" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Adviser, whose address is 500 Boylston Street,
Boston, Massachusetts 02116.
Each Trustee and officer hold comparable positions with certain MFS affiliates
or with certain other funds of which MFS or a subsidiary of MFS is the
investment adviser or distributor. Mr. Brodkin, the Chairman of MFD, Messrs.
Shames and Scott, Directors of MFD, and Mr. Cavan, the Secretary of MFD, hold
similar positions with certain other MFS affiliates. Mr. Bailey is a Director of
Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)"), the
corporate parent of MFS.
The Fund pays the compensation of non-interested Trustees and Mr. Bailey (who
currently receive a retainer of $4,000 per year, $160 per committee meeting and
$180 for attendance at each meeting plus certain out-of-pocket expenses, as
incurred) and has adopted a retirement plan for non-interested Trustees and Mr.
Bailey. Under this plan, a Trustee will retire upon reaching age 73 and if the
Trustee has completed at least 5 years of service, he would be entitled to
annual payments during his lifetime of up to 50% of such Trustee's average
annual compensation (based on the three years prior to his retirement) depending
on his length of service. A Trustee may also retire prior to age 73 and receive
reduced payments if he has completed at least five years of service. Under the
plan, a Trustee (or his beneficiaries) will also receive benefits for a period
of time in the event the Trustee is disabled or dies. These benefits will also
be based on the Trustee's average annual compensation and length of service.
There is no retirement plan provided by the Fund for the interested Trustees
(except Mr. Bailey). The Fund will accrue compensation expenses each year to
cover current year's service and amortize past service cost.
Set forth in Appendix A hereto is certain information concerning cash
compensation paid to non-interested Trustees and Mr. Bailey, and benefits
accrued and estimated benefits payable, under the retirement plan. As of March
31, 1995, all Trustees and officers as a group owned less than 1% of the
outstanding shares of the Fund.
The Declaration of Trust provides that the Fund will indemnify its officers and
Trustees against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Fund, unless, as
to liability to the Fund or its shareholders, it is finally adjudicated that
they engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or with respect to any
matter, unless it is adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interest of the Fund. In
the case of settlement, such indemnification will not be provided unless it has
been determined by a court or other body approving the settlement or other
disposition or by reasonable determination by disinterested Trustees or in a
written opinion of independent counsel based upon a review of readily available
facts, that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
INVESTMENT ADVISER
MFS and its predecessor organizations have a history of money management dating
from 1924. MFS is a subsidiary of Sun Life of Canada (U.S.) which in turn is a
subsidiary of Sun Life Assurance Company of Canada ("Sun Life").
The Adviser manages the Fund pursuant to an Investment Advisory Agreement, dated
May 20, 1982, as amended (the "Advisory Agreement"). The Adviser provides the
Fund with overall investment advisory and administrative services, as well as
general office facilities. Subject to such policies as the Trustees may
determine, the Adviser makes investment decisions for the Fund. For these
services and facilities, the Adviser receives a management fee computed and paid
monthly on the basis of a formula based upon a percentage of the Fund's average
daily net assets plus a percentage of its gross income other than gains from the
sale of securities, in each case on an annualized basis for the Fund's
then-current fiscal year. The applicable percentages are reduced as assets and
income reach the following levels:
ANNUAL RATE OF MANAGEMENT FEE ANNUAL RATE OF MANAGEMENT FEE
BASED ON AVERAGE DAILY NET ASSETS BASED ON GROSS INCOME
- ------------------------------------ --------------------------------
0.30% of the first $200 million 6.67% of the first $6 million
0.24% of the next $300 million 5.33% of the next $9 million
0.12% of average daily net assets in 2.67% of gross income in excess
excess of $500 million of $15 million
Under the Advisory Agreement, MFS received management fees of $4,385,702,
$4,680,789 and $4,146,970 for fiscal years ended December 31, 1994, 1993 and
1992, respectively. In order to comply with the expense limitations of certain
state securities commissions the Adviser will reduce its management fee or
otherwise reimburse the Fund for any expenses, exclusive of interest, taxes and
brokerage commissions, incurred by the Fund in any fiscal year to the extent
such expenses exceed the most restrictive of such state expense limitations. The
Adviser will make appropriate adjustments to such reimbursements in response to
any amendment or rescission of the various state requirements.
The Advisory Agreement provides that the compensation of the Adviser will be
reduced by an annual sum representing the Fund's share of the fair value of the
use of office furniture, furnishings and equipment purchased over the years with
funds furnished by the Fund and Massachusetts Investors Growth Stock Fund as
part of shared expenses. The total annual use value of this property for the
period ended December 31, 1994 has been determined pursuant to a formula devised
by an independent supplier to be $124,379, and this determination has been
approved by the Trustees who are not affiliated with the Adviser. This amount
and amounts so determined and approved in subsequent years will be credited 24%
to Massachusetts Investors Growth Stock Fund and 76% to the Fund, being the
average of their proportionate contributions to shared expenses over the
ten-year period ended December 31, 1968.
The Fund pays all of its expenses (other than those assumed by MFS or MFD),
including: Trustees fees discussed above, governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Fund; fees and expenses of independent auditors, of legal counsel, and of any
transfer agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares; expenses of preparing, printing and mailing
share certificates, shareholder reports, notices, proxy statements and reports
to governmental officers and commissions; brokerage and other expenses connected
with the execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of State Street Bank and Trust Company,
the Fund's custodian, for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; and expenses of
shareholder meetings. Expenses relating to the issuance, registration and
qualification of shares of the Fund and the preparation, printing and mailing of
prospectuses for such purposes are borne by the Fund except that its
Distribution Agreement with MFD requires MFD to pay for prospectuses that are to
be used for sales purposes. For a list of the Fund's expenses, including the
compensation paid to the Trustees who are not officers of MFS, during the Fund's
fiscal year ended December 31, 1993, see "Statement of Operations" in the Fund's
Annual Report to shareholders incorporated by reference into this Statement of
Additional Information. Payment by the Fund of brokerage commissions for
brokerage and research services of value to the Adviser in serving its clients
is discussed under the caption "Portfolio Transactions and Brokerage
Commissions."
MFS pays the compensation of the Fund's officers and of any Trustee who is an
officer of MFS. The Adviser also furnishes at its own expense all necessary
administrative services, including office space, equipment, clerical personnel,
investment advisory facilities, and all executive and supervisory personnel
necessary for managing the Fund's investments, effecting its portfolio
transactions, and, in general, administering its affairs.
The Advisory Agreement will remain in effect until August 1, 1995, and will
continue in effect thereafter only if such continuance is specifically approved
at least annually by the Board of Trustees or by vote of a majority of the
Fund's shares (as defined in "Investment Restrictions") and, in either case, by
a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party. The Advisory Agreement terminates
automatically if it is assigned and may be terminated without penalty by vote of
a majority of the Fund's shares (as defined in "Investment Restrictions") or by
either party on not more than 60 days' nor less than 30 days' written notice.
The Advisory Agreement further provides that MFS may render services to others
and that neither the Adviser nor its personnel shall be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in the execution and management of the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of its or
their duties or by reason of reckless disregard of its or their obligations and
duties under the Advisory Agreement.
CUSTODIAN
State Street Bank and Trust Company (the "Custodian") is the custodian of the
Fund's assets. The Custodian's responsibilities include safekeeping and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities, determining income and collecting interest and dividends on the
Fund's investments, maintaining books of original entry for portfolio and fund
accounting and other required books and accounts, and calculating the daily net
asset value of each class of shares of the Fund. The Custodian does not
determine the investment policies of the Fund or decide which securities the
Fund will buy or sell. The Fund may, however, invest in securities of the
Custodian and may deal with the Custodian as principal in securities
transactions. The Custodian has contracted with the Adviser for the Adviser to
perform certain accounting functions related to options transactions for which
the Adviser receives remuneration on a cost basis.
SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc. (the "Shareholder Servicing Agent"), a wholly owned
subsidiary of MFS, is the Fund's shareholder servicing agent, pursuant to a
Shareholder Servicing Agent Agreement, dated August 1, 1985 (the "Agency
Agreement"), with the Fund. The Shareholder Servicing Agent's responsibilities
under the Agency Agreement include administering and performing transfer agent
functions and keeping records in connection with the issuance, transfer and
redemption of each class of the shares of the Fund. For these services, the
Shareholder Servicing Agent will receive a fee based on the net assets of each
class of shares of the Fund, computed and paid monthly. In addition, the
Shareholder Servicing Agent will be reimbursed by the Fund for certain expenses
incurred by the Shareholder Servicing Agent on behalf of the Fund. For the
fiscal year ended December 31, 1994, the Fund paid the Shareholder Servicing
Agent fees of $2,008,390 under the Agency Agreement. State Street Bank and Trust
Company, the dividend and distribution disbursing agent of the Fund, has
contracted with the Shareholder Servicing Agent to administer and perform
certain dividend and distribution disbursing functions for the Fund.
DISTRIBUTOR
MFD, a wholly owned subsidiary of MFS, serves as distributor for the continuous
offering of shares of the Fund pursuant to a Distribution Agreement, dated
January 1, 1995 (the "Distribution Agreement"), with the Fund. Prior to January
1, 1995, MFS Financial Services, Inc. ("FSI"), another wholly-owned subsidiary
of MFS, was the Fund's distributor. Where this SAI refers to MFD in relation to
the receipt or payment of money with respect to a period or periods prior to
January 1, 1995, such reference shall be deemed to include FSI, as the
predecessor in interest to MFD.
CLASS A SHARES: MFD acts as agent in selling Class A shares of the Fund to
dealers. The public offering price of Class A shares of the Fund is their net
asset value next computed after the sale plus a sales charge which varies based
upon the quantity purchased. The public offering price of Class A shares of the
Fund is calculated by dividing the net asset value of a Class A share by the
difference (expressed as a decimal) between 100% and the sales charge percentage
of offering price applicable to the purchase (see "Purchases" in the
Prospectus). The sales charge scale set forth in the Prospectus applies to
purchases of Class A shares of the Fund alone or in combination with shares of
all classes of certain other funds in the MFS Family of Funds (the "MFS Funds")
and other funds (as noted under Rights of Accumulation), by any person,
including members of a family unit (e.g., husband, wife and minor children) and
bona fide trustees, and also applies to purchases made under the Right of
Accumulation or a Letter of Intent (see "Investment and Withdrawal Programs" in
this Statement of Additional Information). A group might qualify to obtain
quantity sales charge discounts (see "Investment and Withdrawal Programs" in
this Statement of Additional Information).
Class A shares of the Fund may be sold at their net asset value to certain
persons or in certain instances as described in the Prospectus. Such sales are
made without a sales charge to promote good will with employees and others with
whom MFS, MFD and/or the Fund have business relationships, and because the sales
effort, if any, involved in making such sales is negligible.
MFD allows discounts to dealers (which are alike for all dealers) from the
applicable public offering price of the Class A shares. Dealer allowances
expressed as a percentage of offering price for all offering prices are set
forth in the Prospectus (see "Purchases" in the Prospectus). The commission paid
to the distributor is the difference between the total amount invested and the
sum of (a) the net proceeds to the Fund and (b) the dealer commission. Because
of rounding in the computation of offering price, the portion of the sales
charge paid to the distributor may vary and the total sales charge may be more
or less than the sales charge calculated using the sales charge expressed as a
percentage of offering price or as a percentage of the net amount invested as
listed in the Prospectus. In the case of the maximum sales charge, the dealer
retains 5% and MFD retains approximately 3/4 of 1% of the public offering price.
In addition, MFD, on behalf of the Fund, pays commissions to dealers who
initiate and are responsible for purchases of $1 million or more as described in
the Prospectus.
CLASS B SHARES: MFD acts as agent in selling Class B shares of the Fund to
dealers. The public offering price of Class B shares is their net asset value
next computed after the sale (see "Purchases" in the Prospectus).
GENERAL: Neither MFD nor dealers are permitted to delay placing orders to
benefit themselves by a price change. On occasion, MFD may obtain brokers loans
from various banks, including the custodian banks for the MFS Funds, to
facilitate the settlement of sales of shares of the Fund to dealers. MFD may
benefit from its temporary holding of funds paid to it by investment dealers for
the purchase of Fund shares.
During the Fund's fiscal year ended December 31, 1994, MFD received sales
charges of $257,995 and dealers received sales charges of $2,389,049 (as their
concession on gross sales charges of $2,647,044) for selling Class A shares of
the Fund; the Fund received $125,304,888, representing the aggregate net asset
value of such shares. During the Fund's fiscal year ended December 31, 1993, MFD
received sales charges of $457,402 and dealers received sales charges of
$2,786,589 (as their concession on gross sales charges of $3,243,991) for
selling Class A shares of the Fund; the Fund received $144,677,079, representing
the aggregate net asset value of such shares. During the Fund's fiscal year
ended December 31, 1992, MFD received sales charges of $451,615 and dealers
received sales charges of $2,648,939 (as their concession on gross sales charges
of $3,100,554) for selling Class A shares of the Fund; the Fund received
$198,658,806 representing the aggregate net asset value of such shares.
During the Fund's fiscal year ended December 31, 1994, the CDSC imposed on
redemption of Class A and Class B shares was $2,552 and $59,341, respectively.
During the period from September 7, 1993 through December 31, 1994, the CDSC on
redemption of Class B shares was $546.
The Distribution Agreement will remain in effect until August 1, 1995, and will
continue in effect thereafter only if such continuance is specifically approved
at least annually by the Board of Trustess or by vote of a majority of the
Fund's shares (as defined in "Investment Restrictions") and, in either case, by
a majority of the Trustees who are not parties to the Distribution Agreement or
interested persons of any such party. The Distribution Agreement terminates
automatically if it is assigned and may be terminated without penalty by either
party on not more than 60 days' nor less than 30 days' notice.
4. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund are made by a
portfolio manager who is an employee of the Adviser and who is appointed and
supervised by its senior officers. Changes in the Fund's investments are
reviewed by the Board of Trustees. The Fund's portfolio manager may serve other
clients of the Adviser and any subsidiary of the Adviser in a similar capacity.
The primary consideration in placing portfolio security transactions with
broker-dealers for execution is to obtain, and maintain the availability of,
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting
broker-dealers to execute portfolio transactions on behalf of the Fund and other
clients of the Adviser on the basis of their professional capability, the value
and quality of their brokerage services, and the general level of their
brokerage commissions. In the case of securities traded in the over-the-counter
market (where no stated commissions are paid but the prices include a dealer's
markup or markdown), the Adviser normally seeks to deal directly with the
primary market makers, unless in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
Adviser on the tender of the Fund's portfolio securities in so-called tender or
exchange offers. Such soliciting dealer fees are in effect recaptured for the
Fund by the Adviser. At present no other recapture arrangements are in effect.
Consistent with the foregoing primary consideration, the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. ("NASD") and such other
policies as the Trustees may determine, the Adviser may consider sales of shares
of the Fund and of the other investment company clients of MFD as a factor in
the selection of broker-dealers to execute the Fund's portfolio transactions.
Under the Advisory Agreement and as permitted by Section 28(e) of the Securities
Exchange Act of 1934, the Adviser may cause the Fund to pay a broker-dealer
which provides brokerage and research services to the Adviser an amount of
commission for effecting a securities transaction for the Fund in excess of the
amount other broker-dealers would have charged for the transaction if the
Adviser determines in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
the Adviser's overall responsibilities to the Fund or to its other clients. Not
all of such services are useful or of value in advising the Fund.
The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto, such as clearance and settlement.
Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Fund and the Adviser's other clients in part for providing advice as to the
availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and performing functions
incidental thereto, such as clearance and settlement.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to the Adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or sold
from time to time through such broker-dealers, on behalf of the Fund. The
Trustees of the Fund (together with the Trustees of the other MFS Funds) have
directed the Adviser to allocate a total of $20,000 of commission business from
the MFS Funds to Neuberger & Berman as consideration for the annual renewal of
the Lipper Directors' Analytical Data Service (which provides information useful
to the Trustees in reviewing the relationship between the Fund and the Adviser).
The Adviser's investment management personnel attempt to evaluate the quality of
Research provided by brokers. The Adviser sometimes uses evaluations resulting
from this effort as a consideration in the selection of brokers to execute
portfolio transactions. However, the Adviser is unable to quantify the amount of
commissions set forth below which were paid as a result of such Research because
a substantial number of transactions were effected through brokers which provide
Research but which were selected principally because of their execution
capabilities.
The management fee that the Fund pays to the Adviser will not be reduced as a
consequence of the Adviser's receipt of brokerage and research services. To the
extent the Fund's portfolio transactions are used to obtain brokerage and
research services, the brokerage commissions paid by the Fund will exceed those
that might otherwise be paid for such portfolio transactions, or for such
portfolio transactions and research, by an amount which cannot be presently
determined. Such services would be useful and of value to the Adviser in serving
both the Fund and other clients and, conversely, such services obtained by the
placement of brokerage business of other clients would be useful to the Adviser
in carrying out its obligations to the Fund. While such services are not
expected to reduce the expenses of the Adviser, the Adviser would, through use
of the services, avoid the additional expenses which would be incurred if it
should attempt to develop comparable information through its own staff.
During the Fund's fiscal years ended December 31, 1994, 1993 and 1992, the Fund
paid total brokerage commissions of $4,542,396, $2,156,438 and $609,047,
respectively. During the Fund's fiscal year ended December 31, 1994, the Fund
acquired and retained securities issued by General Electric Company through
Kidder Peabody a regular broker-dealers of the Fund.
In certain instances there may be securities which are suitable for the Fund's
portfolio as well as for that of one or more of the other clients of the Adviser
or any subsidiary of the Adviser. Investment decisions for the Fund and for such
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security as far as the Fund is concerned.
In other cases, however, the Fund believes that its ability to participate in
volume transactions will produce better executions for the Fund.
5. SHAREHOLDER SERVICES
INVESTMENT AND WITHDRAWAL PROGRAMS -- The Fund makes available the following
programs designed to enable shareholders to add to their investment or withdraw
from it with a minimum of paper work. These are described below and, in certain
cases, in the Prospectus. The programs involve no extra charge to shareholders
(other than a sales charge in the case of certain Class A share purchases) and
may be changed or discontinued at any time by a shareholder or the Fund.
LETTER OF INTENT: If a shareholder (other than a group purchaser described
below) anticipates purchasing $50,000 or more of Class A shares of the Fund
alone or in combination with shares of all classes of other MFS Funds or MFS
Fixed Fund (a bank collective investment fund) within a 13-month period (or
36-month period, in the case of purchases of $1 million or more), the
shareholder may obtain Class A shares of the Fund at the same reduced sales
charge as though the total quantity were invested in one lump sum by completing
the Letter of Intent section of the Fund's Account Application or filing a
separate Letter of Intent application (available from the Shareholder Servicing
Agent) within 90 days of the commencement of purchases. Subject to acceptance by
MFD and the conditions mentioned below, each purchase will be made at a public
offering price applicable to a single transaction of the dollar amount specified
in the Letter of Intent application. The shareholder or his dealer must inform
MFD that the Letter of Intent is in effect each time shares are purchased. The
shareholder makes no commitment to purchase additional shares, but if his
purchases within 13 months (or 36 months, in the case of purchases of $1 million
or more), plus the value of shares credited toward completion of the Letter of
Intent do not total the sum specified, he will pay the increased amount of the
sales charge as described below. Instructions for issuance of shares in the name
of a person other than the person signing the Letter of Intent application must
be accompanied by a written statement from the dealer stating that the shares
were paid for by the person signing such Letter. Neither income dividends nor
capital gain distributions taken in additional shares will apply toward the
completion of the Letter of Intent. Dividends and distributions of other MFS
Funds automatically reinvested in shares of the Fund pursuant to the
Distribution Investment Program will also not apply toward completion of the
Letter of Intent.
Out of the shareholder's initial purchase (or subsequent purchases if
necessary), 5% of the dollar amount specified in the Letter of Intent
application shall be held in escrow by the Shareholder Servicing Agent in the
form of shares registered in the shareholder's name. All income dividends and
capital gain distributions on escrowed shares will be paid to the shareholder or
to his order. When the minimum investment so specified is completed (either
prior to or by the end of the 13-month period or 36-month period, as
applicable), the shareholder will be notified and the escrowed shares will be
released.
If the intended investment is not completed, the Shareholder Servicing Agent
will redeem an appropriate number of the escrowed shares in order to realize
such difference. Shares remaining after any such redemption will be released by
the Shareholder Servicing Agent. By completing and signing the Account
Application or separate Letter of Intent application, the shareholder
irrevocably appoints the Shareholder Servicing Agent his attorney to surrender
for redemption any or all escrowed shares with full power of substitution in the
premises.
RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity
discounts on the purchase of Class A shares when his new investment, together
with the current offering price value of all holdings of all classes of shares
of that shareholder in the MFS Funds or, MFS Fixed Fund (a bank collective
investment fund) reaches a discount level. See "Purchases" in the Prospectus for
the sales charges on quantity discounts. For example, if a shareholder owns
shares valued at $37,500 and purchases an additional $12,500 of Class A shares
of the Fund, the sales charge for the $12,500 purchase would be at the rate of
4.75% (the rate applicable to single transactions of $50,000). A shareholder
must provide the Shareholder Servicing Agent (or his investment dealer must
provide MFD) with information to verify that the quantity sales charge discount
is applicable at the time the investment is made.
DISTRIBUTION INVESTMENT PROGRAM: Distributions of dividends and capital gains
made by the Fund with respect to a particular class of shares may be
automatically invested in shares of the same class of one of the other MFS
Funds, if shares of the fund are available for sale. Such investments will be
subject to additional purchase minimums. Distributions will be invested at net
asset value (exclusive of any sales charge) and not subject to any CDSC.
Distributions will be invested at the close of business on the payable date for
the distribution. A shareholder considering the Distribution Investment Program
should obtain and read the prospectus of the other fund and consider the
differences in objectives and policies before making any investment.
SYSTEMATIC WITHDRAWAL PLAN: A shareholder may direct the Shareholder Servicing
Agent to send him (or anyone he designates) regular periodic payments, as
designated on the Account Application and based upon the value of his account.
Each payment under a Systematic Withdrawal Plan (a "SWP") must be at least $100,
except in certain limited circumstances. The aggregate withdrawals of Class B
shares in any year pursuant to a SWP generally are limited to 10% of the value
of the account at the time of establishment of the SWP. SWP payments are drawn
from the proceeds of share redemptions (which would be a return of principal
and, if reflecting a gain, would be taxable). Redemptions of Class B shares will
be made in the following order: (i) any "Free Amount"; (ii) to the extent
necessary, any "Reinvested Shares"; and (iii) to the extent necessary, the
"Direct Purchase" subject to the lowest CDSC (as such terms are defined in
"Contingent Deferred Sales Charge" in the Prospectus). The CDSC will be waived
in the case of redemptions of Class B shares pursuant to a SWP, but will not be
waived in the case of SWP redemptions of Class A shares which are subject to a
CDSC. To the extent that redemptions for such periodic withdrawals exceed
dividend income reinvested in the account, such redemptions will reduce and may
eventually exhaust the number of shares in the shareholder's account. All
dividend and capital gain distributions for an account with a SWP will be
reinvested in additional full and fractional shares of the Fund at the net asset
value in effect at the close of business on the record date for such
distributions.To initiate this service, shares generally having an aggregate
value of at least $10,000 either must be held on deposit by, or certificates for
such shares must be deposited with, the Shareholder Servicing Agent. With
respect to Class A shares, maintaining a withdrawal plan concurrently with an
investment program would be disadvantageous because of the sales charges
included in share purchases and the imposition of a CDSC on certain redemptions.
The shareholder by written instruction to the Shareholder Servicing Agent may
deposit into the account additional shares of the Fund, change the payee or
change the dollar amount of each payment. The Shareholder Servicing Agent may
charge the account for services rendered and expenses incurred beyond those
normally assumed by the Fund with respect to the liquidation of shares. No
charge is currently assessed against the account, but one could be instituted by
the Shareholder Servicing Agent on 60 days' notice in writing to the shareholder
in the event that the Fund ceases to assume the cost of these services. The Fund
may terminate any SWP for an account if the value of the account falls below
$5,000 as a result of share redemptions (other than as a result of a SWP) or an
exchange of shares of the Fund for shares of another MFS Fund. Any SWP may be
terminated at any time by either the shareholder or the Fund.
INVEST BY MAIL: Additional investments of $50 or more may be made at any time
by mailing a check payable to the Fund directly to the Shareholder Servicing
Agent. The shareholder's account number and the name of his investment dealer
must be included with each investment.
GROUP PURCHASES: A bona fide group and all its members may be treated as a
single purchaser and, under the Right of Accumulation (but not a Letter of
Intent), obtain quantity sales charge discounts on the purchase of Class A
shares if the group (1) gives its endorsement or authorization to the investment
program so it may be used by the investment dealer to facilitate solicitation of
the membership, thus effecting economies of sales effort; (2) has been in
existence for at least six months and has a legitimate purpose other than to
purchase mutual fund shares at a discount; (3) is not a group of individuals
whose sole organizational nexus is as credit cardholders of a company,
policyholders of an insurance company, customers of a bank or broker-dealer,
clients of an investment adviser or other similar groups; and (4) agrees to
provide certification of membership of those members investing money in the MFS
Funds upon the request of MFD.
AUTOMATIC EXCHANGE PLAN: Shareholders having account balances of at least
$5,000 in any MFS Fund may exchange their shares for the same class of shares of
the other MFS Funds under the Automatic Exchange Plan. The Automatic Exchange
Plan provides for automatic exchanges of funds from the shareholder's account in
an MFS Fund for investment in the same class of shares of other MFS Funds
selected by the shareholder. Under the Automatic Exchange Plan, exchanges of at
least $50 each may be made to up to four different funds effective on the
seventh day of each month or of every third month, depending whether monthly or
quarterly exchanges are elected by the shareholder. If the seventh day of the
month is not a business day, the transaction will be processed on the next
business day. Generally, the initial transfer will occur after receipt and
processing by the Shareholder Servicing Agent of an application in good order.
Exchanges will continue to be made from a shareholder's account in any MFS Fund
as long as the balance of the account is sufficient to complete the exchanges.
Additional payments made to a shareholder's account will extend the period that
exchanges will continue to be made under the Automatic Exchange Plan. However,
if additional payments are added to an account subject to the Automatic Exchange
Plan shortly before an exchange is scheduled, such funds may not be available
for exchanges until the following month; therefore, care should be used to avoid
inadvertently terminating the Automatic Exchange Plan through exhaustion of the
account balance.
No transaction fee for exchanges will be charged in connection with the
Automatic Exchange Plan. However, exchanges of shares of MFS Money Market Fund,
MFS Government Money Market Fund and Class A shares of MFS Cash Reserve Fund
will be subject to any applicable sales charge. Changes in amounts to be
exchanged to each fund, the funds to which exchanges are to be made and the
timing of exchanges (monthly or quarterly), or termination of a shareholder's
participation in the Automatic Exchange Plan will be made after instructions in
writing or by telephone (an "Exchange Change Request") are received by the
Shareholder Servicing Agent in proper form (i.e., if in writing -- signed by the
record owner(s) exactly as shares are registered; if by telephone -- proper
account identification is given by the dealer or shareholder of record). Each
Exchange Change Request (other than termination of participation in the program)
must involve at least $50. Generally, if an Exchange Change Request is received
by telephone or in writing before the close of business on the last business day
of a month, the Exchange Change Request will be effective for the following
month's exchanges.
A shareholder's right to make additional investments in any of the MFS Funds, to
make exchanges of shares from one MFS Fund to another and to withdraw from an
MFS Fund, as well as a shareholder's other rights and privileges are not
affected by a shareholder's participation in the Automatic Exchange Plan.
The Automatic Exchange Plan is part of the Exchange Privilege. For additional
information regarding the Automatic Exchange Plan, including the treatment of
any CDSC, see "Exchange Privilege" below.
REINSTATEMENT PRIVILEGE: Shareholders of the Fund and shareholders of the
other MFS Funds (except MFS Money Market Fund, MFS Government Money Market Fund
and holders of Class A shares of MFS Cash Reserve Fund in the case where the
shares are acquired through direct purchase or reinvested dividends) who have
redeemed their shares have a one-time right to reinvest the redemption proceeds
in the same class of shares of any of the MFS Funds (if shares of the fund are
available for sale) at net asset value (without a sales charge) and, if
applicable, with credit for any CDSC paid. In the case of proceeds reinvested in
shares of MFS Money Market Fund, MFS Government Money Market Fund and Class A
shares of MFS Cash Reserve Fund, the shareholder has the right to exchange the
acquired shares for shares of another MFS Fund at net asset value pursuant to
the exchange privilege described below. Such a reinvestment must be made within
a certain period of time of the redemption and is limited to the amount of the
redemption proceeds. If the shares credited for any CDSC paid are then redeemed
within six years of the initial purchase in the case of Class B shares or 12
months of the initial purchase in the case of certain Class A shares, a CDSC
will be imposed upon redemption. Although redemptions and repurchases of shares
are taxable events, a reinvestment within a certain period of time in the same
fund may be considered a "wash sale" and may result in the inability to
recognize currently all or a portion of any loss realized on the original
redemption for federal income tax purposes. Please see your tax adviser for
further information.
EXCHANGE PRIVILEGE: Subject to the requirements set forth below, some or all of
the shares of the same class in an account with the Fund for which payment has
been received by the Fund (i.e. an established account) may be exchanged for
shares of the same class of any of the other MFS Funds (if available for sale)
at net asset value. Exchanges will be made only after instructions in writing or
by telephone (an "Exchange Request") are received for an established account by
the Shareholder Servicing Agent.
Each Exchange Request must be in proper form (i.e., if in writing -- signed by
the record owner(s) exactly as the shares are registered; if by telephone --
proper account identification is given by the dealer or shareholder of record),
and each exchange must involve either shares having an aggregate value of at
least $1,000 or all the shares in the account ($50 in the case of retirement
plan participants whose sponsoring organizations subscribe to the MFS
FUNDamental 401(k) Plan or another similar 401(k) recordkeeping system made
available by MFS Service Center, Inc.). Each exchange involves the redemption of
the shares of the Fund to be exchanged and the purchase at net asset value
(i.e., without a sales charge) of shares of the same class of the other MFS
Fund. Any gain or loss on the redemption of the shares exchanged is reportable
on the shareholder's federal income tax return, unless both the shares received
and the shares surrendered in the exchange are held in a tax-deferred retirement
plan or other tax-exempt account. No more than five exchanges may be made in any
one Exchange Request by telephone. If an Exchange Request is received by the
Shareholder Servicing Agent prior to the close of regular trading on the New
York Stock Exchange (the "Exchange"), the exchange usually will occur on that
day if all the requirements set forth above have been complied with at that
time. However, payment of the redemption proceeds by the Fund, and thus the
purchase of shares of the other MFS Fund, may be delayed for up to seven days if
the Fund determines that such a delay would be in the best interest of all its
shareholders. Investment dealers which have satisfied criteria established by
MFD may also communicate a shareholder's Exchange Request to MFD by facsimile
subject to the requirements set forth above.
No CDSC is imposed on exchanges, although liability for the CDSC is carried
forward to the exchanged shares. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the purchase of shares acquired in
one or more exchanges is deemed to have occurred at the time of the original
purchase of the exchanged shares.
Additional information with respect to any of the MFS Funds, including a copy of
its current prospectus, may be obtained from investment dealers or the
Shareholder Servicing Agent. A shareholder considering an exchange should obtain
and read the prospectus of the other fund and consider the differences in
objectives and policies before making any exchange. Shareholders of the other
MFS Funds (except shares of MFS Money Market Fund, MFS Government Money Market
Fund and Class A shares of MFS Cash Reserve Fund acquired through direct
purchase and dividends reinvested prior to June 1, 1992) have the right to
exchange their shares for shares of the Fund, subject to the conditions, if any,
set forth in their respective prospectuses. In addition, unitholders of the MFS
Fixed Fund (a bank collective investment Fund) have the right to exchange their
units (except units acquired through direct purchases) for shares of the Fund,
subject to the conditions, if any, imposed upon such unitholders by the MFS
Fixed Fund.
Any state income tax advantages for investment in shares of each state-specific
series of MFS Municipal Series Trust may only benefit residents of such states.
Investors should consult their own tax advisers to be sure this is an
appropriate investment, based on their residency and each state's income tax
laws.
The exchange privilege (or any aspect of it) may be changed or discontinued and
is subject to certain limitations, including certain restrictions on purchases
by market timer accounts (see "Purchases" in the Prospectus).
TAX-DEFERRED RETIREMENT PLANS: Shares of the Fund may be purchased by all
types of tax-deferred retirement plans. MFD makes available through investment
dealers plans and/or custody agreements for the following:
Individual Retirement Accounts (IRAs) (for individuals and their non-employed
spouses who desire to make limited contributions to a tax-deferred retirement
program and, if eligible, to receive a federal income tax deduction for
amounts contributed);
Simplified Employee Pension (SEP-IRA) Plans;
Retirement Plans Qualified under Section 401(k) of the Internal Revenue Code
of 1986, as amended;
403(b) Plans (deferred compensation arrangements for employees of public
school systems and certain non-profit organizations); and
Certain other qualified corporate pension and profit-sharing plans.
The plan documents provided by MFD designate a trustee or custodian (unless
another trustee or custodian is designated by the individual or group
establishing the plan) and contain specific information about the plans. Each
plan provides that dividends and distributions will be reinvested automatically.
For further details with respect to any plan, including fees charged by the
trustee, custodian or MFD, tax consequences and redemption information, see the
specific documents for that plan. Plan documents other than those provided by
MFD may be used to establish any of the plans described above. Third party
administrative services, available for some corporate plans, may limit or delay
the processing of transactions.
Investors should consult with their tax adviser before establishing any of the
tax-deferred retirement plans described above.
6. TAX STATUS
The Fund has elected to be treated and intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions, and the composition and holding period
of the Fund's portfolio assets. Because the Fund intends to distribute all of
its net investment income and net realized capital gains to shareholders in
accordance with the timing requirements imposed by the Code, it is not expected
that the Fund will be required to pay any federal income or excise taxes,
although the Fund's foreign-source income may be subject to foreign withholding
taxes. If the Fund should fail to qualify as a "regulated investment company" in
any year, the Fund would incur a regular corporate federal income tax upon its
taxable income and Fund distributions would generally be taxable as ordinary
dividend income to shareholders. As long as it qualifies as a regulated
investment company under the Code, the Fund will not be required to pay
Massachusetts income or excise taxes.
Shareholders of the Fund normally will have to pay federal income taxes, and any
state or local taxes, on the dividends and capital gain distributions they
receive from the Fund. Distributions from ordinary income and net short-term
capital gains, whether paid in cash or reinvested in additional shares, are
taxable to the Fund's shareholders as ordinary income for federal income tax
purposes. A portion of the dividends from ordinary income (but none of the
Fund's capital gains) is normally eligible for the dividends-received deduction
for corporations if the recipient otherwise qualifies for that deduction with
respect to its holding of Fund shares. Availability of the deduction for
particular shareholders is subject to certain limitations, and deducted amounts
may be subject to the alternative minimum tax or result in certain basis
adjustments. For the Fund's last fiscal year, 70% of the dividends the Fund paid
to shareholders were eligible for the deduction. Distributions from net capital
gains (i.e., the excess of net long-term caital gains over net short-term
capital losses), whether paid in cash or reinvested in additional shares, are
taxable to the Fund's shareholders as long-term capital gains for federal income
tax purposes without regard to the length of time the shareholders have owned
their shares. Fund dividends declared in October, November or December and paid
the following January to shareholders of record in such a month will be taxable
to shareholders as if received on December 31 of the year in which they are
declared. The Fund will notify its shareholders regarding the tax status of its
distributions after the end of each calendar year.
Any dividend or distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the dividend or distribution.
Shareholders purchasing shares shortly before the record date of any taxable
dividend or other distribution may thus pay the full price for the shares and
then effectively receive a portion of the purchase price back as a taxable
distribution.
In general, any gain or loss realized upon a taxable disposition of shares of
the Fund by a shareholder that holds such shares as a capital asset will be
treated as long-term capital gain or loss if the shares have been held for more
than 12 months and otherwise as a short-term capital gain or loss. However, any
loss realized upon a redemption of shares in the Fund held for six months or
less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a redemption of shares may also be disallowed under rules relating
to wash sales. Gain may be increased (or loss reduced) upon a redemption of
Class A shares of the Fund within ninety days after their purchase followed by
any purchase (including purchases by exchange or by reinvestment) without
payment of an additional sales charge of Class A shares of the Fund or of
another MFS Fund (or any other shares of an MFS Fund generally sold subject to a
sales charge).
The Fund's current dividend and accounting policies will affect the amount,
timing and character of distributions to shareholders, and may under certain
circumstances make an economic return of capital taxable to shareholders. Any
investment in zero coupon bonds or certain securities purchased at a market
discount will cause the Fund to recognize income prior to the receipt of cash
payments with respect to those securities. In order to distribute this income
and avoid a tax on the Fund, the Fund may be required to liquidate portfolio
securities that it might otherwise have continued to hold, potentially resulting
in additional taxable gain or loss to the Fund.
Special tax considerations apply with respect to foreign investments of the
Fund. For example, foreign exchange gains and losses realized by the Fund will
generally be treated as ordinary income and losses. Use of foreign currencies
for non-hedging purposes and investment by the Fund in certain "passive foreign
investment companies" may be limited in order to avoid a tax on the Fund.
Investment income received by the Fund from foreign securities may be subject to
foreign income taxes withheld at the source; the Fund will generally be unable
to pass through to shareholders foreign tax credits and deductions with respect
to such foreign taxes. The United States has entered into tax treaties with many
foreign countries that may entitle the Fund to a reduced rate of tax or an
exemption from tax on such income; the Fund intends to qualify for treaty
reduced rates where available. It is impossible to determine the effective rate
of foreign tax in advance since the amount of the Fund's assets to be invested
within various countries is not known.
The Fund's transactions in options, Futures Contracts, and Forward Contracts
will be subject to special tax rules that may affect the amount, timing, and
character of Fund income and distributions to shareholders. For example, certain
positions held by the Fund on the last business day of each taxable year will be
marked to market (i.e., treated as if closed out) on that day, and any gain or
loss associated with the positions will be treated as 60% long-term and 40%
short-term capital gain or loss. Certain positions held by the Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities, and conversion of short-term into long-term capital losses.
Certain tax elections exist for straddles that may alter the effects of these
rules. The Fund will limit its activities in options, Futures Contracts, and
Forward Contracts to the extent necessary to meet the requirements of Subchapter
M of the Code.
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at the rate of 30%. The Fund intends
to withhold 30% of any payments made to Non-U.S. Persons that are subject to
such withholding, regardless of whether a lower treaty rate may be permitted.
Any amounts overwithheld may be recovered by such persons by filing a claim for
refund with the U.S. Internal Revenue Service within the time period applicable
to such claims. Distributions received from the Fund by Non-U.S. Persons may
also be subject to tax under the laws of their own jurisdiction.
The Fund is also required in certain circumstances to apply backup withholding
at a rate of 31% on taxable dividends and the proceeds of redemptions and
exchanges paid to any shareholder (including a Non-U.S. Person) who does not
furnish to the Fund certain information and certifications or who is otherwise
subject to backup withholding. However, backup withholding will not be applied
to payments that have been subject to 30% withholding.
7. DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
NET ASSET VALUE: The net asset value per share of each class of the Fund is
determined each day during which the Exchange is open for trading. (As of the
date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays (or days on which they
are observed): New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.) This
determination is made once each day as of the close of regular trading on the
Exchange by deducting the amount of the liabilities attributable to the class
from the value of assets attributable to the class and dividing the difference
by the number of shares of the class outstanding. Forward Contracts will be
valued using a pricing model taking into consideration data from an external
pricing source. Use of the pricing services has been approved by the Fund's
Board of Trustees. All other securities, futures contracts and options in the
Fund's portfolio (other than short-term obligations) for which the principal
market is one or more securities or commodities exchanges (whether domestic or
foreign) will be valued at the last reported sale price or at the settlement
price prior to the determination (or if there has been no current sale, at the
closing bid price) on the primary exchange on which such securities, futures
contracts or options are traded; but if a securities exchange is not the
principal market for securities, such securities will, if market quotations are
readily available, be valued at current bid prices, unless such securities are
reported on the NASDAQ system, in which case they are valued at the last sale
price or, if no sales occurred during the day, at the last quoted bid price.
Bonds and other fixed income securities, including listed issues, in the Fund's
portfolio are valued on the basis of valuations furnished by a pricing service
which utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data, without exclusive
reliance upon exchange or over-the-counter prices, since such valuations are
believed to reflect the fair value of such securities. Use of the pricing
service has been approved by the Fund's Board of Trustees. Short-term
obligations with a remaining maturity in excess of 60 days will be valued based
upon dealer supplied valuations. Other short-term obligations are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees. Portfolio securities for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Board of Trustees.
PERFORMANCE INFORMATION
TOTAL RATE OF RETURN: The Fund will calculate its total rate of return for each
class of shares for certain periods by determining the average annual compounded
rates of return over those periods that would cause an investment of $1,000
(made with all distributions reinvested and reflecting the CDSC or the maximum
public offering price) to reach the value of that investment at the end of the
periods. The Fund may also calculate (i) a total rate of return, which is not
reduced by the CDSC (4% maximum for Class B shares) and therefore may result in
a higher rate of return, (ii) a total rate of return assuming an initial account
value of $1,000, which will result in a higher rate of return since the value of
the initial account will not be reduced by the maximum sales charge (currently
5.75%) and/or (iii) total rates of return which represent aggregate performance
over a period or year-by-year performance, and which may or may not reflect the
effect of the maximum or other sales charge or CDSC. The Fund's average annual
total rate of return for Class A shares reflecting the initial investment at the
maximum public offering price for the one-year, five-year and ten-year periods
ended December 31, 1994 was, respectively, -6.70%, 7.05% and 12.73%. The Fund's
average annual total rate of return for Class A shares not giving effect to the
sales charge on the initial investment for the one-year, five-year and ten-year
periods ended December 31, 1994 was, respectively, -1.02%, +8.33% and +13.40%.
The Fund's average annual total rate of return for Class B shares, not giving
effect to the CDSC, for the one-year period ended December 31, 1994 and for the
period September 7, 1993 through the Fund's fiscal year ended December 31, 1994
was -1.88% and 0.53%, respectively. The Fund's average annual total rate of
return for Class B shares, reflecting the CDSC for the one-year period ended
December 31, 1994 and for the period September 7, 1993 through the Fund's fiscal
year ended December 31, 1994 was -5.37% and -1.82%, respectively. The total
rates of return presented above may not be indicative of future performance.
PERFORMANCE RESULTS: The performance results for Class A shares below, based on
an assumed initial investment of $10,000 in Class A shares, cover the period
from January 1, 1985 through December 31, 1994. It has been assumed that
dividends and capital gain distributions were reinvested in additional shares.
These performance results, as well as any total rate of return quotations
provided by the Fund, should not be considered as representative of the
performance of the Fund in the future since the net asset value and public
offering price of shares of the Fund will vary based not only on the type,
quality and maturities of the securities held in the Fund's portfolio, but also
on changes in the current value of such securities and on changes in the
expenses of the Fund. These factors and possible differences in the methods used
to calculate total rates of return should be considered when comparing the total
rate of return of the Fund to total rates of return published for other
investment companies or other investment vehicles. Total rate of return reflects
the performance of both principal and income. Current net asset value and
account balance information may be obtained by calling 1-800-MFS-TALK
(637-8255).
MASSACHUSETTS INVESTORS TRUST -- A
----------------------------------
VALUE OF
VALUE OF REINVESTED VALUE OF
YEAR ENDED INITIAL $10,000 CAPITAL GAIN REINVESTED TOTAL
DECEMBER 31 INVESTMENT DISTRIBUTIONS DIVIDENDS VALUE
----------- ---------- ------------- --------- -----
1984 $ 8,944 $ 376 $ 380 $ 9,700
1985 9,837 1,405 840 12,082
1986 9,813 3,146 1,203 14,162
1987 9,139 4,587 1,492 15,218
1988 9,107 5,690 2,002 16,799
1989 10,998 8,752 3,116 22,866
1990 9,967 9,359 3,518 22,844
1991 11,258 13,196 4,710 29,164
1992 9,991 16,474 4,853 31,318
1993 9,334 19,659 5,466 34,459
1994 8,173 20,465 5,470 34,108
EXPLANATORY NOTES: The results in the table assume that the initial investment
on January 1, 1985 has been reduced by the current maximum applicable sales
charge of 5.75%. No adjustment has been made for any income taxes payable by
shareholders.
YIELD: Any yield quotation for a class of shares of the Fund is based on the
annualized net investment income per share of that class for the 30-day period.
The yield for each class of the Fund is calculated by dividing the net
investment income allocated to that class earned during the period by the
maximum offering price per share of that class of the Fund on the last day of
the period. The resulting figure is then annualized. Net investment income per
share of a class is determined by dividing (i) the dividends and interest
allocated to that class during the period, minus accrued expenses of that class
for the period by (ii) the average number of shares of the class entitled to
receive dividends during the period multiplied by the maximum offering price per
share on the last day of the period. The Fund's yield calculations for Class A
shares assume a maximum sales charge of 5.75%. The yield calculation for Class B
shares assumes no CDSC is paid. The yield calculation for Class A shares for the
30-day period ended December 31, 1994 was 1.84%, taking into account certain fee
waivers; without these waivers, the yield would have been 1.73%. The yield
calculation for Class B shares for the 30-day period ended December 31, 1994 was
1.08%.
CURRENT DISTRIBUTION RATE: Yield, which is calculated according to a formula
prescribed by the Securities and Exchange Commission, is not indicative of the
amounts which were or will be paid to the Fund's shareholders. Amounts paid to
shareholders of each class are reflected in the quoted "current distribution
rate" for that class. The current distribution rate for a class is computed by
dividing the total amount of dividends per share paid by the Fund to
shareholders of that class during the past twelve months by the maximum public
offering price of that class at the end of such period. Under certain
circumstances, such as when there has been a change in the amount of dividend
payout, or a fundamental change in investment policies, it might be appropriate
to annualize the dividends paid over the period such policies were in effect,
rather than using the dividends during the past twelve months. The current
distribution rate differs from the yield computation because it may include
distributions to shareholders from sources other than dividends and interest,
such as premium income for option writing, short-term capital gains and return
of invested capital, and is calculated over a different period of time. The
Fund's current distribution rate calculation for Class A shares assumes a
maximum sales charge of 5.75%. The Fund's current distribution rate calculation
for Class B shares assumes no CDSC is paid. The current distribution rate for
Class A shares of the Fund for the 12-month period ended on December 31, 1994
was 5.80%. The current distribution rate for Class B shares of the Fund for the
12-month period ended on December 31, 1994 was 5.02%.
From time to time the Fund may, as appropriate, quote fund rankings or reprint
all or a portion of evaluations of fund performance and operations appearing in
various independent publications, including but not limited to the following:
Money, Fortune, U.S. News and World Report, Kiplinger's Personal Finance, The
Wall Street Journal, Barron's, Investors Business Daily, Newsweek, Financial
World, Financial Planning, Investment Advisor, USA Today, Pensions and
Investments, SmartMoney, Forbes, Global Finance, Registered Representative,
Institutional Investor, the Investment Company Institute, Johnson's Charts,
Morningstar, Lipper Analytical Services, Inc., CDA Wiesenberger, Shearson Lehman
and Salomon Bros. Indices, Ibbotson, Business Week, Lowry Associates, Media
General, Investment Company Data, The New York Times, Your Money, Strangers
Investment Advisor, Financial Planning on Wall Street, Standard and Poor's,
Individual Investor, The 100 Best Mutual Funds You Can Buy, by Gordon K.
Williamson, Consumer Price Index, and Sanford C. Bernstein & Co. Fund
performance may also be compared to the performance of other mutual funds
tracked by financial or business publications or periodicals.
The Fund may also quote evaluations mentioned in independent radio or television
broadcasts.
From time to time the Fund may use charts and graphs to illustrate the past
performance of various indices such as those mentioned above and illustrations
using hypothetical rates of return to illustrate the effects of compounding and
tax-deferral.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against a loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals.
The Fund was established by three securities executives -- L. Sherman Adams,
Charles H. Learoyd and Alston L. Carr. The Fund began operation in 1924 and
established its own in-house research department in 1932. From 1932 to 1953, the
Fund was managed by Merrill Griswold, its Chairman. Mr. Griswold helped to
change the U.S. tax law in order to permit income and capital gains to be passed
along to mutual fund shareholders without a separate tax at the fund level. In
1936, the Fund began offering shareholders the ability to take capital gain
distributions in cash or additional shares. The Fund issued shareholders full,
periodic reports disclosing portfolio holdings, fees and expenses a decade
before it was required to do so under the Securities Act of 1933, as amended.
The fund has been actively managed for the last 70 years responding to major
historical events which have affected the stock market (such as the Great
Depression, World War II, the post-war economic boom, the 1970s' oil crisis and
inflationary periods, and the "boom market" of the 1980s).
In 1969, the Fund's Trustees created a management company, MFS, to externalize
the investment management function and to permit the firm to offer additional
funds. MFS introduced several mutual funds in 1970 and hired the current
chairman of MFS, A. Keith Brodkin, as a bond fund portfolio manager.
As of March 30, 1995, the Fund had total net assets of approximately $1.76
billion and had approximately 103,000 shareholders.
From time to time, MFD, may, as appropriate, quote Fund-related comments from
existing shareholders.
MFS FIRSTS: MFS has a long history of innovations.
-- 1924 -- Massachusetts Investors Fund is established as
the first mutual fund in America.
-- 1924 -- Massachusetts Investors Trust is the first mutual fund
to make full public disclosure of its operations in shareholder
reports.
-- 1932 -- One of the first internal research departments is
established to provide in-house analytical capability for an
investment management firm.
-- 1933 -- Massachusetts Investors Fund is the first mutual fund
to register under the Securities Act of 1933.
-- 1936 -- Massachusetts Investors Fund is the first mutual fund
to let shareholders take capital gain distributions either in
additional shares or in cash.
-- 1976 -- MFS(R) Municipal Bond Fund is among the first municipal
bond funds established.
-- 1979 -- Spectrum becomes the first combination fixed/ variable
annuity with no initial sales charge.
-- 1981 -- MFS(R) World Governments Fund is established as
America's first globally diversified fixed-income mutual fund.
-- 1984 -- MFS(R) Municipal High Income Fund is the first mutual
fund to seek high tax-free income from lower- rated municipal
securities.
-- 1986 -- MFS(R) Managed Sectors Fund becomes the first mutual
fund to target and shift investments among industry sectors for
shareholders.
-- 1986 -- MFS(R) Municipal Income Fund is the first closed-end,
high-yield municipal bond fund traded on the New York Stock
Exchange.
-- 1987 -- MFS(R) Multimarket Income Fund is the first closed-end,
multimarket high income fund listed on the New York Stock
Exchange.
-- 1989 -- MFS(R) Regatta becomes America's first non-qualified
market-value-adjusted fixed/variable annuity.
-- 1990 -- MFS(R) World Total Return Fund is the first
global balanced fund.
-- 1993 -- MFS(R) World Growth Fund is the first global emerging
markets fund to offer the expertise of two sub-advisers.
-- 1993 -- MFS becomes money managers of MFS(R) Union Standard
Trust, the first trust to invest solely in companies deemed to
be union-friendly by an Advisory Board of senior labor
officials, senior managers of companies with significant labor
contracts, academics and other national labor leaders or
experts.
8. DISTRIBUTION PLANS
CLASS A DISTRIBUTION PLAN: The Trustees have adopted a Distribution Plan
relating to Class A shares (the "Class A Distribution Plan") pursuant to Section
12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule") after having
concluded that there is a reasonable likelihood that the Class A Distribution
Plan would benefit the Fund and its Class A shareholders. The Class A
Distribution Plan is designed to promote sales, thereby increasing the net
assets of the Fund. Such an increase may reduce the expense ratio to the extent
the Fund's fixed costs are spread over a larger net asset base. Also, an
increase in net assets may lessen the adverse effects that could result were the
Fund required to liquidate portfolio securities to meet redemptions.
The Class A Distribution Plan provides that the Fund will pay MFD up to (but not
necessarily all of) an aggregate of 0.35% of the average daily net assets
attributable to the Class A shares annually in order that MFD may pay expenses
on behalf of the Fund related to the distribution and servicing of its Class A
shares. The expenses to be paid by MFD on behalf of the Fund include a service
fee to securities dealers which enter into a sales agreement with MFD of up to
0.25% per annum of the portion of the Fund's average daily net assets
attributable to the Class A shares owned by investors for whom that securities
dealer is the holder or dealer of record. These payments are partial
consideration for personal services and/or account maintenance performed by such
dealers with respect to Class A shares. MFD may from time to time reduce the
amount of the service fee paid for shares sold prior to a certain date. MFD may
also retain a distribution fee of 0.10% per annum of the Fund's average daily
net assets attributable to Class A shares as partial consideration for services
performed and expenses incurred in the performance of MFD's obligations as to
Class A shares under the distribution agreement with the Fund. MFD, however,
currently is waiving this 0.10% per annum distribution fee and will not accept
payment of this fee in the future unless it first obtains the approval of the
Fund's Board of Trustees. Any remaining funds may be used to pay for other
distribution related expenses as described in the Prospectus. Service fees may
be reduced for a securities dealer that is the holder or dealer of record for an
investor who owns shares of the Fund having an aggregate net asset value at or
above a certain dollar level. No service fee will be paid (i) to any securities
dealer who is the holder or dealer of record for investors who own Class A
shares having an aggregate net asset value less than $750,000, or such other
amount as may be determined from time to time by MFD (MFD, however, may waive
this minimum amount requirement from time to time if the dealer satisfies
certain criteria), or (ii) to any insurance company which has entered into an
agreement with the Fund and MFD that permits such insurance company to purchase
shares from the Fund at their net asset value in connection with annuity
agreements issued in connection with the insurance company's separate accounts.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. MFD or its affiliates are entitled to retain all
service fees payable under the Class A Distribution Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by MFD or its affiliates for shareholder accounts. Certain banks and
other financial institutions that have agency agreements with MFD will receive
agency transaction and service fees that are the same as commissions and service
fees to dealers. During the fiscal year ended December 31, 1994, the Fund
incurred expenses of $5,330,343 (equal to 0.33% of its average daily net assets)
relating to the distribution and servicing of its Class A shares, of which MFD
waived $1,615,767, retained 1,080,283 and securities dealers of the Fund and
certain banks and other financial institutions received $2,634,293.
The Class A Distribution Plan will remain in effect until August 1, 1995, and
will continue in effect thereafter only if such continuance is specifically
approved at least annually by vote of both the Trustees and a majority of the
Trustees who are not "interested persons" or financially interested parties to
the Plan ("Class A Distribution Plan Qualified Trustees"). The Class A
Distribution Plan requires that the Fund and MFD each shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under such Plan. The Class A
Distribution Plan may be terminated at any time by vote of a majority of the
Class A Distribution Plan Qualified Trustees or by vote of the holders of a
majority of the Fund's Class A shares (as defined in "Investment Restrictions").
Agreements under the Class A Distribution Plan must be in writing, will be
terminated automatically if assigned, and may be terminated at any time without
payment of any penalty, by vote of a majority of the Class A Distribution Plan
Qualified Trustees or by vote of the holders of a majority of the Fund's Class A
shares (as defined in "Investment Restrictions"). The Class A Distribution Plan
may not be amended to increase materially the amount of permitted distribution
expenses without the approval of a majority of the Fund's Class A shares (as
defined in "Investment Restrictions") and may not be materially amended in any
case without a vote of the Trustees and a majority of the Class A Distribution
Plan Qualified Trustees. No Trustee who is not an "interested person" has any
financial interest in the Class A Distribution Plan or in any related agreement.
CLASS B DISTRIBUTION PLAN: The Trustees of the Fund have adopted a Distribution
Plan relating to Class B shares (the "Class B Distribution Plan") pursuant to
Section 12(b) of the 1940 Act and the Rule, after having concluded that there
was a reasonable likelihood that the Class B Distribution Plan would benefit
that Fund and its Class B shareholders. The Class B Distribution Plan is
designed to promote sales, thereby increasing the net assets of the Fund. Such
an increase may reduce the expense ratio to the extent the Fund's fixed costs
are spread over a larger net asset base. Also, an increase in net assets may
lessen the adverse effects that could result were the Fund required to liquidate
portfolio securities to meet redemptions. There is, however, no assurance that
the net assets of the Fund will increase or that the other benefits referred to
above will be realized.
The Class B Distribution Plan provides that the Fund shall pay MFD, as the
Fund's distributor for its Class B shares, a daily distribution fee equal on an
annual basis to 0.75% of the Fund's average daily net assets attributable to
Class B shares and will pay MFD a service fee of up to 0.25% per annum of the
Fund's average daily net assets attributable to Class B shares (which MFD will
in turn pay to securities dealers which enter into a sales agreement with MFD at
a rate of up to 0.25% per annum of the Fund's average daily net assets
attributable to Class B shares owned by investors for whom that securities
dealer is the holder or dealer of record). This service fee is intended to be
additional consideration for all personal services and/or account maintenance
services rendered by the dealer with respect to Class B shares. MFD will advance
to dealers the first-year service fee at a rate equal to 0.25% per annum of the
amount invested. As compensation therefor, MFD may retain the service fee paid
by the Fund with respect to such shares for the first year after purchase.
Dealers will become eligible for additional service fees with respect to such
shares commencing in the thirteenth month following purchase. Except in the case
of the first year service fee, no service fee will be paid to any securities
dealer who is the holder or dealer or record for investors who own Class B
shares having an aggregate net asset value less than $750,000, or such other
amount as may be determined from time to time by MFD. MFD, however, may waive
this minimum amount requirement from time to time if the dealer satisfies
certain criteria. Dealers may from time to time be required to meet certain
other criteria in order to receive service fees. MFD or its affiliates are
entitled to retain all service fees payable under the Class B Distribution Plan
for which there is no dealer or record or for which qualification standards have
not been met as partial consideration for personal services and/or account
maintenance services performed by MFD or its affiliates for shareholder
accounts.
The purpose of distribution payments to MFD under the Class B Distribution Plan
is to compensate MFD for its distribution services to the Fund. MFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Distribution Plan
also provides that MFD will receive all CDSCs attributable to Class B shares
(see "Distribution Plans" and "Purchases" in the Prospectus).
In accordance with the Rule, all agreements relating to the Class B Distribution
Plan entered into between the Fund or MFD and other organizations must be
approved by the Board of Trustees, including a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Class B Distribution Plan or
in any agreement related to such Plan ("Class B Distribution Plan Qualified
Trustees"). The Class B Distribution Plan further provides that the selection
and nomination of Class B Distribution Plan Qualified Trustees shall be
committed to the discretion of the non-interested Trustees then in office.
During the fiscal year ended December 31, 1994, the Fund incurred expenses of
$425,930 (equal to 1.0% of its average daily net assets) relating to the
distribution and servicing of its Class B shares, of which MFD retained 2,779
and securities dealers of the Fund and certain banks and other financial
institutions received $423,151.
The Class B Distribution Plan will remain in effect until August 1, 1995, and
will continue in effect thereafter only if such continuance is specifically
approved at least annually by vote of the Trustees and a majority of the Class B
Distribution Plan Qualified Trustees. The Class B Distribution Plan requires
that the Fund and MFD shall provide to the Trustees, and the Trustees shall
review, at least quarterly, a written report of the amounts expended (and
purposes therefor) under such Plan. The Class B Distribution Plan may be
terminated at any time by vote of a majority of the Class B Distribution Plan
Qualified Trustees or by vote of the holders of a majority of the Class B shares
of the Fund (as defined in "Investment Restrictions" above). The Class B
Distribution Plan may not be amended to increase materially the amount of
permitted distribution expenses without the approval of Class B shareholders and
may not be materially amended in any case without a vote of the majority of both
the Trustees and the Class B Distribution Plan Qualified Trustees. No Trustee
who is not an interested person of the Fund has any financial interest in the
Class B Distribution Plan or in any related agreement.
9. INDEPENDENT ACCOUNTANTS AND
FINANCIAL STATEMENTS
Deloitte & Touche LLP are the Fund's independent certified public accountants.
The Portfolio of Investments at December 31, 1994, the Statement of Assets and
Liabilities at December 31, 1994, the Statement of Operations for the year ended
December 31, 1994, the Statement of Changes in Net Assets for each of the two
years in the period ended December 31, 1994, the Financial Highlights for each
of the 10 years in the period ended December 31, 1994, the Notes to Financial
Statements and the Independent Auditors' Report, each of which is included in
the Annual Report to shareholders of the Fund, are incorporated by reference
into this Statement of Additional Information and have been so incorporated in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing. A copy of the Annual Report
accompanies this Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
APPENDIX A
TRUSTEE COMPENSATION TABLE
TOTAL TRUSTEE
RETIREMENT BENEFIT ESTIMATED FEES
TRUSTEE FEES ACCRUED AS PART OF CREDITED YEARS FROM FUND AND
TRUSTEE FROM FUND<F1> FUND EXPENSE<F1> OF SERVICE<F2> FUND COMPLEX<F3>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard B. Bailey $6,125 $ 857 8 $226,221
Peter G. Harwood 6,535 327 5 105,812
J. Atwood Ives 6,535 875 17 106,482
Lawrence T. Perera 5,975 3,027 23 96,592
William Poorvu 6,535 3,027 23 106,482
Charles W. Schmidt 6,125 2,872 16 98,397
Elaine R. Smith 6,125 835 27 98,397
David B. Stone 6,385 2,345 14 104,007
<FN>
<F1>For fiscal year ended December 31, 1994
<F2>Based on normal retirement age of 73
<F3>Information provided is provided for calendar year 1994. All Trustees served as Trustees of 20 funds within the MFS fund
complex (having aggregate net assets at December 31, 1994, of approximately $14.7 billion) except Mr. Bailey, who served as
Trustee of 56 funds within the MFS fund complex (having aggregate net assets at December 31, 1994, of approximately $24.4
billion).
ESTIMATED ANNUAL BENEFITS PAYABLE BY FUND UPON RETIREMENT<F4>
YEARS OF SERVICE
------------------------------------------------------------------------
AVERAGE TRUSTEE FEES 3 5 7 10 OR MORE
- -------------------------------------------------------------------------------------------------------------------------------
$5,375 $806 $1,344 $1,881 $2,688
5,615 842 1,404 1,965 2,808
5,855 878 1,464 2,049 2,928
6,095 914 1,524 2,133 3,048
6,335 950 1,584 2,217 3,168
6,575 986 1,644 2,301 3,288
<F4>Other funds in the MFS fund complex provide similar retirement benefits to the Trustees.
</FN>
</TABLE>
<PAGE>
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street, Boston, MA 02116
(617) 954-5000
DISTRIBUTOR
MFS Fund Distributors, Inc.
500 Boylston Street, Boston, MA 02116
(617) 954-5000
CUSTODIAN AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
MFS Service Center, Inc.
500 Boylston Street, Boston, MA 02116
Toll free: (800) 225-2606
Mailing Adress:
P.O. Box 2281, Boston, MA 02107-9906
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
MASSACHUSETTS
INVESTORS
TRUST
500 Boylston Street
Boston, MA 02116
THE FIRST NAME IN MUTUAL FUNDS
MIT-13 5/95/1M 12/212
<PAGE>
<PAGE>
MASSACHUSETTS INVESTORS TRUST
<TABLE>
Front Cover: A 6-1/4" by 8-1/4" photo of cars.
<S> <C>
TRUSTEES CUSTODIAN
A. KEITH BRODKIN* - Chairman and President State Street Bank and Trust Company
Richard B. Bailey* - Private Investor; AUDITORS
Former Chairman and Director (until 1991), Deloitte & Touche LLP
Massachusetts Financial Services Company
INVESTOR INFORMATION
Peter G. Harwood - Former Financial Vice For MFS stock and bond market outlooks,
President, Treasurer and Director (until 1988), call toll-free: 1-800-637-4458 anytime from
Loomis, Sayles & Co., Inc. a touch-tone telephone.
J. Atwood Ives - Chairman and Chief Executive For information on MFS mutual funds
Officer, Eastern Enterprises call your financial adviser or, for an
information kit, call toll-free:
Lawrence T. Perera - Partner, Hemenway & Barnes 1-800-637-2929 any business day from
9 a.m. to 5 p.m. Eastern time (or, leave
William J. Poorvu - Adjunct Professor, Harvard a message anytime).
University Graduate School of Business
Administration INVESTOR SERVICE
MFS Service Center, Inc.
Charles W. Schmidt - Private Investor; P.O. Box 2281
Former Senior Vice President and Group Executive Boston, MA 02107-9906
(until 1990), Raytheon Company
For current account service, call toll free:
Arnold D. Scott* - Senior Executive Vice President, 1-800-225-2606 any business day from
Massachusetts Financial Services Company 8 a.m. to 8 p.m. Eastern time.
Jeffrey L. Shames* - President and Chief Equity For service to speech- or hearing-impaired,
Officer, Massachusetts Financial Services Company call toll free: 1-800-637-6576 any business
day from 9 a.m. to 5 p.m. Eastern time.
Elaine R. Smith - Independent Consultant
For share prices, account balances and
David B. Stone - Chairman, North American exchanges, call toll free: 1-800-MFS-TALK
Management Corp. (Investment Advisers) (1-800-637-8255) anytime from a touch-tone
telephone.
INVESTMENT ADVISER
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116-3741
PORTFOLIO MANAGERS
Amy W. de Rham*
John D. Laupheimer, Jr.*
Kevin R. Parke*
TREASURER
W. Thomas London*
ASSISTANT TREASURER
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
-------------------------
TOP-RATED SERVICE
MFS was rated first when
securities firms evaluated the
quality of service they receive
from 40 mutual fund compa-
nies. MFS got high marks for
answering calls quickly, processing trans-
actions accurately and sending statements
out on time.
(Source: 1994 DALBAR Survey)
-------------------------
Cover photo: Through their wide range of investments, MFS mutual funds help you
share in America's growth.
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
The past year was a difficult one for the stock market with many stocks
performing significantly worse than the market averages. A major change in
investment focus occurred during the year when it became clear that the Federal
Reserve Board intended to slow the economy by raising short-term interest rates.
At that time, stocks of companies whose earnings are particularly sensitive to
the business cycle began to significantly underperform the Standard & Poor's 500
Composite Index (S&P 500), a popular, unmanaged index of common stock
performance, while stocks whose earnings tend to be less cyclical (such as
medical and consumer non-durable issues) began to outperform the market
averages.
For the 12 months ended December 31, 1994, the stock market, as measured by
the S&P 500, had a return of +1.31%. During that same period, Class A shares of
the Trust provided a total return of -1.02%, while Class B shares had a total
return of -1.88%. Both of these returns include the reinvestment of
distributions but exclude the effects of any sales charges. A discussion of the
factors which contributed to the Trust's modest underperformance relative to the
S&P 500 may be found in the Portfolio Performance and Strategy section of this
letter. Complete performance data may be found on pages three and four of this
report.
Economic Environment
The economic expansion, about to enter its fifth year, has gained firmer
underpinnings as employers have been stepping up hiring levels. Increased
employment, stronger capital spending by businesses, and strengthening overseas
economies resulted in 4% real (adjusted for inflation) gross domestic product
growth in 1994. Interest rates rose significantly in 1994, which should help
restrain, but not curtail, the economic expansion. Based on improving economic
fundamentals both here and abroad, we expect the business expansion to continue
well into 1995.
Stock Market
The stock market proved volatile in 1994, influenced by both a strengthening
economy and uncertainty over interest rates. Although the stronger economy has
been beneficial to corporate earnings, higher interest rates have negatively
impacted price-to-earnings multiples (or stock valuations). Given our
expectation of further upward pressure on short-term interest rates as the
Federal Reserve continues to lean against the current economic expansion, we
believe the stock market will have difficulty sustaining any significant
improvement. When interest rates finally stabilize, however, we expect the stock
market to benefit given our continuing outlook for improved corporate earnings.
Portfolio Performance and Strategy
The Trust follows a conservative growth investment policy. We attempt to
structure the portfolio with stocks we believe possess modestly above-average
earnings growth prospects relative to the S&P 500. While doing this, we attempt
to maintain an overall conservative investment posture by focusing on companies
with moderately below-average price-to-earnings ratios relative to the S&P 500.
In addition, we concentrate on large-capitalization, well-established and
recognized corporations. This is a long-term investment strategy unaffected by
our short-term market outlook.
Given our outlook for continued cyclical economic expansion, the Trust began
1994 with a substantial overweighting in consumer durable stocks, such as those
of automotive companies and industrial companies like John Deere. We also
overweighted banks and financial services companies, believing these stocks were
undervalued relative to their earnings. At the same time, the portfolio was
substantially underweighted in consumer non-durable companies and medical
issues, and modestly underweighted in technology issues. This strategy proved
the correct strategy for the first half of the year and the Trust's performance
at the end of June was ahead of the market averages. At mid-year, we began to
move the Trust away from cyclicals and to consumer non-durables, which has
proved to be the correct direction. However, we did not complete the transition
quickly enough and were hurt by declines in stocks such as John Deere and CSX.
These stocks underperformed the market despite having very strong earnings. We
were also negatively impacted by our modest overweighting in the retail sector,
which struggled with an unusually weak sales environment despite a strong
economy. Finally, financial services stocks underperformed in 1994 as they
approached historically low relative valuations.
For 1995, the Trust is structured for slowing economic growth. We have
significantly reduced cyclical exposure and increased consumer non-durable and
medical positions which we believe could show more consistent earnings growth.
We remain overweighted in financial service stocks based on our view that these
stocks are modestly priced relative to our expectations of strong earnings
growth. The market as a whole is unlikely to show significant improvement until
it becomes clear that the economy has slowed and interest rates have stabilized.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
Amy W. de Rham
A. Keith Brodkin John D. Laupheimer, Jr.
Chairman and President Kevin R. Parke
January 20, 1995 Portfolio Managers
The Trustees of the Massachusetts Investors Trust (the "Trust") circulated
a proxy statement and form of ballot, dated August 4, 1994 to shareholders of
the Trust. The results of the ballot are as follows:
ITEM 1: The election of Arnold D. Scott and Jeffrey L. Shames as Trustees of the
Trust.
Number of Shares
----------------
Nominee For Against
------- --- -------
Arnold D. Scott 90,711,601.161 1,756,159.036
Jeffrey L. Shames 90,682,051.606 1,785,708.591
Trustees continuing in office who were not subject to re-election at this
time are A. Keith Brodkin, Richard B. Bailey, Peter G. Harwood, J. Atwood Ives,
Lawrence T. Perera, William J. Poorvu, Charles W. Schmidt, Elaine R. Smith and
David B. Stone.
ITEM 2: The approval of the amendment to the Trust's Declaration of Trust.
Number of Shares
----------------
For 77,832,959.727
Against 7,624,980.746
Abstain 2,531,825.724
No vote 4,477,994.000
ITEM 3: The ratification of the selection of Deloitte & Touche as the
independent public accountants to be employed by the Trust for the fiscal year
ending December 31, 1995.
Number of Shares
----------------
For 89,975,488.936
Against 912,920.263
Abstain 1,579,350.998
PORTFOLIO MANAGERS PROFILES
Amy de Rham has been a member of the MFS investment staff for eight years. A
graduate of Princeton University and the Amos Tuck School of Business
Administration of Dartmouth College, she began her career at MFS in the Research
Department and was named Assistant Vice President - Investments in 1988. In
1989, she was named Vice President - Investments and in 1993 became Portfolio
Manager of Massachusetts Investors Trust.
John Laupheimer has been a member of the MFS investment staff for 13 years. A
graduate of Boston University and the Sloan School of Management of
Massachusetts Institute of Technology, he began his career at MFS as an Industry
Specialist. He was named Assistant Vice President - Investments in 1984. In
1986, he was named Vice President - Investments and in 1993 he was named
Portfolio Manager of Massachusetts Investors Trust. In 1995 he became Senior
Vice President. John is a Chartered Financial Analyst (C.F.A.).
Kevin Parke has been a member of the MFS investment staff for nine years. A
graduate of Lehigh University and the Harvard University Graduate School of
Business Administration, he began his career at MFS as an Industry Specialist.
He was named Assistant Vice President - Investments in 1987. In 1988, he was
named Vice President - Investments. In 1992, he was named Portfolio Manager of
Massachusetts Investors Trust and in 1993 he became Senior Vice President.
PERFORMANCE
The following information illustrates the historical performance of
Massachusetts Investors Trust Class A shares in comparison to various market
indicators. Results reflect the deduction of the 5.75% maximum sales charge.
Benchmark comparisons are unmanaged and do not reflect any fees or expenses. You
cannot invest in an index. All results reflect the reinvestment of all dividends
and capital gains.
Please note that effective September 7, 1993, Class B shares were offered.
Information on Class B share performance appears on the next page.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(Over the 5-Year Period Ended December 31, 1994)
Page 3
Line graph representing the growth of a $10,000 investment for the 5-year period
ended December 31, 1994. The graph is scaled from $8,000 to $18,000 in $2,000
segments. The years are marked from 1990 to 1994. There are three lines drawn to
scale. One is a solid line representing Massachusetts Investors Trust Class A, a
second line of short dashes represents the S&P 500, and a third line of long
dashes represents the Consumer Price Index.
Massachusetts Investors Trust
Class A $14,054
S&P 500 $15,160
Consumer Price Index $11,872
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(Over the 10-Year Period Ended December 31, 1994)
Page 4
Line graph representing the growth of a $10,000 investment for the 10-year
period ended December 31, 1994. The graph is scaled from $0 to $50,000 in
$10,000 segments. The years are marked from 1985 to 1994. There are three lines
drawn to scale. One is a solid line representing Massachusetts Investors Trust
Class A, a second line of short dashes represents the S&P 500, and a third line
of long dashes represents the Consumer Price Index.
Massachusetts Investors Trust
Class A $33,146
S&P 500 $38,268
Consumer Price Index $14,214
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Trust (Class A)
including 5.75% sales charge -6.70% +3.30% +7.05% +12.73%
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Trust (Class A)
at net asset value -1.02% +5.36% +8.33% +13.40%
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Trust (Class B)
with CDSC<F2> -5.37% -- -- - 1.82%<F1>
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Trust (Class B)
without CDSC -1.88% -- -- + 0.53%<F1>
- ------------------------------------------------------------------------------------------------------------------------------
Average growth and income fund -0.94% +6.33% +8.29% +12.38%
- ------------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index +1.31% +6.26% +8.68% +14.36%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Price Index<F3> +2.67% +2.78% +3.49% + 3.58%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>For the period from the commencement of offering of Class B shares, September 7, 1993 to December 31, 1994.
<F2>These returns reflect the current maximum Class B CDSC of 4%.
<F3>The Consumer Price Index is a popular measure of change in prices.
</TABLE>
In the above table, we have included the average annual total returns of all
growth and income funds (including the Trust) tracked by Lipper Analytical
Services, Inc. (an independent firm which reports mutual fund performance) for
the applicable time periods (348, 225, 182 and 109 funds for the 1-, 3-, 5- and
10-year periods ended December 31, 1994, respectively). Because these returns do
not reflect any applicable sales charge, we have also included the Trust's
results at net asset value (no sales charge) for comparison.
All results are historical and, therefore, are not an indication of future
results. The principal value and income return of an investment in a mutual fund
will vary with changes in market conditions, and shares, when redeemed, may be
worth more or less than their original cost. All Class A share results reflect
the applicable expense subsidy which is explained in the Notes to Financial
Statements. Had the subsidy not been in effect, the results would have been less
favorable. The subsidy may be rescinded at any time.
TAX FORM SUMMARY
In January 1995, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1994.
For the year ended December 31, 1994, the amount of distributions from income
eligible for the 70% dividends-received deduction for corporations came to 100%.
OBJECTIVES AND POLICIES
The Trust's investment objectives are to provide reasonable current income and
long-term growth of capital and income. Any investment involves risk and there
can be no assurance that the Trust will achieve its investment objectives.
The Trust is believed to constitute a conservative medium for that portion of an
investor's capital which he wishes to have invested in securities considered to
be of high or improving investment quality. The term "conservative medium"
indicates that the Trust attempts to exercise prudence, discretion and
intelligence in the selection of investments with due regard for both probable
income and probable safety of capital. The words "high investment quality"
reflect the intention of the Trust to avoid the acquisition of speculative
securities or those of doubtful character even if immediate prospects are
tempting.
<PAGE>
PORTFOLIO OF INVESTMENTS - December 31, 1994
Common Stocks - 92.6%
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Common Stocks - 85.0%
Aerospace - 3.7%
Allied-Signal, Inc. 630,000 $ 21,420,000
Lockheed Corp. 100,000 7,262,500
Martin-Marietta Corp. 300,000 13,312,500
McDonnell Douglas Corp. 127,000 18,034,000
--------------
$ 60,029,000
- -----------------------------------------------------------------------------
Apparel and Textiles - 2.8%
Nike, Inc., "B" 295,000 $ 22,014,375
Reebok International Ltd. 120,000 4,740,000
VF Corp. 375,100 18,239,237
--------------
$ 44,993,612
- -----------------------------------------------------------------------------
Automotive - 0.6%
Eaton Corp. 180,000 $ 8,910,000
- -----------------------------------------------------------------------------
Banks and Credit Companies - 8.2%
Bankers Trust New York Corp. 160,000 $ 8,860,000
Barnett Banks, Inc. 230,000 8,826,250
First Bank System, Inc. 780,000 25,935,000
First Security Corp. 50,000 1,137,500
Firstar Corp. 290,000 7,793,750
NBD Bancorp, Inc. 530,000 14,508,750
National City Corp. 280,000 7,245,000
Norwest Corp. 1,560,000 36,465,000
SunTrust Banks, Inc. 250,000 11,937,500
U.S. Bancorp 375,000 8,484,375
--------------
$ 131,193,125
- -----------------------------------------------------------------------------
Broadcasting - 0.1%
LIN Television Corp.* 50,000 $ 1,137,500
- -----------------------------------------------------------------------------
Business Machines - 1.7%
Hewlett-Packard Co. 125,000 $ 12,484,375
Xerox Corp. 150,000 14,850,000
--------------
$ 27,334,375
- -----------------------------------------------------------------------------
Cellular Telephones - 0.8%
LIN Broadcasting Corp.* 100,000 $ 13,350,000
- -----------------------------------------------------------------------------
Chemicals - 1.5%
Air Products & Chemicals, Inc. 50,000 $ 2,231,250
du Pont (E.I.) de Nemours & Co. 315,000 17,718,750
Grace (W.R.) & Co. 125,000 4,828,125
--------------
$ 24,778,125
- -----------------------------------------------------------------------------
Computer Software - Systems - 3.4%
Compaq Computer Corp.* 100,000 $ 3,950,000
Honeywell, Inc. 350,000 11,025,000
Microsoft Corp.* 550,000 33,618,750
Oracle Systems Corp.* 125,000 5,515,625
--------------
$ 54,109,375
- -----------------------------------------------------------------------------
Conglomerates - 0.9%
ITT Corp. 160,000 $ 14,180,000
- -----------------------------------------------------------------------------
Consumer Goods and Services - 8.0%
Colgate-Palmolive Co. 535,000 $ 33,905,625
Duracell International, Inc. 75,000 3,253,125
Gillette Co. 400,000 29,900,000
Philip Morris Cos., Inc. 510,000 29,325,000
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Common Stocks - continued
Consumer Goods and Services - continued
Procter & Gamble Co. 405,000 $ 25,110,000
RJR Nabisco Holdings Corp., Inc.* 1,250,000 6,875,000
--------------
$ 128,368,750
- -----------------------------------------------------------------------------
Containers - 1.2%
Corning, Inc. 625,000 $ 18,671,875
- -----------------------------------------------------------------------------
Defense Electronics - 1.0%
Loral Corp. 440,000 $ 16,665,000
- -----------------------------------------------------------------------------
Electrical Equipment - 1.9%
General Electric Co. 610,000 $ 31,110,000
- -----------------------------------------------------------------------------
Electronics - 2.5%
E-Systems, Inc. 260,000 $ 10,822,500
Intel Corp. 285,000 18,204,375
Motorola, Inc. 185,000 10,706,875
--------------
$ 39,733,750
- -----------------------------------------------------------------------------
Entertainment - 0.2%
Disney (Walt) Co. 82,000 $ 3,782,250
- -----------------------------------------------------------------------------
Financial Institutions - 2.2%
Beneficial Corp. 454,000 $ 17,706,000
Federal National Mortgage Assn. 100,000 7,287,500
State Street Boston Corp. 370,000 10,591,250
--------------
$ 35,584,750
- -----------------------------------------------------------------------------
Food and Beverage Products - 6.6%
Archer-Daniels-Midland Co. 975,000 $ 20,109,375
CPC International, Inc. 475,000 25,293,750
Conagra, Inc. 685,000 21,406,250
Hershey Foods Corp. 160,000 7,740,000
PepsiCo, Inc. 235,000 8,518,750
Sara Lee Corp. 870,000 21,967,500
--------------
$ 105,035,625
- -----------------------------------------------------------------------------
Forest and Paper Products - 1.3%
Kimberly-Clark Corp. 233,000 $ 11,766,500
Scott Paper Co. 80,000 5,530,000
Weyerhaeuser Co. 75,000 2,812,500
--------------
$ 20,109,000
- -----------------------------------------------------------------------------
Insurance - 5.0%
American General Corp. 135,000 $ 3,813,750
General Re Corp. 125,000 15,468,750
Marsh & McLennan Cos., Inc. 55,200 4,374,600
Progressive Corp. Ohio 300,000 10,500,000
Providian Corp. 129,000 3,982,875
Torchmark Corp. 410,000 14,298,750
Transamerica Corp. 324,600 16,148,850
UNUM Corp. 290,000 10,947,500
--------------
$ 79,535,075
- -----------------------------------------------------------------------------
Machinery - 1.8%
Caterpillar, Inc. 75,000 $ 4,134,375
Deere & Co., Inc. 375,000 24,843,750
--------------
$ 28,978,125
- -----------------------------------------------------------------------------
Medical and Health Products - 5.3%
Abbott Laboratories 150,000 $ 4,893,750
Bausch & Lomb, Inc. 100,000 3,387,500
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Common Stocks - continued
Medical and Health Products - continued
Johnson & Johnson 370,000 $ 20,257,500
Lilly (Eli) & Co. 250,000 16,406,250
Pfizer, Inc. 175,000 13,518,750
Warner-Lambert Co. 345,000 26,565,000
--------------
$ 85,028,750
- -----------------------------------------------------------------------------
Medical and Health Technology and Services - 1.1%
Columbia HCA Healthcare Corp. 295,000 $ 10,767,500
Manor Care, Inc. 250,000 6,843,750
--------------
$ 17,611,250
- -----------------------------------------------------------------------------
Oils - 5.8%
Amoco Corp. 235,000 $ 13,894,375
Atlantic Richfield Co. 100,000 10,175,000
Chevron Corp. 680,000 30,345,000
Exxon Corp. 345,000 20,958,750
Mobil Corp. 210,000 17,692,500
--------------
$ 93,065,625
- -----------------------------------------------------------------------------
Photographic Products - 1.0%
Eastman Kodak Co. 340,000 $ 16,235,000
- -----------------------------------------------------------------------------
Pollution Control - 0.8%
WMX Technologies, Inc. 500,000 $ 13,125,000
- -----------------------------------------------------------------------------
Printing and Publishing - 1.2%
Times Mirror Co., "A" 220,000 $ 6,902,500
Tribune Co., Inc. 220,000 12,045,000
--------------
$ 18,947,500
- -----------------------------------------------------------------------------
Railroads - 3.5%
CSX Corp. 430,000 $ 29,938,750
Illinois Central Corp. 580,000 17,835,000
Norfolk Southern Corp. 130,000 7,881,250
--------------
$ 55,655,000
- -----------------------------------------------------------------------------
Restaurants and Lodging - 0.1%
Brinker International, Inc.* 100,000 $ 1,812,500
- -----------------------------------------------------------------------------
Retail - 4.2%
Dayton-Hudson Corp. 165,000 $ 11,673,750
Federated Department Stores* 620,000 11,935,000
May Department Stores Co. 470,000 15,862,500
Penney (J.C.) & Co., Inc. 495,000 22,089,375
Tandy Corp. 100,000 5,012,500
--------------
$ 66,573,125
- -----------------------------------------------------------------------------
Special Products and Services - 0.5%
Stanley Works 225,000 $ 8,043,750
- -----------------------------------------------------------------------------
Utilities - Electric - 1.6%
Cinergy Corp. 204,600 $ 4,782,525
DPL, Inc. 395,700 8,111,850
Peco Energy Co. 350,000 8,575,000
Texas Utilities Co. 150,000 4,800,000
--------------
$ 26,269,375
- -----------------------------------------------------------------------------
Utilities - Gas - 0.5%
Pacific Enterprises 400,000 $ 8,500,000
- -----------------------------------------------------------------------------
Utilities - Telephone - 4.0%
American Telephone & Telegraph Co. 350,000 $ 17,587,500
BellSouth Corp. 100,000 5,412,500
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Common Stocks - continued
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Common Stocks - continued
Utilities - Telephone - continued
GTE Corp. 350,000 $ 10,631,250
MCI Communications Corp. 435,000 7,993,125
Pacific Telesis Group 325,000 9,262,500
Southwestern Bell Corp. 160,000 6,460,000
US West, Inc. 190,000 6,768,750
--------------
$ 64,115,625
- -----------------------------------------------------------------------------
Total U.S. Common Stocks (Identified Cost, $1,182,748,217) $1,362,571,812
- -----------------------------------------------------------------------------
Foreign Stocks - 7.6%
Argentina - 0.5%
YPF S.A., ADR (Oils) 362,500 $ 7,748,437
- -----------------------------------------------------------------------------
Australia - 0.2%
Australia & New Zealand Bank Group Ltd.
(Finance) 1,000,000 $ 3,293,808
- -----------------------------------------------------------------------------
Denmark - 0.4%
Tele Danmark, ADR (Utilities - Telephone)*+ 280,000 $ 7,140,000
- -----------------------------------------------------------------------------
Finland - 0.5%
Nokia Corp., ADR (Electronics)* 115,000 $ 8,625,000
- -----------------------------------------------------------------------------
France - 0.6%
LVMH Moet-Hennessy (Food and Beverage
Products) 40,000 $ 6,319,340
Pinault-Printemps (Retail) 21,000 3,730,885
--------------
$ 10,050,225
- -----------------------------------------------------------------------------
Japan - 0.3%
Canon, Inc. (Office Equipment) 250,000 $ 4,236,014
- -----------------------------------------------------------------------------
Netherlands - 1.0%
IHC Caland (Transportation) 45,900 $ 1,161,858
Royal Dutch Petroleum Co. (Oils) 132,000 14,190,000
--------------
$ 15,351,858
- -----------------------------------------------------------------------------
New Zealand - 0.2%
Lion Nathan Ltd. (Food and Beverage Products) 2,000,000 $ 3,814,888
- -----------------------------------------------------------------------------
South Korea - 0.3%
Korea Electric Power Corp., ADR
(Utilities - Electric) 250,000 $ 5,343,750
- -----------------------------------------------------------------------------
Sweden - 1.5%
Astra AB, "B" (Medical and Health Products) 464,300 $ 11,848,535
Hennes & Mauritz AB, "B" (Retail) 144,000 7,388,295
Svenska Handelsbank S.A., "A" (Banks
and Credit Companies) 300,000 3,959,169
--------------
$ 23,195,999
- -----------------------------------------------------------------------------
Switzerland - 0.6%
Nestle A.G. (Food and Beverage Products) 10,000 $ 9,531,453
- -----------------------------------------------------------------------------
United Kingdom - 1.5%
British Steel (Steel) 3,550,000 $ 8,563,596
PowerGen PLC (Utilities - Electric) 1,000,000 8,395,990
Southern Electric PLC (Utilities - Electric) 500,000 6,310,699
--------------
$ 23,270,285
- -----------------------------------------------------------------------------
Total Foreign Stocks (Identified Cost,
$101,806,463) $ 121,601,717
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost,
$1,284,554,680) $1,484,173,529
- -----------------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS - continued
Convertible Preferred Stocks - 2.1%
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
Atlantic Richfield Co., 9.01s (Oils) 120,000 $ 3,135,000
Bowater, Inc., 7s, "B" (Forest and
Paper Products) 150,000 3,693,750
Ford Motor Co., $4.20, "A" (Automotive) 60,000 5,520,000
Occidental Petroleum Corp., $3.875
(Oils)+ 200,000 9,700,000
RJR Nabisco Holdings, $0.6012 (Consumer
Goods and Services) 1,850,000 11,100,000
- -----------------------------------------------------------------------------
Total Convertible Preferred Stocks
(Identified Cost, $32,519,249) $ 33,148,750
- -----------------------------------------------------------------------------
Convertible Bonds - 0.9%
- -----------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -----------------------------------------------------------------------------
Costco Wholesaler Corp., 5.75s, 2002 (Retail) $ 2,500 $ 2,037,500
Equitable Cos., Inc., 6.125s, 2024
(Insurance) 6,250 5,625,000
Motorola, Inc., 0s, 1998 (Electronics) 8,230 5,843,300
Rogers Communications, Inc., 2s, 2005
(Telecommunications) 3,000 1,582,500
- -----------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost,
$16,131,307) $ 15,088,300
- -----------------------------------------------------------------------------
Short-Term Obligations - 4.1%
- -----------------------------------------------------------------------------
Federal Farm Credit Bank, due 1/11/95 $ 9,000 $ 8,986,300
Federal Farm Credit Bank, due 1/13/95 80 79,853
Federal Home Loan Bank, due 1/03/95 9,700 9,696,998
Federal Home Loan Bank, due 1/04/95 9,000 8,995,665
Federal Home Loan Bank, due 1/06/95 8,800 8,792,850
Federal National Mortgage Assn., due 2/01/95 8,200 8,158,269
Pfizer, Inc., due 1/11/95 10,600 10,582,481
Student Loan Marketing Assn., due 1/03/95 10,350 10,346,694
- -----------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 65,639,110
- -----------------------------------------------------------------------------
Total Investments (Identified Cost,
$1,398,844,346) $1,598,049,689
Other Assets, Less Liabilities - 0.3% 5,507,087
- -----------------------------------------------------------------------------
Net Assets - 100.0% $1,603,556,776
- -----------------------------------------------------------------------------
*Non-income producing security.
+Restricted security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
December 31, 1994
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,398,844,346) $1,598,049,689
Cash 800,061
Foreign currency, at value (identified cost, $133,607) 135,398
Receivable for investments sold 847,896
Receivable for Trust shares sold 4,256,104
Dividends and interest receivable 4,265,780
Other assets 22,322
--------------
Total assets $1,608,377,250
--------------
Liabilities:
Distributions payable $ 1,640
Payable for investments purchased 2,011,504
Payable for Trust shares reacquired 1,458,376
Payable to affiliates -
Management fee 18,281
Shareholder servicing agent fee 10,886
Distribution fee 2,810
Accrued expenses and other liabilities 1,316,977
--------------
Total liabilities $ 4,820,474
--------------
Net assets $1,603,556,776
==============
Net assets consist of:
Paid-in capital $1,407,190,670
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 199,211,202
Accumulated distributions in excess of net realized gain on
investments and foreign currency transactions (2,785,811)
Accumulated distributions in excess of net investment
income (59,285)
--------------
Total $1,603,556,776
==============
Shares of beneficial interest outstanding 159,244,562
==============
Class A shares:
Net asset value and redemption price per share
(net assets of $1,535,051,748 / 152,412,907 shares of
beneficial interest outstanding) $10.07
======
Offering price per share (100/94.25) $10.68
======
Class B shares:
Net asset value, offering price and redemption price
per share
(net assets of $68,505,028 / 6,831,655 shares of
beneficial interest outstanding) $10.03
======
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A and
Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Year Ended December 31, 1994
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 43,624,688
Interest 4,762,379
-------------
Total investment income $ 48,387,067
-------------
Expenses -
Management fee $ 4,385,702
Trustees' compensation 74,270
Shareholder servicing agent fee (Class A) 1,914,686
Shareholder servicing agent fee (Class B) 93,704
Distribution and service fee (Class A) 5,330,343
Distribution and service fee (Class B) 425,930
Custodian fee 459,465
Postage 263,932
Printing 113,319
Auditing fees 40,732
Registration fees 25,205
Legal fees 12,011
Miscellaneous 710,265
-------------
Total expenses $ 13,849,564
Reduction of expenses by distributor (1,615,767)
-------------
Net expenses $ 12,233,797
-------------
Net investment income $ 36,153,270
-------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 160,167,831
Foreign currency transactions (7,080,871)
-------------
Net realized gain on investments $ 153,086,960
-------------
Change in unrealized appreciation (depreciation) -
Investments $(207,043,744)
Translation of assets and liabilities in foreign
currencies 37,149
-------------
Net unrealized loss on investments $(207,006,595)
-------------
Net realized and unrealized loss on investments and
foreign currency transactions $ (53,919,635)
-------------
Decrease in net assets from operations $ (17,766,365)
=============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
Year Ended December 31, 1994 1993
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 36,153,270 $ 49,481,094
Net realized gain on investments and
foreign currency transactions 153,086,960 212,619,860
Net unrealized loss on investments and
foreign currency transactions (207,006,595) (105,788,415)
-------------- --------------
Decrease in net assets from operations $ (17,766,365) $ 156,312,539
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (34,653,221) $ (49,084,360)
From net investment income (Class B) (721,674) (180,367)
In excess of net investment income
(Class A) (58,099) --
In excess of net investment income
(Class B) (1,186) --
From net realized gain on investments
and foreign currency transactions (154,197,201) (213,230,913)
In excess of net realized gain on
investments and foreign currency
transactions (2,785,811) --
-------------- --------------
Total distributions declared to
shareholders $ (192,417,192) $ (262,495,640)
-------------- --------------
Trust share (principal) transactions -
Net proceeds from sale of shares $ 193,471,112 $ 159,150,400
Net asset value of shares issued to
shareholders in reinvestment
of distributions 136,047,466 175,259,430
Cost of shares reacquired (156,603,306) (135,096,331)
-------------- --------------
Increase in net assets from Trust
share transactions $ 172,915,272 $ 199,313,499
-------------- --------------
Total increase (decrease) in net
assets $ (37,268,285) $ 93,130,398
Net assets:
At beginning of period 1,640,825,061 1,547,694,663
-------------- --------------
At end of period (including
distributions in excess of net
investment income of $59,285 and $0,
respectively) $1,603,556,776 $1,640,825,061
============== ==============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -continued
<TABLE>
<CAPTION>
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $11.50 $12.31 $13.87 $12.28 $13.55 $11.22 $11.26
------ ------ ------ ------ ------ ------ ------
Income from investment operations<F5> -
Net investment income<F6> $ 0.25 $ 0.39 $ 0.32 $ 0.38 $ 0.43 $ 0.45 $ 0.40
Net realized and unrealized gain (loss)
on investments (0.36) 0.86 0.69 2.95 (0.45) 3.56 0.76
------ ------ ------ ------ ------ ------ ------
Total from investment operations $(0.11) $ 1.25 $ 1.01 $ 3.33 $(0.02) $ 4.01 $ 1.16
------ ------ ------ ------- ------ ------ ------
Less distributions declared to
shareholders -
From net investment income<F3> $(0.25) $(0.39) $(0.33) $(0.39) $(0.43) $(0.45) $(0.39)
From net realized gain on
investments<F2> (1.05) (1.67) (2.22) (1.32) (0.82) (1.22) (0 81)
In excess of net realized gain on
investments (0.02) -- -- -- -- -- --
From paid-in capital<F1> -- -- (0.02) (0.03) -- (0.01) --
------ ------ ------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.32) $(2.06) $(2.57) $(1.74) $(1.25) $(1.68) $(1.20)
------ ------ ------ ------ ------ ------ ------
Net asset value - end of period $10.07 $11.50 $12.31 $13.87 $12.28 $13.55 $11.22
====== ====== ====== ====== ====== ====== ======
Total return<F4> (1.02)% 10.03% 7.68% 27.41% (0.33)% 35.80% 10.12%
Ratios (to average net assets)/
Supplemental data:<F6>
Expenses 0.71% 0.68% 0.62% 0.62% 0.47% 0.50% 0.55%
Net investment income 2.20% 3.04% 2.30% 2.73% 3.28% 3.40% 3.39%
Portfolio turnover 87% 41% 46% 44% 26% 20% 19%
Net assets at end of period
(000,000 omitted) $1,535 $1,626 $1,548 $1,530 $1,265 $1,382 $1,139
<F1>For the year ended December 31, 1988, the per share distribution from paid-in capital was $0.001.
<F2>For the year ended December 31, 1991, the per share distribution in excess of net realized gain on investments was $0.0041.
<F3>For the year ended December 31, 1994, the per share distribution in excess of net investment income was $0.0004 for Class A
shares.
<F4>Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends prior to January
2, 1991.) If the charge had been included, the results would have been lower.
<F5>For the periods subsequent to December 31, 1992, the per share data is based on average shares outstanding for both Class A
and Class B shares.
<F6>The distributor did not impose a portion of its distribution fee, attributable to Class A shares, for the periods indicated.
Furthermore, for the year ended December 31, 1993, net investment income for Class A shareholders includes $0.12 per share
applicable to nonrecurring dividend income. Had such dividend not been included and the management fee related to such income
and a portion of the distribution fee related to Class A shareholders not been waived, the net investment income per share and
the ratios would have been:
Net investment income $ 0.24 $ 0.27 -- -- -- -- --
Ratios (to average net assets):
Expenses 0.81% 0.74% -- -- -- -- --
Net investment income 2.10% 2.05% -- -- -- -- --
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS -continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1987 1986 1985 1994 1993<F4>
- ------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value- beginning of period $12.09 $12.12 $11.02 $11.48 $13.02
------ ------ ------ ------ ------
Income from investment operations<F5> -
Net investment income<F6> $ 0.38 $ 0.40 $ 0.46 $ 0.15 $ 0.04
Net realized and unrealized gain (loss)
on investments 0.57 1.72 2.18 (0.36) 0.32
------ ------ ------ ------ ------
Total from investment operations $ 0.95 $ 2.12 $ 2.64 $(0.21) $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income<F2> $(0.39) $(0.40) $(0.46) $(0.17) $(0.23)
From net realized gain on investments (1.39) (1.73) (1.06) (1.05) (1.67)
In excess of net realized gain on investments -- -- -- (0.02) --
From paid-in capital -- (0.02) (0.02) -- --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(1.78) $(2.15) $(1.54) $(1.24) $(1.90)
------ ------ ------ ------ ------
Net asset value - end of period $11.26 $12.09 $12.12 $10.03 $11.48
====== ====== ====== ====== ======
Total return<F3> 7.25% 16.97% 24.21% (1.88)% 2.62%
Ratios (to average net assets)/Supplemental data:<F6>
Expenses 0.45% 0.49% 0.55% 1.61% 1.56%<F1>
Net investment income 2.63% 2.99% 3.91% 1.37% 1.05%<F1>
Portfolio turnover 23% 26% 33% 87% 41%
Net assets at end of period
(000,000 omitted) $1,177 $1,186 $1,155 $69 $15
<F1>Annualized.
<F2>For the year ended December 31,1994, the per share distribution in excess of net investment income was $0.0003
for Class B shares.
<F3>Total returns for Class A shares do not include the applicable sales charge (except for reinvested dividends
prior to January 2, 1991.) If the charge had been included, the results would have been lower.
<F4>For the period from the commencement of offering Class B shares, September 7, 1993 to December 31, 1993.
<F5>For the periods subsequent to December 31, 1992, the per share data is based on average shares outstanding for
both Class A and Class B shares.
<F6>For the year ended December 31, 1993, net investment income for Class B shareholders includes $0.007 per share
applicable to nonrecurring dividend income. Had such dividend not been included and the manage- ment fee
related to such income not been waived, the net investment income per share and the ratios would have been:
Net investment income -- -- -- -- $ 0.03
Ratios (to average net assets):
Expenses -- -- -- -- 1.66%<F1>
Net investment income -- -- -- -- 0.29%<F1>
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
Massachusetts Investors Trust (the Trust) was organized as a common law trust
under the laws of the Commonwealth of Massachusetts in 1924 and is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
(2) Significant Accounting Policies
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates value. Non-U.S. dollar denominated short-term
obligations are valued at amortized cost as calculated in the base currency and
translated into U.S. dollars at the closing daily exchange rate. Futures
contracts, options and options on futures contracts listed on commodities
exchanges are valued at closing settlement prices. Over-the-counter options are
valued by brokers through the use of a pricing model which takes into account
closing bond valuations, implied volatility and short-term repurchase rates.
Securities for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Repurchase Agreements - The Trust may enter into repurchase agreements with
institutions that the Trust's investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Trust requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Trust to obtain those securities
in the event of a default under the repurchase agreement. The Trust monitors, on
a daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Trust under each such repurchase agreement.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments and 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.
Written Options - The Trust may write covered call or put options for which
premiums are received and are recorded as liabilities, and are subsequently
adjusted to the current value of the options written. Premiums received from
writing options which expire are treated as realized gains. Premiums received
from writing options which are exercised or are closed are offset against the
proceeds or amount paid on the transaction to determine the realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security purchased by the Trust. The Trust, as writer of an option, may have no
control over whether the underlying securities may be sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. In general, written call
options may serve as a partial hedge against decreases in value in the
underlying securities to the extent of the premium received. Written options may
also be used as a part of an income-producing strategy reflecting the view of
the Trust's management on the direction of interest rates.
Futures Contracts - The Trust may enter into stock index and foreign currency
futures contracts for the delayed delivery of securities, or contracts based on
financial indices at a fixed price on a future date. In entering such contracts,
the Trust is required to deposit either in cash or securities an amount equal to
a certain percentage of the contract amount. Subsequent payments are made or
received by the Trust each day, depending on the daily fluctuations in the value
of the underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Trust. The Trust's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. The Trust may also invest in futures contracts for
non-hedging purposes. For example, interest rate futures may be used in
modifying the duration of the portfolio without incurring the additional
transaction costs involved in buying and selling the underlying securities.
Should interest rates or securities prices move unexpectedly, the Trust may not
achieve the anticipated benefits of the futures contracts and may realize a
loss.
Forward Foreign Currency Exchange Contracts - The Trust may enter into forward
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risks may arise upon
entering these contracts from the potential inability of counterparties to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The Trust will enter into forward
contracts for hedging purposes as well as for non-hedging purposes. For hedging
purposes, the Trust may enter into contracts to deliver or receive foreign
currency it will receive from or require for its normal investment activities.
It may also use contracts in a manner intended to protect foreign
currency-denominated securities from declines in value due to unfavorable
exchange rate movements. For non-hedging purposes, the Trust may enter into
contracts with the intent of changing the relative exposure of the Trust's
portfolio of securities to different currencies to take advantage of anticipated
changes. The forward foreign currency exchange contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for both financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend payments received in additional securities are recorded on the
ex-dividend date in an amount equal to the value of the security on such date.
Tax Matters and Distributions - The Trust's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided.
The Trust files a tax return annually using tax accounting methods required
under provisions of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain reported
on these financial statements may differ from that reported on the Trust's tax
return and, consequently, the character of distributions to shareholders
reported in the financial highlights may differ from that reported to
shareholders on Form 1099-DIV. Foreign taxes have been provided for on interest
and dividend income earned on foreign investments in accordance with the
applicable country's tax rates and to the extent unrecoverable are recorded as a
reduction of investment income. Distributions to shareholders are recorded on
the ex-dividend date.
The Trust distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains. During the year ended December 31, 1994, $778,375 and $325,211 were
reclassified from accumulated undistributed net investment income and paid in
capital, respectively, to accumulated net realized gain on investments, due to
differences between book and tax accounting for currency transactions. This
change had no effect on the net assets or net asset value per share.
Multiple Classes of Shares of Beneficial Interest - The Trust offers Class A and
Class B shares. Class B shares were first offered to the public on September 7,
1993. The two classes of shares differ in their shareholder servicing agent,
distribution and service fees. Shareholders of each class also bear certain
expenses that pertain only to that particular class. All shareholders bear the
common expenses of the Trust pro rata, based on the average daily net assets of
each class, without distinction between share classes. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses, including distribution and shareholder servicing fees.
(3) Transactions with Affiliates
Investment Adviser - The Trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee, computed daily and paid monthly at an effective annual rate of
0.16% of average daily net assets and 3.46% of investment income, amounted to
$4,385,702. The Trust pays no compensation directly to its Trustees who are
officers of the investment adviser, or to officers of the Trust, all of whom
receive remuneration for their services to the Trust from MFS. Certain of the
officers and Trustees of the Trust are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD) and MFS Service Center, Inc. (MFSC). The Trust has an
unfunded defined benefit plan for all of its independent Trustees. Included in
Trustees' compensation is a net periodic pension expense of $23,930 for the year
ended December 31, 1994.
Distributor - FSI, a wholly owned subsidiary of MFS, as distributor, received
$257,995 as its portion of the sales charge on sales of Class A shares of the
Trust. Effective January 1, 1995, MFS Financial Services, Inc. (FSI) became MFS
Fund Distributors (MFD). The Trustees have adopted separate distribution plans
for Class A and Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940 as follows:
The Class A Distribution Plan provides that the Trust will pay MFD up to 0.35%
of its average daily net assets attributable to Class A shares annually in order
that MFD may pay expenses on behalf of the Trust related to the distribution and
servicing of its shares. These expenses include a service fee to each securities
dealer that enters into a sales agreement with MFD of up to 0.25% per annum of
the Trust's average daily net assets attributable to Class A shares which are
attributable to that securities dealer, a distribution fee to MFD of up to 0.10%
per annum of the Trust's average daily net assets attributable to Class A
shares, commissions to dealers and payments to MFD wholesalers for sales at or
above a certain dollar level, and other such distribution-related expenses that
are approved by the Trust. MFD is not imposing the 0.10% distribution fee for an
indefinite period. Fees incurred under the distribution plan, net of waiver,
during the year ended December 31, 1994 were 0.23% of average daily net assets
attributable to Class A shares on an annualized basis and amounted to $3,714,576
(of which MFD retained $1,080,283).
The Class B Distribution Plan provides that the Trust will pay MFD a monthly
distribution fee, equal to 0.75% per annum, and a quarterly service fee of up to
0.25% per annum, of the Trust's average daily net assets attributable to Class B
shares. MFD will pay to securities dealers that enter into a sales agreement
with MFD, all or a portion of the service fee attributable to Class B shares.
The service fee is intended to be additional consideration for services rendered
by the dealer with respect to Class B shares. Fees incurred under the
distribution plan for the year ended December 31, 1994 were 1.00% of average
daily net assets attributable to Class B shares on an annualized basis and
amounted to $425,930 (of which MFD retained $2,779).
A contingent deferred sales charge is imposed on shareholder redemptions of
Class A shares, on purchases of $1 million or more, in the event of a share
redemption within twelve months following the share purchase. A contingent
deferred sales charge is imposed on shareholder redemptions of Class B shares in
the event of a shareholder redemption within six years of purchase. MFD receives
all contingent deferred sales charges. Contingent deferred sales charges imposed
during the year ended December 31, 1994 were $2,552 and $59,341 for Class A and
Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earned
$1,914,686 and $93,704 for Class A and Class B shares, respectively, for its
services as shareholder servicing agent. The fee is calculated as a percentage
of the average daily net assets of each class of shares at an effective annual
rate of up to 0.15% and up to 0.22% attributable to Class A and Class B shares,
respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions and short-term obligations, aggregated
$1,381,483,004 and $1,406,355,898, respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Trust, as computed on a federal income tax basis, are as follows:
Aggregate cost $1,401,630,157
==============
Gross unrealized appreciation $ 226,793,100
Gross unrealized depreciation (30,373,568)
--------------
Net unrealized appreciation $ 196,419,532
==============
(5) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue 180,000,000 full and
fractional shares of beneficial interest (par value $0.33 1/3). Transactions in
Trust shares were as follows:
Class A Shares
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
Year Ended December 31, Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 11,401,171 $ 129,970,532 11,370,013 $ 144,127,688
Shares issued to shareholders in
reinvestment of distributions 12,678,046 129,231,432 14,857,094 173,569,724
Shares reacquired (13,044,429) (148,666,502) (10,548,472) (134,654,616)
----------- ------------- ----------- -------------
Net increase 11,034,788 $ 110,535,462 15,678,635 $ 183,042,796
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
1994 1993*
------------------------- -------------------------
Year Ended December 31, Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 5,590,985 $ 63,500,580 1,158,058 $15,022,712
Shares issued to shareholders in
reinvestment of distributions 674,366 6,816,034 145,785 1,689,706
Shares reacquired (703,746) (7,936,804) (33,793) (441,715)
--------- ------------ --------- ------------
Net increase 5,561,605 $ 62,379,810 1,270,050 $16,270,703
--------- ------------ --------- ------------
*For the period from the commencement of offering of Class B shares, September
7, 1993 to December 31, 1993.
</TABLE>
(6) Line of Credit
The Trust entered into an agreement which enables it to participate with other
funds managed by MFS, or an affiliate of MFS, in an unsecured line of credit
with a bank which permits borrowings up to $300 million, collectively.
Borrowings may be made to temporarily finance the repurchase of Trust shares.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the bank's base rate. In addition, a commitment fee, based on the average daily
unused portion of the line of credit, is allocated among the participating funds
at the end of each quarter. The commitment fee allocated to the Trust for the
year ended December 31, 1994 was $25,428.
(7) Restricted Securities
The Trust may invest not more than 15% of its total assets in securities which
are subject to legal or contractual restrictions on resale. At December 31,
1994, the Trust owned the following restricted securities (constituting 1.05% of
net assets) which may not be publicly sold without registration under the
Securities Act of 1933. The Trust does not have the right to demand that such
securities be registered. The value of these securities is determined by
valuations supplied by a pricing service or brokers.
<TABLE>
<CAPTION>
Date of
Description Acquisition Shares Cost Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Occidental Petroleum Corp., $3.875 3/24/93 150,000 $ 8,156,250 $ 7,275,000
Occidental Petroleum Corp., $3.875 7/19/94 50,000 2,537,500 2,425,000
Tele Danmark, ADR 4/28/94 280,000 6,587,280 7,140,000
----------- -----------
$17,281,030 $16,840,000
=========== ===========
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of Massachusetts Investors Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Massachusetts Investors Trust as of December
31, 1994, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended December 31, 1994 and
1993, and the financial highlights for each of the years in the ten-year period
ended December 31, 1994. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
December 31, 1994 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Massachusetts
Investors Trust at December 31, 1994, the results of its operations, the changes
in its net assets, and its financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 1, 1995
----------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS INCLUDED IN PART A:
For the ten years ended December 31, 1994:
Financial Highlights.
FINANCIAL STATEMENTS INCLUDED IN PART B:
At December 31, 1994:
Portfolio of Investments.*
Statement of Assets and Liabilities.*
For the two years ended December 31, 1994:
Statement of Changes in Net Assets.*
For the year ended December 31, 1994:
Statement of Operations.*
- -----------------------------
* Incorporated herein by reference to the Trust's Annual Report to
shareholders dated December 31, 1994, filed with the SEC on March 6, 1995.
(B) EXHIBITS
1 (a) Amendment to the Declaration of Trust,
dated September 29, 1994; filed herewith.
(b) Declaration of Trust, dated March 21,
1924, as amended through September 29,
1994; filed herewith.
2 Not Applicable.
3 Not Applicable.
4 Form of Share Certificates for Class A and
B Shares of Massachusetts Investors Trust.
(10)
5 Investment Advisory Agreement, dated May
20, 1982. (3)
6 (a) Amended and Restated Distribution
Agreement dated January 1, 1995; filed
herewith.
(b) Dealer Agreement between MFS Fund
Distributors, Inc. ("MFD") and a dealer,
dated December 28, 1994 and Form of Mutual
Fund Agreement between MFS Financial
Services, Inc. and a bank or NASD
affiliate, dated December 28, 1994. (11)
7 Retirement Plan for Non-Interested Person
Trustees, dated January 1, 1991. (8)
8 (a) Amendment to Custodian Agreement, dated
December 6, 1934. (1)
(b) Amendment to Custodian Agreement, dated
February 22, 1978. (2)
(c) Amendment to Custodian Agreement, dated
October 1, 1989. (5)
(d) Amendment to Custodian Agreement, dated
December 15, 1993; filed herewith.
9 (a) Shareholder Servicing Agent Agreement,
dated August 1, 1985. (4)
(b) Amendment to Shareholder Servicing Agent
Agreement, dated December 31, 1992. (9)
(c) Amendment to Shareholder Servicing Agent
Agreement dated September 7, 1993. (10)
(d) Exchange Privilege Agreement, dated
February 8, 1989 as amended through
September 1, 1993. (10)
(e) Dividend Disbursing Agency Agreement,
dated February 1, 1986. (7)
(f) Loan Agreement Among MFS Borrowers and the
First National Bank of Boston, as of
February 21, 1995. (12)
10 Consent and Opinion of Counsel; filed
herewith.
11 Consent of Deloitte & Touche; filed
herewith.
12 Not Applicable.
13 Investment Representation Letter
14 (a) Forms for Individual Retirement Account
Disclosure Statement as currently in
effect. (6)
(b) Forms for MFS 403(b) Custodial Account
Agreement as currently in effect. (6)
(c) Forms for MFS Prototype Paired Defined
Contribution Plans and Trust Agreement as
currently in effect. (6)
15 (a) Amended and Restated Distribution Plan for
Class A Shares, dated December 21, 1994;
filed herewith.
(b) Distribution Plan for Class B Shares,
dated December 21, 1994; filed herewith.
16 Schedule for Computation of Performance
Quotations - Total Rate of Return, Yield
and Distribution Rate. (10)
17 Financial Data Schedule for each class of
shares; filed herewith.
Power of Attorney, dated September 21,
1994; filed herewith.
- -----------------------------
(1) Incorporated by reference to Registration Statement on Form A-1, filed with
the SEC on February 7, 1935.
(2) Incorporated by reference to Post-Effective Amendment No. 49 to the Trust's
Registration Statement on Form S-5, filed with the SEC on April 11, 1979.
(3) Incorporated by reference to Post-Effective Amendment No. 54 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on February 28,
1983.
(4) Incorporated by reference to Post-Effective Amendment No. 58 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on February 28,
1986.
(5) Incorporated by reference to Post-Effective Amendment No. 62 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on February 26,
1990.
(6) Incorporated by reference to Post-Effective Amendment No. 63 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on March 1, 1991.
(7) Incorporated by reference to Post-Effective Amendment No. 11 to the
Registration Statement of Massachusetts Financial Special Fund on Form N-1A
(1933 Act File No. 2-82779), filed with the SEC on January 29, 1992.
(8) Incorporated by reference to Post-Effective Amendment No. 65 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on March 1, 1993.
(9) Incorporated by reference to Post-Effective Amendment No. 66 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on June 18, 1993.
(10) Incorporated by reference to Post-Effective Amendment No. 67 to the Trust's
Registration Statement on Form N-1A, filed with the SEC on April 29, 1994.
(11) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 26 filed with the SEC on
February 22, 1995.
(12) Incorporated by reference to Amendment No. 8 on Form N-2 for MFS Municipal
Income Trust (File No. 811-4841) filed with the SEC on February 28, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
<S> <C>
Class A Shares of Beneficial Interest 91,840
($0.33 1/3 par value) (as at March 31, 1995)
Class B Shares of Beneficial Interest 11,322
($0.33 1/3 par value) (as at March 31, 1995)
</TABLE>
<PAGE>
ITEM 27. INDEMNIFICATION
Reference is hereby made to Section 4 of the Distribution
Agreement between Registrant and MFS Fund Distributors, Inc., filed herewith.
The Trustees and officers of the Registrant and the personnel
of the Registrant's investment adviser and distributor are insured under an
errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Massachusetts Financial Services Company ("MFS") serves as
investment adviser to the following open-end funds comprising the MFS Family of
Funds: Massachusetts Investors Trust, Massachusetts Investors Growth Stock Fund,
MFS Growth Opportunities Fund, MFS Government Securities Fund, MFS Government
Mortgage Fund, MFS Government Limited Maturity Fund, MFS Series Trust I (which
has three series: MFS Managed Sectors Fund, MFS Cash Reserve Fund and MFS World
Asset Allocation Fund), MFS Series Trust II (which has four series: MFS Emerging
Growth Fund, MFS Capital Growth Fund, MFS Intermediate Income Fund and MFS Gold
& Natural Resources Fund), MFS Series Trust III (which has two series: MFS High
Income Fund and MFS Municipal High Income Fund), MFS Series Trust IV (which has
four series: MFS Money Market Fund, MFS Government Money Market Fund, MFS
Municipal Bond Fund and MFS OTC Fund), MFS Series Trust V (which has two series:
MFS Total Return Fund and MFS Research Fund), MFS Series Trust VI (which has
three series: MFS World Total Return Fund, MFS Utilities Fund and MFS World
Equity Fund), MFS Series Trust VII (which has two series: MFS World Governments
Fund and MFS Value Fund), MFS Series Trust VIII (which has two series: MFS
Strategic Income Fund and MFS World Growth Fund), MFS Municipal Series Trust
(which has 19 series: MFS Alabama Municipal Bond Fund, MFS Arkansas Municipal
Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal Bond Fund,
MFS Georgia Municipal Bond Fund, MFS Louisiana Municipal Bond Fund, MFS Maryland
Municipal Bond Fund, MFS Massachusetts Municipal Bond Fund, MFS Mississippi
Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North Carolina
Municipal Bond Fund, MFS Pennsylvania Municipal Bond Fund, MFS South Carolina
Municipal Bond Fund, MFS Tennessee Municipal Bond Fund, MFS Texas Municipal Bond
Fund, MFS Virginia Municipal Bond Fund, MFS Washington Municipal Bond Fund, MFS
West Virginia Municipal Bond Fund and MFS Municipal Income Fund) and MFS Series
Trust IX (which has three series: MFS Bond Fund, MFS Limited Maturity Fund and
MFS Municipal Limited Maturity Fund) (the "MFS Funds"). The principal business
address of each of the aforementioned funds is 500 Boylston Street, Boston,
Massachusetts 02116.
MFS also serves as investment adviser of the following
no-load, open-end funds: MFS Institutional Trust ("MFSIT") (which has two
series), MFS Variable Insurance Trust ("MVI") (which has twelve series) and MFS
Union Standard Trust ("UST") (which has two series). The principal business
address of each of the aforementioned funds is 500 Boylston Street, Boston,
Massachusetts 02116.
In addition, MFS serves as investment adviser to the following
closed-end funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS
Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter
Income Trust and MFS Special Value Trust (the "MFS Closed-End Funds"). The
principal business address of each of the aforementioned funds is 500 Boylston
Street, Boston, Massachusetts 02116.
Lastly, MFS serves as investment adviser to MFS/Sun Life
Series Trust ("MFS/SL"), Sun Growth Variable Annuity Fund, Inc. ("SGVAF"), Money
Market Variable Account, High Yield Variable Account, Capital Appreciation
Variable Account, Government Securities Variable Account, World Governments
Variable Account, Total Return Variable Account and Managed Sectors Variable
Account. The principal business address of each is One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181.
MFS International Ltd. ("MIL"), a limited liability company
organized under the laws of the Republic of Ireland and a subsidiary of MFS,
whose principal business address is 41-45 St. Stephen's Green, Dublin 2,
Ireland, serves as investment adviser to and distributor for MFS International
Funds (which has four portfolios: MFS International Funds-U.S. Equity Fund, MFS
International Funds-U.S. Emerging Growth Fund, MFS International
Funds-International Governments Fund and MFS International Fund-Charter Income
Fund) (the "MIL Funds"). The MIL Funds are organized in Luxembourg and qualify
as an undertaking for collective investments in transferable securities (UCITS).
The principal business address of the MIL Funds is 47, Boulevard Royal, L-2449
Luxembourg.
MIL also serves as investment adviser to and distributor for
MFS Meridian U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS
Meridian Global Government Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
World Growth Fund, MFS Meridian Money Market Fund and MFS Meridian U.S. Equity
Fund (collectively the "MFS Meridian Funds"). Each of the MFS Meridian Funds is
organized as an exempt company under the laws of the Cayman Islands. The
principal business address of each of the MFS Meridian Funds is P.O. Box 309,
Grand Cayman, Cayman Islands, British West Indies.
MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary
of MFS, serves as distributor for the MFS Funds, MVI, UST and MFSIT.
Clarendon Insurance Agency, Inc. ("CIAI"), a wholly owned
subsidiary of MFS, serves as distributor for certain life insurance and annuity
contracts issued by Sun Life Assurance Company of Canada (U.S.).
MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary
of MFS, serves as shareholder servicing agent to the MFS Funds, the MFS
Closed-End Funds, MFS Institutional Trust, MFS Variable Insurance Trust and MFS
Union Standard Trust.
MFS Asset Management, Inc. ("AMI"), a wholly owned subsidiary
of MFS, provides investment advice to substantial private clients.
MFS Retirement Services, Inc. ("RSI"), a wholly owned
subsidiary of MFS, markets MFS products to retirement plans and provides
administrative and record keeping services for retirement plans.
<PAGE>
MFS
The Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames,
Arnold D. Scott, John R. Gardner and John D. McNeil. Mr. Brodkin is the
Chairman, Mr. Shames is the President, Mr. Scott is a Senior Executive Vice
President and Secretary, James E. Russell is a Senior Vice President and the
Treasurer, Stephen E. Cavan is a Senior Vice President, General Counsel and an
Assistant Secretary, and Robert T. Burns is a Vice President and an Assistant
Secretary of MFS.
MASSACHUSETTS INVESTORS TRUST
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
MFS GROWTH OPPORTUNITIES FUND
MFS GOVERNMENT SECURITIES FUND
MFS GOVERNMENT MORTGAGE FUND
MFS SERIES TRUST I
MFS SERIES TRUST V
MFS GOVERNMENT LIMITED MATURITY FUND
MFS SERIES TRUST VI
A. Keith Brodkin is the Chairman and President, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice
President of MFS, is Assistant Treasurer, James R. Bordewick, Jr., Vice
President and Associate General Counsel of MFS, is Assistant Secretary.
MFS SERIES TRUST II
A. Keith Brodkin is the Chairman and President, Leslie J.
Nanberg, Senior Vice President of MFS, is a Vice President, Stephen E. Cavan is
the Secretary, W. Thomas London is the Treasurer, James O. Yost is Assistant
Treasurer, and James R. Bordewick, Jr., is Assistant Secretary.
MFS GOVERNMENT MARKETS INCOME TRUST
MFS INTERMEDIATE INCOME TRUST
A. Keith Brodkin is the Chairman and President, Patricia A.
Zlotin, Executive Vice President of MFS and Leslie J. Nanberg, Senior Vice
President of MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost is Assistant Treasurer, and James
R. Bordewick, Jr., is the Assistant Secretary.
MFS SERIES TRUST III
A. Keith Brodkin is the Chairman and President, James T.
Swanson, Robert J. Manning, Cynthia M. Brown and Joan S. Batchelder, Senior Vice
Presidents of MFS, Bernard Scozzafava, Vice President of MFS, and Matthew
Fontaine, Assistant Vice President of MFS, are Vice Presidents, Sheila
Burns-Magnan and Daniel E. McManus, Assistant Vice Presidents of MFS, are
Assistant Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London
is the Treasurer, James O. Yost is Assistant Treasurer, and James R. Bordewick,
Jr., is Assistant Secretary.
MFS SERIES TRUST IV
MFS SERIES TRUST IX
A. Keith Brodkin is the Chairman and President, Robert A.
Dennis and Geoffrey L. Kurinsky, Senior Vice Presidents of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost is Assistant Treasurer and James R. Bordewick, Jr., is
Assistant Secretary.
MFS SERIES TRUST VII
A. Keith Brodkin is the Chairman and President, Leslie J.
Nanberg and Stephen C. Bryant, Senior Vice Presidents of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost is Assistant Treasurer and James R. Bordewick, Jr., is
Assistant Secretary.
MFS SERIES TRUST VIII
A. Keith Brodkin is the Chairman and President, Jeffrey L.
Shames, Leslie J. Nanberg, Patricia A. Zlotin, James T. Swanson and John D.
Laupheimer, Jr., Vice President of MFS, are Vice Presidents, Stephen E. Cavan is
the Secretary, W. Thomas London is the Treasurer, James O. Yost is Assistant
Treasurer and James R. Bordewick, Jr., is Assistant Secretary.
MFS MUNICIPAL SERIES TRUST
A. Keith Brodkin is the Chairman and President, Cynthia M.
Brown and Robert A. Dennis are Vice Presidents, David B. Smith, Geoffrey L.
Schechter and David R. King, Vice Presidents of MFS, are Vice Presidents,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost is Assistant Treasurer and James R. Bordewick, Jr., is Assistant Secretary.
MFS VARIABLE INSURANCE TRUST
MFS INSTITUTIONAL TRUST
A. Keith Brodkin is the Chairman and President, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is the
Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.
MFS UNION STANDARD TRUST
A. Keith Brodkin is the Chairman and President, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost and
Karen C. Jordan are Assistant Treasurers and James R. Bordewick, Jr., is the
Assistant Secretary.
MFS MUNICIPAL INCOME TRUST
A. Keith Brodkin is the Chairman and President, Cynthia M.
Brown and Robert J. Manning are Vice Presidents, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost, is Assistant
Treasurer and James R. Bordewick, Jr., is Assistant Secretary.
MFS MULTIMARKET INCOME TRUST
MFS CHARTER INCOME TRUST
A. Keith Brodkin is the Chairman and President, Patricia A.
Zlotin, Leslie J. Nanberg and James T. Swanson are Vice Presidents, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice
President of MFS, is Assistant Treasurer and James R. Bordewick, Jr., is
Assistant Secretary.
MFS SPECIAL VALUE TRUST
A. Keith Brodkin is the Chairman and President, Jeffrey L.
Shames, Patricia A. Zlotin and Robert J. Manning are Vice Presidents, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, and James O. Yost, is
Assistant Treasurer and James R. Bordewick, Jr., is Assistant Secretary.
SGVAF
W. Thomas London is the Treasurer.
MIL
A. Keith Brodkin is a Director and the President, Arnold D.
Scott, Jeffrey L. Shames are Directors, Ziad Malek, Senior Vice President of
MFS, is a Senior Vice President and Managing Director, Thomas J. Cashman, Jr., a
Vice President of MFS, is a Senior Vice President, Stanley T. Kwok is a Vice
President, Anthony F. Clarizio is an Assistant Vice President, Stephen E. Cavan
is a Director, Senior Vice President and the Clerk, James R. Bordewick, Jr. is a
Director, Senior Vice President and an Assistant Clerk, Robert T. Burns is an
Assistant Clerk and James E. Russell is the Treasurer.
MIL FUNDS
A. Keith Brodkin is the Chairman, President and a Director,
Arnold D. Scott and Jeffrey L. Shames are Directors, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer and James R. Bordewick, Jr., is the Assistant Secretary, and Ziad
Malek is a Senior Vice President.
MFS MERIDIAN FUNDS
A. Keith Brodkin is the Chairman, President and a Director,
Arnold D. Scott and Jeffrey L. Shames are Directors, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James R. Bordewick, Jr., is the
Assistant Secretary and Ziad Malek is a Senior Vice President.
MFD
A. Keith Brodkin is the Chairman, Arnold D. Scott and Jeffrey
L. Shames are Directors, William W. Scott, Jr., an Executive Vice President of
MFS, is the President, Stephen E. Cavan is the Secretary, Robert T. Burns is the
Assistant Secretary, and James E. Russell is the Treasurer.
CIAI
A. Keith Brodkin is the Chairman, Arnold D. Scott and Jeffrey
L. Shames are Directors, Cynthia Orcott is President, Bruce C. Avery, Executive
Vice President of MFS, is the Vice President, James E. Russell is the Treasurer,
Stephen E. Cavan is the Secretary, and Robert T. Burns is the Assistant
Secretary.
MFSC
A. Keith Brodkin is the Chairman, Arnold D. Scott and Jeffrey
L. Shames are Directors, Joseph A. Recomendes, Senior Vice President of MFS, is
the President, James E. Russell is the Treasurer, Stephen E. Cavan is the
Secretary, and Robert T. Burns is the Assistant Secretary.
AMI
A. Keith Brodkin is the Chairman and a Director, Jeffrey L.
Shames, Leslie J. Nanberg and Arnold D. Scott are Directors, Thomas J. Cashman
is the President and a Director, James E. Russell is the Treasurer and Robert T.
Burns is the Secretary.
RSI
William W. Scott, Jr., Joseph A. Recomendes and Bruce C. Avery
are Directors, Arnold D. Scott is the Chairman, Douglas C. Grip, a Senior Vice
President of MFS, is the President, James E. Russell is the Treasurer, Stephen
E. Cavan is the Secretary, Robert T. Burns is the Assistant Secretary and Henry
A. Shea is an Executive Vice President.
In addition, the following persons, Directors or officers of
MFS, have the affiliations indicated:
A. Keith Brodkin Director, Sun Life Assurance Company of
Canada (U.S.), One Sun Life Executive
Park, Wellesley Hills, Massachusetts
Director, Sun Life Insurance and Annuity
Company of New York, 67 Broad Street,
New York, New York
John R. Gardner President and a Director, Sun Life
Assurance Company of Canada, Sun Life
Centre, 150 King Street West, Toronto,
Ontario, Canada (Mr. Gardner is also
an officer and/or Director of various
subsidiaries and affiliates of Sun
Life)
John D. McNeil Chairman, Sun Life Assurance Company of
Canada, Sun Life Centre, 150 King
Street West, Toronto, Ontario, Canada
(Mr. McNeil is also an officer and/or
Director of various subsidiaries and
affiliates of Sun Life)
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Reference is hereby made to Item 28 above.
(b) Reference is hereby made to Item 28 above.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Registrant are located, in
whole or in part, at the office of the Registrant and the following locations:
NAME ADDRESS
Massachusetts Financial Services 500 Boylston Street
Company (investment adviser) Boston, MA 02116
MFS Fund Distributors, Inc. 500 Boylston Street
(distributor) Boston, MA 02116
State Street Bank and Trust State Street South
Company (custodian) 5 - West
North Quincy, MA 02171
MFS Service Center, Inc. 500 Boylston Street
(transfer agent) Boston, MA 02116
ITEM 31. MANAGEMENT SERVICES
(a) Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
Shareholders upon request and without a charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the 27th day of April, 1995.
MASSACHUSETTS INVESTORS
TRUST
By: /s/ JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on April 27, 1995.
SIGNATURE TITLE
/s/ A. KEITH BRODKIN* Chairman, President (Principal
A. Keith Brodkin Executive Officer) and Trustee
/s/ W. THOMAS LONDON* Treasurer (Principal Financial
W. Thomas London Officer and Principal Accounting
Officer)
/s/ RICHARD B. BAILEY* Trustee
Richard B. Bailey
/s/ PETER G. HARWOOD* Trustee
Peter G. Harwood
<PAGE>
/s/ J. ATWOOD IVES* Trustee
J. Atwood Ives
/s/ LAWRENCE T. PERERA, ESQ* Trustee
Lawrence T. Perera, Esq.
/s/ WILLIAM J. POORVU* Trustee
William J. Poorvu
/s/ CHARLES W. SCHMIDT* Trustee
Charles W. Schmidt
/s/ ARNOLD D. SCOTT* Trustee
Arnold D. Scott
/s/ JEFFREY L. SHAMES* Trustee
Jeffrey L. Shames
/s/ ELAINE R. SMITH* Trustee
Elaine R. Smith
/s/ DAVID B. STONE* Trustee
David B. Stone
*By: /s/ JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
as Attorney-in-fact
Executed by James R. Bordewick,
Jr. on behalf of those indicated
pursuant to a Power of Attorney
dated September 21, 1994; filed
herewith.
<PAGE>
POWER OF ATTORNEY
MASSACHUSETTS INVESTORS TRUST
The undersigned, Trustees and officers of Massachusetts Investors Trust
(the "Registrant"), hereby severally constitute and appoint A. Keith Brodkin, W.
Thomas London, Stephen E. Cavan and James R. Bordewick, Jr., and each of them
singly, as true and lawful attorneys, with full power to them and each of them
to sign for each of the undersigned, in the names of, and in the capacities
indicated below, any Registration Statement and any and all amendments thereto
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission for the
purpose of registering the Registrant as a management investment company under
the Investment Company Act of 1940 and/or the shares issued by the Registrant
under the Securities Act of 1933 granting unto our said attorneys, and each of
them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary or desirable to be done in the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys or any of them may
lawfully do or cause to be done by virtue thereof.
In WITNESS WHEREOF, the undersigned have hereunto set their hand on
this 21st day of September, 1994.
SIGNATURES TITLE(S)
/s/ A. KEITH BRODKIN Chairman of the Board; Trustee; and
A. Keith Brodkin Principal Executive Officer
/s/ RICHARD B. BAILEY Trustee
Richard B. Bailey
/s/ PETER G. HARWOOD Trustee
Peter G. Harwood
/s/ J. ATWOOD IVES Trustee
J. Atwood Ives
<PAGE>
/s/ LAWRENCE T. PERERA Trustee
Lawrence T. Perera
/s/ WILLIAM J. POORVU Trustee
William J. Poorvu
/s/ CHARLES W. SCHMIDT Trustee
Charles W. Schmidt
/s/ ARNOLD D. SCOTT Trustee
Arnold D. Scott
/s/ JEFFREY L. SHAMES Trustee
Jeffrey L. Shames
/s/ ELAINE R. SMITH Trustee
Elaine R. Smith
/s/ DAVID B. STONE Trustee
David B. Stone
/s/ W. THOMAS LONDON Principal Financial and
W. Thomas London Accounting Officer
<PAGE>
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
<S> <C> <C>
1 (a) Amendment to the Declaration of Trust, dated September 29,
1994.
(b) Declaration of Trust, dated March 21, 1994, as amended
through September 29, 1994.
6 (a) Amended and Restated Distribution Agreement dated
January 1, 1995.
8 (d) Amendment to Custodian Agreement, dated December 15, 1993.
10 Consent and Opinion of Counsel.
11 Consent of Deloitte & Touche.
15 (a) Amended and Restated Distribution Plan for Class A Shares,
dated December 21, 1994.
(b) Distribution Plan for Class B Shares, dated December 21,
1994.
27 Financial Data Schedule for each class of shares.
</TABLE>
EXHIBIT 99.1(A)
MASSACHUSETTS INVESTORS TRUST
CERTIFICATION OF AMENDMENT
TO AGREEMENT AND DECLARATION OF TRUST
The undersigned, constituting all of the Trustees of Massachusetts
Investors Trust (the "Trust"), a common law trust organized under the laws of
The Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust, dated March 21, 1924, as amended (the "Declaration"), do hereby certify
that the Declaration was amended by the Trustees, with the assent of the holders
of the majority of the outstanding shares of the Trust, effective September 27,
1994, as follows:
Article II, Section 3(d) is hereby deleted.
Article II, Section 4 is hereby amended and restated in its entirety as
follows:
Section 4. In case of the declination, death, resignation,
retirement, removal, or inability of any of the Trustees, or in
case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees, or Trustee,
shall fill such vacancy by appointing such other person or
corporation as they in their discretion shall see fit. Such
appointment shall be evidenced by a written instrument signed by
a majority of the Trustees in office and deposited with the
depository, whereupon the appointment shall take effect. An
appointment of a Trustee may be made as aforesaid, to take
effect at a later date, by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees provided that said
later date shall be at or after the effective date of said
retirement, resignation or increase in number of Trustees. As
soon as any Trustee so appointed shall have accepted this trust
by an instrument, a duplicate original of which shall be
deposited with said depository, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing
Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. Within twelve months of any such
effective date of appointment, the Trustees shall cause notice
of such appointment to be mailed to each Shareholder at his
address as recorded on the books of the Trustees.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate this
28th day of September, 1994.
A. KEITH BRODKIN CHARLES W. SCHMIDT
- --------------------------- --------------------------
A. Keith Brodkin, Trustee Charles W. Schmidt, Trustee
RICHARD B. BAILEY ARNOLD D. SCOTT
- --------------------------- --------------------------
Richard B. Bailey, Trustee Arnold D. Scott, Trustee
PETER G. HARWOOD JEFFREY L. SHAMES
- --------------------------- --------------------------
Peter G. Harwood, Trustee Jeffrey L. Shames, Trustee
J. ATWOOD IVES ELAINE R. SMITH
- --------------------------- --------------------------
J. Atwood Ives, Trustee Elaine R. Smith, Trustee
LAWRENCE T. PERERA DAVID B. STONE
- --------------------------- --------------------------
Lawrence T. Perera, Trustee David B. Stone, Trustee
WILLIAM J. POORVU
- ---------------------------
William J. Poorvu, Trustee
EXHIBIT 99.1(B)
MASSACHUSETTS INVESTORS TRUST
AGREEMENT
AND
DECLARATION OF TRUST
MARCH 24, 1924
AS AMENDED THROUGH SEPTEMBER 29, 1994
<PAGE>
MASSACHUSETTS INVESTORS TRUST
THIS AGREEMENT AND DECLARATION OF TRUST made at Boston, in the County
of Suffolk and Commonwealth of Massachusetts, this 21st day of March, 1924, by
and between the STATE STREET TRUST COMPANY duly incorporated under the laws of
Massachusetts and doing business in Boston in said Commonwealth, party of the
first part (hereinafter called the Depository), and CHARLES H. LEAROYD, of
Wakefield, HATHERLY FOSTER, Junior, of Milton, and EDWARD G. LEFFLER, of
Cambridge, all in said Commonwealth (hereinafter called the Trustees, which
expression shall extend to, and include, the Trustees for the time being of
these presents, and the word "Trustee" shall apply to any one of said Trustees
where the context so admits) parties of the second part.
WITNESSETH:
WHEREAS certain subscriptions to shares in the trust hereby created
have been and will be received by said Trustees from the cestuis que trustent
whose interest is hereinafter described;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, and it is hereby AGREED AND
DECLARED that the Trustees do, and shall, stand possessed of the amount of said
subscriptions paid in and to be paid in, and of any other similar subscriptions
or other property hereafter received by, or paid, transferred or conveyed to the
Trustees for the purposes of these presents (hereinafter called the trust
estate) in trust to manage the same and to receive the income thereof for the
benefit of the Shareholders for the time being according to the number of shares
held by them respectively, and with and subject to the powers and provisions
hereinafter contained concerning the same, and it is hereby expressly declared
that a trust and not a partnership is hereby created.
ARTICLE I.
(a) A duplicate original of this Agreement and Declaration of Trust
shall be deposited with said State Street Trust Company. In the event of the
dissolution of said Trust Company, resignation, refusal to continue, or act
hereunder, or expiration of its charter or otherwise, or not less than 30 days
after notice to said Trust Company or its successor, of the unanimous vote of
the Trustees to change the depository, the Trustees shall have the power to
designate a successor depository which shall be a bank or trust company having
capital, surplus and undivided profits of at least $5,000,000. In such event the
depository shall deliver to such successor all documents, deposits and other
property relating to trust estate in its possession. The depository may resign
by instrument in writing mailed postage prepaid to the Trustees at their
addresses as they appear on the books of the depository, such resignation to
take effect 30 days after the date of such writing.
<PAGE>
(b) The Trustees shall deposit with said depository all moneys and
other property received by them hereunder and said depository shall receive and
keep the same as a special trust estate in the name of Massachusetts Investors
Trust, but said trust estate may be kept in one or more accounts, as the
Trustees from time to time shall designate and, notwithstanding the provisions
of Section 2 of Article III, the Trustees may cause any of the trust property to
be transferred into the name or to be acquired or held in the name of the
depository, or in the name of any nominee or nominees of the depository
satisfactory to the Trustees. The depository shall from time to time deposit
moneys of the Trust at such other banks or trust companies, and in such amounts
as the Trustees may direct, in writing, but subject only to the draft or order
of the depository. Subject to such rules, regulations and orders as the
Securities and Exchange Commission may adopt, the Trust may deposit or may
direct the depository to deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association registered
with the Securities and Exchange Commission under the Securities Exchange Act of
1934, or such other person as may be permitted by the Commission, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon the
order of the depository. The depository shall deliver to the Trustees, or on
their written order and in accordance therewith, any or all of the property in
said trust estate, as the Trustees may at any time require in writing initialed
or signed by a majority of the Trustees, but only in the following manner:
(1) In case of sale of any of said trust property, a check for the
proceeds of said sale as shown by the written instructions of
the Trustees shall be delivered to the depository in
accordance with street custom to be credited into the trust
estate on the same day said property shall be taken therefrom.
(2) In case of disbursement of funds from the trust estate, such
disbursement shall be limited to payment of expenses of the
Trust, including Trustees' fees, and liabilities of the Trust,
including distributions to shareholders and repurchase of
shares of the Trust, and to payments for investment against
delivery of securities acquired.
(3) In case of exchange of any of said trust property, the
property to be exchanged for said trust property, or evidence
of title therefor, shall be delivered to the depository at the
time said trust property is taken.
The depository shall have no duty or responsibility whatsoever relative
to moneys or other property received by the Trustees and not deposited with it,
nor relative to the disposition of moneys or other property delivered by it to
the Trustees and it shall not be required to request or receive any accounting
from the Trustees.
<PAGE>
Notwithstanding the requirement above as to instructions the Trustees
may provide for the disbursement of moneys derived from dividends and interest
by checks or other instruments executed in behalf of the trust estate by any one
or more officers or agents thereunto authorized by resolution adopted by the
Trustees, and such moneys shall be subject to withdrawal only in accordance with
the rules provided therefor by the Trustees, and no withdrawal of said funds
shall be made except by the signature of at least one duly authorized officer,
agent, or Trustee.
(c) The Trustees may employ one or more Transfer Agents for the issuing
of the certificates of beneficial interest herein provided for and for the
transfer thereof in case of change of ownership. The Trustees may, in lieu of
employing a Transfer Agent, cause the Trust to transfer its own shares or,
notwithstanding Article III, Section 1(a), may form a subsidiary, alone or
jointly with others, for the purpose of performing these functions.
Any Transfer Agent shall also pay to the holders of said certificates,
when so instructed by the Trustees, and in so far as it has or is provided with
the necessary funds for this purpose, their respective dividends or other
distributions as declared by the Trustees, said payments to be made to the
Shareholders as they appear in the records of said Transfer Agent.
(d) The depository shall not be responsible or liable in any manner to
the Trustees, or to the holders of certificates of beneficial interest, except
for its own wilful neglect or default, and shall not be responsible for the
title, validity, or genuineness of any property conveyed and/or delivered to the
Trustees, or to it.
(e) The depository shall be entitled to reasonable compensation for its
services and expenses both as depository, and Transfer Agent, and shall have a
lien upon the trust estate, whether or not in its possession for the payment
thereof. It may employ counsel and act through such officers, agents and
employees as it shall select.
ARTICLE II.
SECTION 1. The Trustees, in their collective capacity, shall be
designated "Massachusetts Investors Trust" and under such name, so far as may be
practical and convenient, shall manage the trust estate, execute all their
instruments in writing, and do all other things relating to the trust hereby
created, and every duly authorized instrument executed in the name of the
Massachusetts Investors Trust (or such other designation of the Trustees as may
for the time being be adopted, as hereinafter provided) shall have the same
effect as if executed in the name of the Trustees.
SECTION 2. The Trustees shall have the right and power from time to
time to change said name and designation by delivering to said depository a
written notice of such change, and the date upon which the same shall become
effective.
<PAGE>
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the depository, which shall take effect upon such delivery or upon such later
date as is specified therein; (b) that any Trustee may be removed at any time by
written instrument signed by at least two-thirds of the number of Trustees prior
to such removal, specifying the date when such removal shall become effective,
and deposited with the depository; [and] (c) that any Trustee who requests in
writing to be retired or who has attained the age of sixty-five or has become
incapacitated by illness or injury may be retired by written instrument signed
by all the other Trustees, specifying the date of his retirement and deposited
with the depository. No bonds shall be required from any Trustee. The Trustees
shall be entitled to remuneration for their services and retired Trustees to
retirement pay as provided in Section 1 of Article IV.
SECTION 4. In case of the declination, death, resignation, retirement,
removal, or inability of any of the Trustees, or in case of vacancy shall, by
reason of an increase in number, or for any other reason, exist, the remaining
Trustees, or Trustee, shall fill such vacancy by appointing such other person or
corporation as they in their discretion shall see fit. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in office
and deposited with the depository, whereupon the appointment shall take effect.
An appointment of a Trustee may be made as aforesaid, to take effect at a later
date, by the Trustees then in office in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of Trustees provided
that said later date shall be at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust by an instrument, a duplicate original
of which shall be deposited with said depository, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder. Within
twelve months of any such effective date of appointment, the Trustees shall
cause notice to such appointment to be mailed to each Shareholder at his address
as recorded on the books of the Trustees.
SECTION 5. Any Trustee may, by power of attorney, delegate his powers
for a period not exceeding six months at any one time to any other Trustee or
Trustees herein, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
SECTION 6. The number of Trustees, not less than three (3) nor more
than fifteen (15), serving hereunder at any time shall be determined by the
Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is absent from the Commonwealth of
Massachusetts or physically or mentally incapacitated by reason of disease or
otherwise, the other Trustees shall have all the powers hereunder and the
certificate of the other Trustees of such vacancy, absence or incapacity, shall
be conclusive, provided, however, that no vacancy shall remain unfilled for a
period longer than six calendar months.
SECTION 7. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any of them, shall not operate to annul the Trust
or to revoke any existing agency create pursuant to the terms of this agreement.
<PAGE>
ARTICLE III.
SECTION 1. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders and have the right
and are empowered hereby, in their absolute and uncontrolled discretion, to do
any and all of the following acts:
(a)
I. To buy, and invest the funds in their hands, in bonds, stocks,
notes, certificates of indebtedness, mortgages, acceptances,
certificates of interest, and other negotiable securities,
however named or described, of the United States Government
and of foreign countries, of States, Counties, Cities, Towns
or Districts, of Governmental Agencies, or of Corporations,
Associations, or of other organizations, domestic or foreign,
to the end that the investments may be generally diversified
in the nature of the investment, and the geographical location
thereof, and in the line of commercial activity represented
thereby.
II. The Trustees shall not in anywise be bound or limited by
present or future laws or customs in regard to Trust
investments, but shall have full authority and power to make
any and all investments which they, in their uncontrolled
discretion, shall deem proper to accomplish the purpose of
this Trust.
III. The Trustees shall not purchase the securities of any issuer
if such purchase at the time thereof would cause more than 5%
of the total assets of the Trust (taken at market value) to be
invested in the securities of such issuer. The foregoing
limitation shall not apply to obligations of the Government of
the United States or Canada or of any corporation which is an
instrumentality of the United States.
IV. The Trustees shall not purchase securities issued by any other
investment company or investment trust except by purchase in
the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary
broker's commission.
V. The Trustees shall not purchase securities of any issuer if
such purchase at the time thereof would cause more than ten
per cent (10%) of any class of securities of such issuer to be
held by the Trust. For this purpose all outstanding bonds and
other evidences of indebtedness shall be deemed to be a single
class of securities of the issuer, and all kinds of stock of
an issuer preferred over the common stock as to dividends or
in liquidation shall be deemed to constitute a single class
regardless of relative priorities, series designations,
conversion rights and other differences.
<PAGE>
VI. Notwithstanding the foregoing paragraphs III, IV or V, any
other investment trust, whether organized as a trust,
association or corporation, or a personal holding company, may
be merged or consolidated with or acquired by Massachusetts
Investors Trust, provided that if such merger, consolidation
or acquisition results in an investment in the securities of
any issuer in excess of 5% of the total assets of the Trust
(taken at market value), or 10% of any class of securities of
an issuer, the Trustees shall within sixty days after the
consummation of such merger, consolidation or acquisition
dispose of all of the securities of such issuer so acquired or
such portion thereof as shall bring the total investment
therein within the limitations imposed by paragraphs III and V
above as of the date of consummation.
VII. The Trustees shall not purchase or retain in the portfolio of
the Trust any securities issued by an issuer any of whose
officers, directors, trustees, or securityholders is a Trustee
or officer of the Trust, or is a member, officer, director or
trustee of any investment adviser of the Trust, if one or more
of such persons owns beneficially more than one-half of one
per cent (1/2%) of the shares or securities, or both (all
taken at market value), of such issuer, and such persons
owning more than one-half of one per cent (1/2%) of such
shares or securities together own beneficially more than five
per cent (5%) of such shares or securities, or both (all taken
at market value).
VIII. The Trustees shall not invest more than five percent (5%) of
the assets of the Trust (taken a market value) in securities
of any issuer which has a record of less than three (3) years'
continuous operation including, however, in such three (3)
years the operation of any predecessor company or companies,
partnership or individual enterprise if the issuer whose
securities are proposed as an investment for funds of the
Trust has come into existence as a result of a merger,
consolidation, reorganization, or the purchase of
substantially all the assets of such predecessor company or
companies, partnership or individual enterprise.
(b) To sell, or otherwise dispose of, free and clear from any of the
provisions of this Trust and from any of the liens created by this Trust, any of
such investments, and to reinvest the proceeds thereof or any part thereof, with
continuing powers to so invest and reinvest during the existence of the Trust.
(c) To pay any and all taxes or liens of whatsoever nature or kind
imposed upon or against the trust estate or any part thereof, or imposed upon
any of the Trustees herein, individually or jointly, by reason of the trust
estate, or of the business conducted by said Trustees under the terms of the
indenture, out of the funds of the trust estate available for such purpose.
(d) To make distributions of income and of capital gains to the
Shareholders in the manner hereinafter provided for.
(e) For the purposes of said Trust to raise and to borrow money, with
or without collateral security, and, whenever in their judgment necessary, the
Trustees are authorized to pledge, mortgage, charge or hypothecate, or otherwise
encumber the whole or any part of the trust estate as security for a loan or
loans, provided, however, that no loan shall be contracted by which the
aggregate amount of loans outstanding, including such loan, shall exceed ten per
cent (10%) of the then net liquidating value of the Trust.
<PAGE>
(f) To sell or exchange upon such terms and for such considerations,
whether cash, securities, or other property, as they may see fit, the stocks,
bonds, securities and other claims at any time held by them for other such
bonds, notes, shares of stock, participation shares, trust certificates,
certificates of interest, or other securities made or issued by one or more
corporations, voluntary associations, trustees, persons or other organizations,
as the Trustees may deem to be proper.
(g) To engage in and to prosecute, compound, compromise, abandon, or
adjust, by arbitration, or otherwise, any actions, suits, proceedings, disputes,
claims, demands, and things relating to the trust estate, and out of the trust
estate to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any evidence that the
Trustees may deem sufficient. The powers aforesaid are to include any actions,
suits, proceedings, disputes, claims, demands and things relating to the trust
estate wherein any of the Trustees may be named individually, but the subject
matter of which arises by reason of business for and on behalf of the trust
estate.
(h) To buy or join with any person or persons in buying the property of
any corporation, association, or other organization any of the securities of
which are included in the trust estate, or any property in which the Trustees,
as such, shall have or may hereafter acquire an interest, and to allow the title
to any property so bought to be taken in the name or names of, and to be held
by, such person or persons as the Trustees shall name or approve.
(i) From time to time to sell the shares of the Trust either for cash
or for property whenever and in such amounts as the Trustees may deem desirable
but subject to the limitations set forth in subsection (d) of Section 5 of
Article VIII.
(j) In all matters and respects, to sell, convey, and generally to deal
with the trust estate and to manage and conduct the trust hereby created
(including the giving or furnishing proxies for voting at meetings in respect of
any shares of stock, bonds, or other security at any time included in the trust
estate), as fully as if the Trustees were the absolute owners of the trust
estate, and to execute any and all instruments and to do any and all things
incidental to said Trust not inconsistent with the provisions hereof, the
execution or performance of which the Trustees may deem expedient.
(k) To adopt and use a common seal, but such seal may or may not be
affixed to instruments executed by the Trustees or the officers of the Trust,
and the absence of said seal shall in no wise affect the validity of such
instruments; also, to place upon any instrument executed by the Trustees, or
officers of the Trust, any device or seal that may be required by the laws of
the Commonwealth of Massachusetts or of any other state wherein said Trust may
have business transactions.
<PAGE>
(l) But the Trustees shall not have any power or authority to borrow
money on the credit, or on behalf of the Shareholders, or to make any contract
on their behalf for the repayment of any money raised by mortgage, pledge,
charge, or other encumbrance in pursuance of the provisions herein, or to make
any contract or incur any liability whatever on behalf of the Shareholder
individually, or binding them personally.
(m) From time to time to purchase shares of the Trust for cash in their
discretion but subject to the limitations set forth in subsection (d) of Section
5 of Article VIII. Shares so purchased may in the discretion of the Trustees be
canceled and retired or may be resold as provided in subsection 1(i) of this
Article III.
(n) From time to time in their discretion to enter into, modify and
terminate agreements with federal or state regulatory authorities, which
agreements may restrict but not amplify their powers under this Indenture. Such
agreements shall be signed by all the Trustees for the time being and shall,
during their effectiveness, be binding upon the Trustees as fully as though
incorporated in this Indenture.
SECTION 2. The Trustees shall hold the legal title to, and have the
absolute and exclusive control and management of, all property at any time
belonging to this Trust, subject only to the specific limitations herein
contained. The naming of any specific duties and powers herein shall not be
construed as limiting the general powers conferred upon the Trustees, and each
of the powers herein named shall be deemed separate and distinct powers.
SECTION 3. The Trustees may act by a majority of their number and may
make, adopt, amend and repeal such by-laws, rules, and regulations, not
inconsistent with the terms of this instrument, as they may deem necessary or
desirable for the management of the trust estate and for the government of
themselves, their officers, agents, servants, and representatives. Such by-laws,
rules, and regulations may delegate to particular Trustees or committees of
Trustees one or more powers or responsibilities of the Trustees to be exercised
between meetings of the Trustees, provided that the general power to purchase,
sell or exchange securities for investment and reinvestment on behalf of the
Trust shall not be delegated to a committee of less than five (5) Trustees, and
provided further that no action shall be taken by any committee except with the
concurrence of a majority of its members.
ARTICLE IV.
SECTION 1. The Trustees may hire suitable offices for the transaction
of the business of the Trust, appoint, remove or reappoint such officers or
agents as they may think best, define their duties and fix their compensation.
The Trustees shall from time to time determine the remuneration to be
paid to each Trustee for his services, the retirement pay to be paid to each
retired Trustee, the amounts, if any, to be paid to dependents of deceased
Trustees, and the remuneration to be paid to each member of the Advisory Board.
The aggregate of all such payments for any calendar quarter commencing with the
quarter ending September 30, 1952, plus credits for such quarter referred to in
the fourth paragraph of this Section 1, shall not exceed the sum of the
following amounts:
<PAGE>
(a)
(1) 14/400 of 1% of the portion of the average asset value of the
Trust not in excess of $100,000,000., plus-
(2) 7/400 of 1% of the portion of the average asset value in
excess of $100,000,000. and not in excess of $250,000,000.,
plus-
(3) 4/400 of 1% of the portion of the average asset value in
excess of $250,000,000.;
(b)
(1) 2 1/2% of the portion of the gross earnings of the Trust for
such calendar quarter not in excess of $1,250,000., plus-
(2) 1 1/2% of the portion of such gross earnings in excess of
$1,250,000. and not in excess of $3,125,000., plus-
(3) 3/4 of 1% of the portion of such gross earnings in excess of
$3,125,000.
For the purposes of the preceding paragraph-
(i) The average asset value of the Trust in any calendar quarter
shall be the arithmetical average of the total net assets of
the Trust, computed in the manner provided in Section 5 of
Article VIII at the close of business on each day in such
quarter on which the net asset value of a share of the Trust
is determined for the purpose of establishing the price at
which shares of the Trust may be sold by the Trustees,
pursuant to Section 1 (i) of Article III, or repurchased by
the Trustees, pursuant to Section 1 (m) of Article III or
Section 5 of Article VIII.
(ii) The determination of the gross earnings of the Trust shall be
made without giving effect to gains or losses which have been
realized on the disposition of any assets of the Trust or to
any unrealized appreciation or depreciation in any assets of
the Trust.
(iii) The term "dependent of a deceased Trustee" shall mean the
widow and the minor children of a Trustee who shall have died
in office, or of a deceased Trustee who shall have been
retired pursuant to Clause (c) of Section 3 of Article II.
<PAGE>
The Trustees shall have the right to establish a reserve to provide for
retirement pay to retired Trustees and for payments to dependents of deceased
Trustees and, from time to time, to credit to such reserve such amounts as they
may determine, and to determine what amounts, if any, shall be charged against
and paid out of such reserve to retired Trustees and to dependents of Trustees.
The aggregate of payments and credits which shall be subject to the limitation
(specified in the second paragraph of this Section 1) in any quarter shall
include any credits made to such reserve in such quarter, but shall not include
any payments charged against said reserve in such quarter.
Any employee of the Trust (which term does not include any Trustee or
any member of the Advisory Board) who has attained the age of sixty-five years
in the case of male employees, and sixty years in the case of female employees,
or has become incapacitated by illness or injury, may be retired by the
Trustees, and thereafter such employee shall be paid, as an expense of the
Trust, such retirement pay, if any, as the Trustees shall from time to time
determine.
The Trustees shall be reimbursed from the trust estate for their
expenses and disbursements, including expenses for clerks, transfer agents,
office hire, counsel fees, etc., and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses, and liabilities, the Trustees shall have a lien on the
trust estate prior to any rights or interests of the Shareholders thereto.
The Trustees, with the approval of the holders of a majority of the
outstanding voting securities (as those words are defined in Section 2(a)(40)
and used in Section 15(e) of the Investment Company Act of 1940 and applied to
shares of beneficial interest of the Trust), shall have the authority to enter
into a written agreement complying with Section 15 of said 1940 Act with any
corporation or partnership, including one with which Trustees, officers and
employees of the Trust are affiliated, to act as investment adviser to the Trust
(herein referred to as the "investment adviser") and to provide such investment
advice and administrative services as the Trustees from time to time consider
desirable for the proper management of the Trust. While such investment advisory
agreement is in effect the investment adviser shall be required to make all
payments of remuneration to Trustees (except Trustees not affiliated with the
adviser), officers, employees and members of the Advisory Board, amounts to
retired Trustees and dependents of deceased Trustees and to reserves referred to
in the second, third and fourth paragraphs of this Section 1. Such an investment
advisory agreement shall provide that it may be continued in effect upon
compliance with the requirements of Section 15 of said 1940 Act. Notwithstanding
the provisions in paragraph (b) of Article I and Section 3 of Article III hereof
or elsewhere in this Agreement and Declaration of Trust, the Trustees may
authorize the investment adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities of the Trust on behalf of the
Trustees or may authorize any officer or Trustee to effect such purchases, sales
or exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and exchanges
shall be deemed to have been authorized by all of the Trustees.
SECTION 2. The Trustees may appoint an Advisory Board. Members of this
Board shall not be Trustees or officers of the Trust but may be shareholders or
retired Trustees. The Trustees may remove any member and may appoint new or
additional members. Any member of this Board may resign by giving written notice
of his resignation to the Trustees. It shall be the duty of the Advisory Board
to consult with and advise the Trustees as to the investment of the trust
estate and other matters relating to the business and affairs of the Trust. This
Board shall have no power or authority to make any contract or incur any
liability whatever or to take any action binding upon the Trust, the Trustees or
the Shareholders. The provisions of Article VI and elsewhere in this instrument
relative to exemption from personal liability of the Trustees, officers and
agents of the Trust shall apply in all respects to members of the Advisory
Board.
SECTION 3. The Trustees may authorize one of their number to sign,
execute, acknowledge and deliver any note, deed, certificate or other instrument
in the name of, and in behalf of, the Trust, and upon such authorization such
signature, acknowledgment or delivery shall have full force and effect as the
act of all of the Trustees.
<PAGE>
The receipt of the Trustees or any of them, or any of the officers or
agents thereunto authorized, for moneys or property paid or delivered to them or
any of them, shall be an effectual discharge therefor to the person paying or
delivering the same.
SECTION 4. No person, purchaser, lender, corporation, association,
officer or transfer agent dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by the
Trustees, or be liable for the application of money or property paid, loaned, or
delivered. Every note, bond, contract, instrument, certificate, share or
undertaking, and every other act or thing whatsoever executed or done by the
Trustees or any of them in connection with the Trust, shall be conclusively
taken to have been executed or done only in their or his capacity of Trustee or
Trustees under this agreement, and such Trustee or Trustees shall not be
personally liable thereon.
Every such note, bond, contract, instrument, certificate, share, or
undertaking, made or issued by the Trustees shall recite that the same is
executed or made by them not individually, but as Trustees under this agreement,
and that the obligations of any such instrument are not binding upon any of the
Trustees individually, but bind only the trust estate, and may contain any
further recital which they or he may deem appropriate, but the omission of such
recital shall not operate to bind the Trustees individually.
ARTICLE V.
No officer, Trustee or member of the Advisory Board of the Trust, and
no member, officer, director or trustee of an investment adviser of the Trust or
of the principal underwriter of the Trust shall take long or short positions in
the shares of beneficial interest issued by the Trust, provided that
(a) the foregoing provision shall not prevent the principal underwriter
from purchasing form the Trust such shares if such purchases are limited (except
for reasonable allowances for clerical errors, delays and errors of transmission
and cancellation of orders) to purchases for the purpose of filling orders for
such shares received by the principal underwriter, and provided that orders to
purchase from the Trust are entered with the Trust or the depository promptly
upon receipt by the principal underwriter of purchase orders for such shares,
unless the principal underwriter is otherwise instructed by its customer;
<PAGE>
(b) the foregoing provision shall not prevent the principal underwriter
from purchasing shares of the Trust as agent for the account of the Trust; and
(c) the foregoing provision shall not prevent the purchase of such
shares for investment by any officer, Trustee, or member of the Advisory Board
of the Trust or by any member, officer, director or trustee of any investment
adviser of the Trust or of the principal underwriter of the Trust.
ARTICLE VI.
SECTION 1. No recourse shall at any time be had under or upon any note,
bond, contract, instrument, certificate, undertaking, obligation, covenant, or
agreement, whether oral or written, made, issued, or executed by the Trustees in
pursuance of the terms of this agreement, or by any officer or agent of the
Trustees, or by reason of anything done or omitted to be done by them or any of
them, against the Trustees individually, or against any such officer or agent or
against any Shareholder or the holder of any other security issued by the
Trustees either directly or indirectly, by legal or equitable proceeding, or by
virtue of any suit or otherwise, except only to compel the proper application or
distribution of the trust estate, it being expressly understood and agreed that
this agreement, and all obligations and instruments executed hereunder, or
pursuant hereto, by the Trustees, and any acts done or omitted to be done by
them, are solely the obligations, instruments, acts, and omissions of, or in
respect of, the trust estate, and that all the obligations, instruments,
liabilities, covenants and agreements, acts and omissions of the Trustees, as
Trustees, shall be enforced against and be satisfied out of the trust estate
only, and all personal and individual liability of the Trustees, except as above
stated, and of all officers and agents, and of the Shareholders, is hereby
expressly waived and negatived.
Nothing herein contained is to be construed as power given to the
Trustees to contract any debt or to do anything which will bind any of the
Shareholders or any of the Trustees personally, and any person, firm,
corporation, or association contracting or dealing with the Trustees shall be
obligated to enforce any obligation, liability, or covenant with said Trustees
against and be satisfied out of the trust estate only, and not against any
Shareholder or any Trustee personally.
SECTION 2. No corporation, company, or body politic shall be affected
by notice that any of its shares of stock or bonds or other securities are
subject to the trust hereby created, or be bound to see to the execution of such
Trust, or ascertain or inquire whether any transfer of any such shares, bonds,
or securities by the Trustees is provided for by the said Trust, notwithstanding
that any provisions to that effect may be disputed by some other person. Any
person, firm, corporation, or association dealing with the Trustees herein in
connection with any instrument executed hereunder, which purports to be executed
by the said Trustees for and on behalf of the trust estate, shall be justified
in considering such instrument duly and properly executed by the said Trustees,
and that they were duly authorized thereunto, and the instrument was duly
executed in accordance with the terms and provisions of this indenture, unless
such person, firm, corporation, or association shall have actual notice of a
breach of the covenants of this indenture.
<PAGE>
SECTION 3. Nothing in this Article VI or elsewhere in this Agreement
and Declaration of Trust shall protect any Trustee or officer or any member of
the Advisory Board against any liability to the Trust or to the shareholders of
the Trust to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
SECTION 4. (a) Subject to the exceptions and limitations contained in
paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the
Trust shall be indemnified by the Trust against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal, administrative or other, including appeals), actual
or threatened; and the works "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and
other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by
reason of final adjudication by the court or other body before
which the proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee
or officer or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) above
resulting in a payment by a Trustee or officer, unless there
has been either a determination that such Trustee or officer
did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the
settlement or other disposition or by a reasonable
determination, based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that he did not
engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the
matter); or
<PAGE>
(B) by written opinion of independent legal counsel.
(c) the rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a Person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such Person. Nothing contained herein shall affect any rights
to indemnification to which personnel other than Trustees and officers may be
entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 4, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against
losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or an independent legal counsel
in a written opinion, shall determine, based upon a review of
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
ARTICLE VII.
SECTION 1. The Trustees may establish a fiscal year and from time to
time alter or change the same.
SECTION 2. The Trustees shall annually submit to the Shareholders a
written financial report of their transactions as Trustees.
SECTION 3. Notices delivered or sent by mail to any Shareholder at the
last address given by him to the Trustee shall be deemed properly delivered and
be binding upon all parities.
<PAGE>
ARTICLE VIII.
SECTION 1. The beneficial interests of the cestuis que trustent shall
be divided into shares and fractional shares (herein referred to collectively as
"shares"), and the persons who are for the time being recorded on the books as
holders of shares shall be deemed the Shareholders, and only to such
Shareholders of record shall the Trustees be responsible. The Trustees may issue
certificates of beneficial interest to evidence the ownership of such shares,
and shall issue such certificates to any Shareholder who so requests. Said
certificates shall be substantially in the form hereto annexed marked "Exhibit
A," which is made a part hereof, which form may be changed, in the discretion of
the Trustees whenever necessary in their opinion more fully to set forth the
rights and interests of the Shareholder. Said certificates may be signed and
sealed on behalf of the Trustees by one of their number thereunto duly
authorized, or by an agent selected by them for the purpose, and shall be
countersigned by a transfer agent. The signature of such Trustee or agent
selected by the Trustees and the seal upon such certificate may be facsimile.
SECTION 1A. Class Designation. The Trustees may, in their discretion,
authorize the division of shares of the Trust into one or more classes. All
shares of a class shall be identical with each other and with the [s]hares of
each other class of the Trust, except for such variations between classes as may
be approved by the Board of Trustees and permitted by the Investment Company Act
of 1940, as amended, or pursuant to any exemptive order issued by the Securities
and Exchange Commission. [The class of shares established pursuant to this
Section 1A and existing as of the date hereof are set forth in Appendix B.]
SECTION 2. The shares shall have a par value of $.33 1/3 each, but the
Trustees may from time to time by a written instrument signed by all the
Trustees and deposited with the depository hereunder reduce or increase the par
value of the shares, and in connection with any such reduction or increase in
the par value may change the outstanding shares into a greater or lesser number
of shares with par value. Such written instrument shall specify the new par
value of the shares and the date on which the reduced or increased par value
and, if applicable, the change, of the outstanding shares into a greater or
lesser number of shares shall become effective, which date shall not be earlier
than the date of deposit of the instrument. Such instrument may also make
provision for the continuance of outstanding certificates for shares of an old
par value to evidence a like number of shares of a new par value and for the
distribution of new certificates to evidence any additional shares to which each
Shareholder may become entitled as a result of such change.
SECTION 3. The Trustees shall from time to time distribute out of
available assets of the Trust pro rata among the Shareholders of each class
amounts in cash measured approximately by the net income of the Trust allocable
to such class, adjusted for amounts included as accrued dividends in the price
of shares of such class issued or repurchased. Such distributions may be made
even though the paid-in capital of the Trust at the time of any distribution
exceeds the net assets of the Trust based either on market or book value and in
that event the Trustees may make such distributions out of capital.
<PAGE>
In addition to the distributions authorized in the foregoing paragraph
and notwithstanding the limitations therein contained the Trustees may in any
calendar year make distributions among Shareholders out of any available net
assets of the Trusts, which shall be designated as "special distributions." Such
special distributions may be made in the discretion of the Trustees either (a)
in cash, (b) in shares of the Trust or (c) at the election of any of the
Shareholders (whether exercised before or after the declaration of the
distribution) payable either (1) in cash, or (2) in shares of the Trust. In case
of a distribution payable in cash or shares pursuant to clause (c) of this
paragraph the Trustees may prescribe whether a Shareholder failing to express
his election before a given time shall be deemed to have elected to take shares
rather than cash, or to take cash rather than shares, or to take shares with
cash adjustment of fractions.
In connection with any distribution of shares, the Trustees may issue
fractional shares or may provide for the issue of scrip for fractions of shares
and determine the terms of such scrip including, without limitation, the time
within which the same must be surrendered for exchange into full shares, the
rights if any of holders of scrip to receive proportional distributions, the
rights if any of the holders of scrip upon expiration of time so fixed, the
right if any to redeem scrip for cash, or the Trustees may in their discretion,
or if they see fit at the option of each Shareholder, provide in lieu of scrip
for the adjustment of fractions in cash. The provisions of Section 1 of this
Article VIII relative to certificates for shares shall apply so far as
applicable to scrip which the Trustees may determine to issue and distribute
pursuant to this Section 3.
SECTION 3A. Notwithstanding the authority contained in Section 3, the
total of distributions to Shareholders paid in cash or pursuant to clause (c) of
Section 3 for any one fiscal year, subject to the exceptions noted below, shall
not substantially exceed the sum of
(i) the accumulated undistributed net income, if any, at the
beginning of such fiscal year, determined in accordance with
good accounting practice, and adjusted for amounts included as
such accrued net income in the price of shares of the Trust
issued or repurchased, plus the net income so determined and
adjusted for such fiscal year; and
(ii) (a) the accumulated undistributed excess of profits over
losses on sales of securities or other property; or
(b) such excess of profits over losses for such fiscal year.
For the purposes of the limitation imposed by this Section 3A shares
issued pursuant to clause (c) of Section 3 shall be valued at the amount of cash
which the Shareholders would have received if they had elected to receive cash
in lieu of such shares.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provision shall be interpreted to give to the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gain dividends, respectively, amounts sufficient to enable the Trust as
a regulated investment company to eliminate any liability for Federal income tax
in respect of that year. If any distribution is made to Shareholders from any
source other than (i) the accumulated undistributed net income, or (ii) such net
income of the current fiscal year, such payment shall be accompanied by a
written statement showing the source or sources of such payments and the basis
of computation thereof. Nothing in this Section 3A shall limit the right of the
Trustees to make any distribution pursuant to Article IX.
<PAGE>
SECTION 4. The term "net income" is hereby defined as the gross
earnings of the Trust excluding gains on sales of securities, less the expenses
including taxes, commissions to the Trustees and other charges properly
deductible for the maintenance and administration of the Trust, and with respect
to any class of shares, the expenses attributable solely to such class; but
there shall not be deducted from gross or net income any losses on securities,
realized or unrealized. The allocation of expenses (and any income resulting
therefrom) to a particular class of shares, the computation of the amount of any
distributions to be made to a particular class and any and all other
determinations or allocations related to, or required by, the division of
shares, into one or more classes shall be in the Trustees' sole discretion,
subject only to applicable regulatory requirements. It shall be the duty of the
Trustees to determine whether any cash or property received shall be treated as
gross earnings or as principal and whether any item of expense shall be charged
to the income or the principal account, and their determination made in good
faith shall be conclusive upon the Shareholders. In the case of stock dividends
received, the Trustees shall have full discretion to determine, in the light of
the particular circumstances, how much if any of the market value thereof shall
be treated as gross earnings, the balance if any to be treated as principal.
SECTION 5. (a) The number of shares shall be fixed from time to time by
the Trustees and such number may be increased or reduced by them. Nothing herein
contained shall be deemed a limitation on the rights of the Trustees to issue
additional shares ranking with the same rights and privileges as any class of
existing shares. The Trustees shall have the right to sell or exchange such
additional shares without offering the same to the holders of the then
outstanding shares, but subject to the limitations set forth in subsection (d)
of this Section 5.
(b) In case any Shareholder in this Trust at any time desires to
dispose of his shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank at the office of the Transfer Agent or at the office of any bank or trust
company, either in or outside of Massachusetts, which is a member of the Federal
Reserve System and which the said Transfer Agent has designated in writing for
that purpose, together with an irrevocable offer in writing in a form acceptable
to the Trustees to sell the shares represented thereby to the Trustees at the
net asset value thereof determined as provided in subsection (c) of this Section
5, next after such deposit. Payment for said shares shall be made to the
Shareholder within seven days after the date on which the deposit is made. The
Trustees may, however in their discretion, if they deem it advisable for the
best interests of the Trust and the Shareholders as a whole, subject to
applicable rules and regulations of the Securities and Exchange Commission or
other Federal authority having jurisdiction, suspend the right to require the
repurchase of shares as aforesaid or defer payment for the shares for all or
part of any period (1) during which the New York Stock Exchange is closed (other
than customary weekend and holiday closings), or (2) during which trading on the
New York Stock Exchange is restricted, or (3) during which any emergency exists
as a result of which the disposal by the Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust fairly
to determine the value of its net assets. In the event that the right to require
the repurchase of shares so deposited is suspended pursuant to the preceding
sentence, then with respect to shares deposited after the suspension is declared
and prior to the day on which the period of suspension is terminated (i) the
depositing Shareholder may require the return of the deposited certificates to
him, (ii) the shares remaining on deposit shall be repurchased at the next net
asset value determined after the termination of the period of such suspension,
and (iii) payment for said shares shall be made to the Shareholder within seven
days after such termination date.
<PAGE>
(c) The net asset value of the shares of this Trust shall be
determined in the following manner:
1. The value of the assets of the Trust shall be determined as
follows: Securities owned by the Trust shall be appraised on
the basis of either the closing sale of such securities on the
New York Stock Exchange or the consolidated tape on the day as
of which such appraisal is made, and if there shall be no sale
of any particular security on such day, then the closing bid
price shall be used. Securities not listed on the New York
Stock Exchange shall be appraised in like manner on the basis
of the closing sale or bid price on any other stock exchange
which the Trustees may from time to time approve, or on the
consolidated tape or by such other method as shall be deemed
to reflect their fair market value, and all other Trust
assets, including cash, prepaid and accrued items and
dividends receivable shall be appraised by such method as
shall be deemed to reflect their fair market value; provided,
however, that prices on stock exchanges need not be used to
appraise the value of debt securities owned by the Trust if,
in the opinion of the Trustees, some other method would more
accurately reflect the fair market value of such debt
securities.
2. From the total value of said assets determined as aforesaid,
there shall be deducted all indebtedness, interest, taxes,
payable or accrued, including estimated taxes on unrealized
book profits, expenses and management charges accrued to the
appraisal date, and all other items in the nature of
liabilities which shall be deemed appropriate; provided,
however, any expense which is allocable to a particular class
will be deducted only from the assets attributed to that
class. The allocation of expenses (and any income resulting
therefrom) to a particular class of shares, and any and all
other determinations or allocations related to, or required
by, the division of shares into one or more classes shall be
in the Trustees' sole discretion subject only to applicable
regulatory requirements.
3. The resulting amount which shall represent the total net
assets of the Trust attributable to each class shall be
divided by the number of shares outstanding of the respective
class at the time and the quotient so obtained shall be deemed
to be the net asset value of such class of shares.
<PAGE>
(d) The Trustees shall determine the net asset value of the shares of
the Trust, or cause the same to be determined by an agent designated by them, in
the manner prescribed in subsection (c) of this Section 5 as of the close of
business on each day when the New York Stock Exchange is open. They may also
cause the net asset value to be determined as of any time or times prescribed by
them during periods when said Exchange is open, either by appraisal in the
manner prescribed in said subsection (c) or by calculation or estimate base upon
changes in the market value of representative or selected securities or changes
in recognized market averages since the last closing appraisal and made in a
manner which in the opinion of the Trustees will fairly reflect the changes in
the net asset value. For the purposes of determining the price at which shares
of the Trust may be sold pursuant to subsection (i) of Section 1 of Article III
and the price at which shares may be purchased by the Trustees pursuant to
subsection (m) of said Section 1, the Trustees may prescribe the time when the
determination of asset value shall become effective (whether such determination
is made as of the close of business or as of some other hour as above permitted)
provided that the effective time shall not be more than one hour later than the
time as of which such value is determined, and that the value so determined
shall remain in effect for those purposes until the value next determined
becomes effective. No shares shall be sold to net the Trust (before taxes and
expenses exclusive of sales charge or commission) less than the net asset value
in effect at the time of sale. No shares shall be purchased except (i) as
required by subsection (b) of this section 5 or (ii) at a price not exceeding
the net asset value in effect at the time of purchase. If shares are sold or
purchased by the Trust at a price to be based on a net asset value to be
determined as of a later time, the time of sale or purchase shall be the time
when such net asset value becomes effective. Otherwise the time of sale shall be
the time when an unconditional order is placed with the principal underwriter or
authorized sales agent of the Trustees, and the time of purchase shall be the
time when the Trustees or their authorized agent accepts an offer to sell. Such
determination of the net asset value of shares shall be final and binding upon
such Shareholder who may, however, examine the books of the Trust if he so
requests.
(e) On any day on which the New York Stock Exchange is closed (other
than customary week-end and holiday closings), the Trustees may nevertheless
cause the net asset value of the shares to be determined, appraising securities
listed on said Exchange in the manner above provided for appraisal of securities
not so listed. If the asset value is so determined as of the close of business
on such a day, the rights of depositing shareholders shall (unless a suspension
of the right to require the repurchase of shares is in effect) be the same as if
it were a day on which said Exchange were open, and such determination shall
have the same effect as a determination as of the close of business on a day on
which said Exchange is open.
SECTION 6. The interest represented by a certificate may be transferred
on the books of the Trust by the person named therein, or by his attorney
thereunto duly authorized, upon the surrender of the certificate duly endorsed
and a new certificate shall be issued to the transferee who shall thereupon
become a cestui qui trust.
SECTION 7. In case of the loss or destruction of any certificate of
shares, the Trustees may, under such terms as they may deem expedient, issue a
new certificate or certificates in place of the one so lost.
<PAGE>
SECTION 8. Shares hereunder shall be personal property, giving only the
rights in this instrument and in the certificates specifically set forth. The
death of a Shareholder during the continuance of this Trust shall not operate to
determine this Trust, nor entitle the representatives of the deceased
Shareholder to an accounting or to take any action in the courts or elsewhere
against the Trustees; but only to the rights of said decedent under this Trust
upon the surrender of the certificate for the shares owned by him.
The ownership of shares shall not entitle the Shareholders to any title
in or to the whole or any part of the trust property, or right to call for a
partition or division of the same or for an accounting, nor shall the ownership
of shares constitute the holders partners.
SECTION 9. The Trustees shall have no power to call upon the
Shareholders for the payment of any sum of money or assessment whatever, other
than such as said Shareholders may at any time personally agree to pay by way of
subscription to any shares or otherwise.
ARTICLE IX.
SECTION 1. This Trust shall continue without limitation of time but
subject to provisions of Sections 2, 3 and 4.
SECTION 2. The Trustees by unanimous action may at any time sell and
convey the assets of the Trust to another trust or corporation organized under
the laws of any state of the United States, which is a diversified open-end
management investment company as defined in the Investment Company Act of 1940,
for an adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust and which may include shares of beneficial interest or stock of such
trust or corporation. Upon making provision for the payment of all such
liabilities, by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds ratably among the holders of the shares of each class of the
Trust then outstanding.
SECTION 3. With the written assent of the holders of a majority of the
shares of the Trust at the time outstanding, the Trustees may at any time sell
and convert into money all the assets of the Trust. Upon making provision for
the payment of all outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust, the Trustees shall distribute the remaining assets
of the Trust ratably among the holders of the shares of each class of the Trust
then outstanding.
SECTION 4. Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in Section 2 or 3, the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties shall be canceled and discharged.
<PAGE>
ARTICLE X.
The Trustees shall determine whether and to what extent and under what
conditions and regulations the accounts and books of the Trustees shall be open
to the inspection of the Shareholders, and no Shareholder shall have the right
to inspect any account or books or document of the Trustees except as authorized
by the Trustees.
ARTICLE XI.
The Trustees hereunder shall not be responsible or liable in any event
for any neglect or wrongdoing of their agents or employees or of any other
Trustees hereafter succeeding under the terms hereof, provided such Trustees
have exercised reasonable care in their selection. No Trustee shall be
responsible except for his own individual act or omission to act, and then only
for wilful default or neglect.
ARTICLE XII.
This instrument may be amended by written instrument signed by all the
Trustees and assented to in writing by the holders of a majority of the
outstanding shares. Such written instrument shall be deposited with the
depository hereunder and copies of the proposed amendment shall thereafter be
mailed to each Shareholder at his address as recorded on the books of the
Trustees. The Trustees may in such written instrument fix a record date for
determining the number of shares outstanding and the holders thereof, which
record date shall not be earlier than the date of such deposit. The amendment
proposed therein shall become effective when the required number of written
assents are filed with the Transfer Agent or at such later date as may be
specified in such written instrument. No such amendment shall affect the
validity of any lawful act done prior to its effective date. A certificate,
signed by all the Trustees in office at the date thereof and deposited with the
depository hereunder, to the effect that the holders of a majority of the
outstanding shares required to make a particular amendment effective have
assented to the amendment, shall be conclusive on all persons after the
expiration of one year form the date on which such amendment became effective as
above provided, or upon the deposit of such certificate if deposited after the
expiration of such one year period. Thereafter neither the Trustees, the
depository, nor the Transfer Agent shall be under any obligation to retain the
written assents with respect to such amendment.
ARTICLE XIII.
SECTION 1. This instrument is executed by the Trustees and delivered by
all the parities thereto in the Commonwealth of Massachusetts, and with
reference to the laws thereof, and the rights of all parties and the
construction and effect thereof shall be subject to and construed according to
the laws of said Commonwealth.
SECTION 2. The term "Trustees" used in the agreement shall be deemed to
mean those who are or may be Trustees for the time being.
<PAGE>
The marginal notes are inserted for the convenience of the reference
and are not to be taken to be any part of these presents or to control or affect
the meaning, construction, or effect thereof.
This instrument is executed in four counterparts, each of which shall
be deemed an original.
IN WITNESS WHEREOF, the said STATE STREET TRUST COMPANY has caused its
name to be signed and its corporate seal to be hereto affixed, and said CHARLES
H. LEAROYD, HATHERLY FOSTER, JUNIOR, and EDWARD G. LEFFLER have hereunto set
their hands and seals in execution of this agreement and in token of their
acceptance of the trust hereinbefore mentioned.
STATE STREET TRUST CO. Corporate
Seal
ASHTON L. CARR, Vice-President
F.S. MILLETT, Asst. Treasurer,
CHARLES H. LEAROYD, [Seal]
HATHERLY FOSTER, JR., [Seal]
EDWARD G. LEFFLER, [Seal]
----------
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS. Boston, Mass., March 29, 1924.
Then personally appeared the above-named CHARLES H. LEAROYD, HATHERLY
FOSTER, JUNIOR, and EDWARD G. LEFFLER, who severally acknowledged the foregoing
instrument to be their free act and deed.
Before me,
FREDERICK S. MOORE,
Notary Public.
Notarial
Seal
My commission expires Oct. 10, 1930.
<PAGE>
EXHIBIT "A"
(Form of Certificate as adopted July 21, 1972 pursuant to
Article VIII, Section 1.)
MASSACHUSETTS INVESTORS TRUST
PAR
VALUE
33 1/3 CENTS
CERTIFICATE OF BENEFICIAL INTEREST
THIS CERTIFIES THAT
CUSIP_____________
..........................................................................is the
holder of................................................................ Shares
of Massachusetts Investors Trust, created by the Agreement and Declaration of
Trust dated March 21, 1924 which, as amended, is on file with the State Street
Bank and Trust Company Depository. This certificate is not valid until
countersigned by the transfer agent.
IN WITNESS WHEREOF, the Trustees of Massachusetts Investors Trust, not
individually but solely on behalf of said trust estate, have caused this
certificate to be signed on their behalf by the undersigned, one of their
number, and sealed.
The Trustees of
Massachusetts Investors Trust
By
Chairman SEAL
Dated
COUNTERSIGNED
MASSACHUSETTS FINANCIAL SERVICE CENTER
A Division of Bradford Mutual Fund Services Inc.
(BOSTON)
TRANSFER AGENT
By.............................................................................
Authorized Signature
<PAGE>
SHARES MAY ALSO BE PRESENTED FOR REDEMPTION BY THE TRUST AT THE OFFICE OF THE
DEPOSITORY, THE STATE STREET BANK AND TRUST COMPANY.
MASSACHUSETTS INVESTORS TRUST
The registered holder of this certificate is entitled to all the
rights, interest and privileges of a shareholder as provided by said Agreement
and Declaration of Trust, as amended, which is incorporated by reference herein.
In particular the shares represented by this certificate are transferable by the
holder, in person or by his duly authorized attorney, but only on surrender of
this certificate properly endorsed and when the transfer is made on the books of
the Trustees.
The holder of this certificate, as provided in said Agreement and
Declaration of Trust as amended, shall not in any wise be personally liable for
any debt, obligation or act of the Trustees.
Any shareholder desiring to dispose of his shares may deposit his
certificate duly endorsed in blank or accompanied by an instrument of transfer
executed in blank at the office of Massachusetts Financial Service Center or any
successor Transfer Agent of the Trust, together with an irrevocable offer in
writing to sell the shares represented thereby at the net asset value thereof
and the Trustees will thereafter purchase said stock for cash at net asset
value. The computation of net asset value, the limitations upon the date of
payment and provisions dealing with suspension of this right of redemption in
certain emergencies are fully described in said Agreement and Declaration of
Trust, as amended.
See current prospectus for further information concerning repurchases
of shares by the Trust.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws:
TEN IN COM - as tenants in common
TEN BY ENT - as tenants by the entireties
JTWROS - as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFTS TO M/A - Uniform Gifts to Minors Act
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- ----------------------..........................................................
................................................................................
..........................................................................Shares
of the Massachusetts Investors Trust represented by the within certificate and
do hereby irrevocably constitute and appoint....................................
.......................................................................Attorney,
to transfer the said stock on the books of the said Trust with full power of
substitution in the premises.
Dated,....................................19.........
(Sign Here)..........................................
NOTICE: The Signature to this Assignment must
correspond with the name as written upon the face of
the Certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed by
.....................................................
Signature must be guaranteed by a National Bank or
Trust Company or by a member Bank of the Federal
Reserve System or member firm of the New Your,
American, Boston, Midwest or Pacific Coast Stock
Exchange.
<PAGE>
"EXHIBIT" B
Pursuant to Section 1A of Article VIII of the Agreement and Declaration
of Trust, the Trustees have divided the [s]hares of Massachusetts Investors
Trust into two classes of [s]hares, within the meaning of Section 1A of Article
VIII, as follows:
1. The two classes of [s]hares are designated "Class A Shares" and
"Class B Shares";
2. Class A Shares and Class B Shares shall be entitled to all the
rights and preferences accorded to [s]hares under the Declaration;
3. The purchase price of Class A Shares and Class B Shares, the
method of determination of the net asset value of Class A Shares
and Class B Shares, the price, terms and manner of redemption of
Class A Shares and Class B Shares, any conversion feature of the
Class B Shares, and the relative dividend rights of holders of
Class A Shares and Class B Shares shall be established by the
Trustees of the Trust in accordance with the Declaration and shall
be set forth in the current prospectus and statement of additional
information of the Trust or any series thereof, as amended from
time to time, contained in the Trust's registration statement
under the Securities Act of 1933, as amended.
4. Class A Shares and Class B Shares shall vote together as a single
class except that [s]hares of a class may vote separately on
matters affecting only that class and [s]hares of a class not
affected by a matter will not vote on that matter.
5. A class of [s]hares of any series of the Trust may be terminated
by the Trustees by written notice to the Shareholders of the
class.
[From amendment dated August 27, 1993]
EXHIBIT 99.6(A)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, made this first day of January, 1995, by and
between MASSACHUSETTS INVESTORS TRUST, a common law trust (the "Trust"), and MFS
FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor");
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the parties hereto agree as follows:
1. The Trust grants to the Distributor the right, as agent of the
Trust, to sell Shares of Beneficial Interest, without par value, of the Trust
(the "Shares") upon the terms herein below set forth during the term of this
Agreement. While this Agreement is in force, the Distributor agrees to use its
best efforts to find purchasers for Shares.
The Distributor shall have the right, as agent of the Trust, to
order from the Trust the Shares needed, but not more than the Shares needed
(except for clerical errors and errors of transmission) to fill unconditional
orders for Shares placed with the Distributor by dealers, banks or other
financial institutions or investors as set forth in the current Prospectus and
Statement of Additional Information (collectively, the "Prospectus") relating to
the Shares. The price which shall be paid to the Trust for the Shares so
purchased shall be the net asset value used in determining the public offering
price on which such orders were based. The Distributor shall notify the
Custodian of the Trust, at the end of each business day, or as soon thereafter
as the orders placed with it have been compiled, of the number of Shares and the
prices thereof which have been ordered through the Distributor since the end of
the previous day.
The right granted to the Distributor to place orders for Shares
with the Trust shall be exclusive, except that said exclusive right shall not
apply to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is merged
or consolidated with the Trust or in the event that the Trust acquires by
purchase or otherwise, all (or substantially all) the assets or the outstanding
shares of any such company; nor shall it apply to Shares issued by the Trust as
a stock dividend or a stock split. The exclusive right to place orders for
Shares granted to the Distributor may be waived by the Distributor by notice to
the Trust in writing, either unconditionally or subject to such conditions and
limitations as may be set forth in the notice to the Trust. The Trust hereby
acknowledges that the Distributor may render distribution and other services to
other parties, including other investment companies. In connection with its
duties hereunder, the Distributor shall also arrange for computation of
performance statistics with respect to the Trust and arrange for publication of
current price information in newspapers and other publications.
2. The Shares may be sold through the Distributor to dealers, banks and
other financial institutions having sales agreements with the Distributor, upon
the following terms and conditions:
The public offering price, i.e., the price per Share at which the
Distributor or dealers, banks or other financial institutions purchasing Shares
through the Distributor may sell Shares to the public, shall be the public
offering price as set forth in the current Prospectus relating to the Shares,
including a sales charge (where applicable) not to exceed the amount permitted
by Article III, Section 26 of the National Association of Securities Dealers,
Inc.'s Rule of Fair Practice, as amended from time to time. The Distributor
shall retain the sales charge (where applicable) less any applicable dealer or
comparable discount. If the resulting public offering price does not come out to
an even cent, the public offering price shall be adjusted to the nearer cent. In
addition, the Trust agrees that the Distributor may impose certain contingent
deferred sales charges (where applicable) in connection with the redemption of
Shares, not to exceed 6% of the net asset value of Shares, and the Distributor
shall retain (or receive from the Trust, as the case may be) all such contingent
deferred sales charges.
The Distributor may place orders for Shares at the net asset
value for such Shares (as established pursuant to paragraph l above) on behalf
of such purchasers and under such circumstances as the Prospectus describes,
provided that such sales comply with Rule 22d-1 under the Investment Company Act
of 1940 or any exemptive order granted by the Securities and Exchange
Commission. The Distributor may also place orders for Shares at net asset value
on behalf of persons reinvesting the proceeds of the redemption or resale of
Shares or shares of other investment companies for which the Distributor acts as
Distributor or as otherwise provided in the current Prospectus.
The net asset value of Shares shall be determined by the Trust or
by an agent of the Trust, as of the close of regular trading of the New York
Stock Exchange on each business day on which said Exchange is open, in
accordance with the method set forth in the governing instruments (as
hereinafter defined) of the Trust. The Trust may also cause the net asset value
to be determined in substantially the same manner or estimated in such manner
and as of such other hour or hours as may from time to time be agreed upon in
writing by the Trust and Distributor. The Trust shall have the right to suspend
the sale of Shares if, because of some extraordinary condition, the New York
Stock Exchange shall be closed, or if conditions obtaining during the hours when
the Exchange is open render such action advisable, or for any other reasons
deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, take all necessary
action to register the offering and sale of Shares under the Securities Act of
l933, as amended (the "Act"), and applicable state securities laws.
The Distributor shall be an independent contractor and neither
the Distributor nor any of its directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers and
shareholders of the Trust are or may become interested in the Distributor, as
Directors, officers and employees, or otherwise and that Directors, officers and
employees of the Distributor are or may become similarly interested in the Trust
and that the Distributor may be or become interested in the Trust as a
shareholder or otherwise. The Distributor is responsible for its own conduct and
the employment, control and conduct of its agents and employees and for injury
to such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it
will use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD") relating to the sale of
Shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith), arising by reason of any person's acquiring any Shares,
which may be based upon the Act or any other statute or common law, on account
of any wrongful act of the Distributor or any of its employees (including any
failure to conform with any requirement of any state or federal law or the Rules
of Fair Practice of the NASD relating to the sale of Shares) or on the ground
that the registration statement or Prospectus as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless any such act, statement or omission
was made in reliance upon information furnished to the Distributor by or on
behalf of the Trust, provided, however, that in no case (i) is the indemnity of
the Distributor in favor of any person indemnified to be deemed to protect the
Trust or any such person against any liability to which the Trust or any such
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its or his duties or by reason of its or
his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Distributor to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or such person, as the case may be, shall have
notified the Distributor in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim shall
have been served upon the Trust or upon such person (or after the Trust or such
person shall have received notice of such service on any designated agent), but
failure to notify the Distributor of any such claim shall not relieve it from
any liability which it may have to the Trust or any person against whom such
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph. The Distributor shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if the Distributor elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any such suit and retain such
counsel, the Trust or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Distributor does
not elect to assume the defense of any such suit, it shall reimburse the Trust
and such officers and Trustees or controlling person or persons, defendant or
defendants in such suit, for the reasonable fees and expenses of any counsel
retained by them. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any Shares.
Neither the Distributor nor any other person is authorized to
give any information or to make any representation on behalf of the Trust, other
than those contained in the registration statement or Prospectus filed with the
Securities and Exchange Commission under the Act (as said registration statement
or Prospectus may be amended or supplemented from time to time), covering the
Shares or other than those contained in periodic reports to shareholders of the
Trust.
5. The Trust will pay, or cause to be paid -
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required registration statement or Prospectus under the Act covering Shares
and all amendments and supplements thereto and any notices regarding the
registration of shares, and preparing and mailing to shareholders Prospectuses,
statements and confirmations and periodic reports (including the expense of
setting up in type any such registration statement, Prospectus or periodic
report);
(ii) the expenses (including auditing expenses) of
qualification of the Shares for sale, and, if necessary or advisable in
connection therewith, of qualifying the Trust as a dealer or broker, in such
states as shall be selected by the Distributor and the fees payable to each such
state with respect to shares sold and for continuing the qualification therein
until the Distributor notifies the Trust that it does not wish such
qualification continued;
(iii) the cost of preparing temporary or permanent
certificates for Shares;
(iv) all fees and disbursements of the transfer agent of
the Trust;
(v) the cost and expenses of delivering to the Distributor
at its office in Boston, Massachusetts, all Shares sold through it as
Distributor hereunder; and
(vi) all the federal and state issue and/or transfer taxes
payable upon the issue by or (in the case of treasury Shares) transfer from the
Trust of any and all Shares purchased through the Distributor hereunder.
The Distributor agrees that, after the Prospectus and periodic
reports have been set up in type, it will bear the expense (other than the cost
of mailing to shareholders of the Trust of printing and distributing any copies
thereof which are to be used in connection with the offering of Shares to
dealers, banks or other financial institutions or investors. The Distributor
further agrees that it will bear the expenses of preparing, printing and
distributing any other literature used by the Distributor or furnished by it for
use by dealers, banks or other financial institutions in connection with the
offering of the Shares for sale to the public and expenses of advertising in
connection with such offering. The Distributor will also bear the expense of
sending confirmations and statements to dealers, banks and other financial
institutions having sales agreements with the Distributor. Nothing in this
paragraph 5 shall be deemed to prohibit or conflict with any payment by the
Trust to the Distributor pursuant to any Distribution Plan adopted as in effect
pursuant to Rule 12b-1 under the Investment Company Act of 1940.
6. The Trust hereby authorizes the Distributor to repurchase, upon the
terms and conditions set forth in written instructions given by the Trust to the
Distributor from time to time, as agent of the Trust and for its account, such
Shares as may be offered for sale to the Trust from time to time; provided the
Distributor shall have the right, as stated above in paragraph 2 of this
Agreement, to retain (or to receive from the Trust, as the case may be) a
deferred sales charge not to exceed 6% of the net asset value of the Shares so
repurchased.
(a) The Distributor shall notify in writing the Custodian
of the Trust, at the end of each business day, or as soon thereafter as the
repurchases have been compiled, of the number of Shares repurchased for the
account of the Trust since the last previous report, together with the prices at
which such repurchases were made, and upon the request of any Officer or Trustee
of the Trust shall furnish similar information with respect to all repurchases
made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the
foregoing authorization at any time. Unless otherwise stated, any such
suspension or revocation shall be effective forthwith upon receipt of notice
thereof by an officer of the Distributor, by telegraph or by written notice from
the Trust. In the event that the authorization of the Distributor is, by the
terms of such notice, suspended for more than twenty-four hours or until further
notice, the authorization given by this paragraph 6 shall not be revived except
by action of a majority of the members of the Board of Trustees of the Trust.
(c) The Distributor shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty days' written
notice thereof.
(d) The Trust agrees to authorize and direct the Custodian
to pay, for the account of the Trust, the purchase price of any Shares so
repurchased against delivery of the certificates, if any, in proper form for
transfer to the Trust or for cancellation by the Trust.
(e) The Distributor shall receive no commission in respect
of any repurchase of Shares under the foregoing authorization and appointment as
agent, except in connection with contingent deferred sales charge as provided in
the current Prospectus relating to the Shares.
(f) The Trust agrees to reimburse the Distributor, from
time to time upon demand, for any reasonable expenses incurred in connection
with the repurchase of Shares pursuant to this paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under Massachusetts, any state or federal
tax laws, it shall notify the Distributor of the form of amendment which it
deems necessary or advisable and the reasons therefore. If the Distributor
declines to assent to such amendment, the Trust may terminate this Agreement
forthwith by written notice to the Distributor without payment of any penalty.
If, at any time during the existence of this Agreement, upon request by the
Distributor, the Trust fails (after a reasonable time) to make any changes in
its governing instruments or in its methods of doing business which are
necessary in order to comply with any requirements of federal or state laws or
regulations, laws or regulations of the Securities and Exchange Commission or of
a national securities association of which the Distributor is or may be a
member, relating to the sale of Shares, the Distributor may terminate this
Agreement forthwith by written notice to the Trust without payment of any
penalty.
8. The Distributor agrees that it will not take any long or short
positions in the Shares except as permitted by paragraphs l and 6 hereof.
Whenever used in this Agreement, the term "governing instruments" shall mean the
Declaration of Trust and the By-Laws of the Trust, as from time to time amended.
9. This Agreement shall become effective on January 1, 1995 and shall
continue in force until August 1, 1996 on which date it will terminate unless
its continuance after August 1, 1996, is specifically approved at least annually
(i) by the vote of a majority of the Board of Trustees of the Trust who are not
interested persons of the Trust or of the Distributor at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of that Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of l940 and the Rules and
Regulations thereunder.
This Agreement may be terminated as to any Fund at any time by either
party without payment of any penalty on not more than sixty days' or less than
thirty days' written notice to the other party.
10. This Agreement shall automatically terminate in the event of its
assignment.
11. The terms "vote of a majority of the outstanding voting
securities", "interested person" and "assignment" shall have the respective
meanings specified in the Investment Company Act of l940 and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
12. This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts.
13. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts. The
Distributor acknowledges that the obligations of or arising out of this
instrument are not binding upon any of the Trust's trustees, officers,
employees, agents or shareholders individually, but are binding solely upon the
assets and property of the Trust. If this instrument is executed by the Trust on
behalf of one or more series of the Trust, the Distributor further acknowledges
that the assets and liabilities of each series of the Trust are separate and
distinct and that the obligations of or arising out of this instrument are
binding solely upon the assets or property of the series on whose behalf the
Trust has executed this instrument. If the Trust has executed this instrument on
behalf of more than one series of the Trust, the Distributor also agrees that
the obligations of each series hereunder shall be several and not joint, in
accordance with its proportionate interest hereunder, and the Distributor agrees
not to proceed against any series for the obligations of another series.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above.
MASSACHUSETTS INVESTORS TRUST
By: W. THOMAS LONDON
----------------------------
W. Thomas London as officer
and not individually
MFS FUND DISTRIBUTORS, INC.
By: WILLIAM W. SCOTT, JR.
----------------------------
William W. Scott, Jr.
President
<PAGE>
EXHIBIT 99.8(D)
FOURTH AMENDMENT TO THE LETTER AGREEMENT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and Massachusetts Investors Trust (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a Letter Agreement
dated December 6, 1934, previously amended by Letter Agreements dated August 1,
1978 and December 31, 1978 and by the Third Amendment thereto dated as of
October 21, 1993 (the "Letter Agreement") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the Letter
Agreement to provide for the maintenance of the Fund's foreign securities, and
cash incidental to transactions in such securities, in the custody of certain
foreign banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Letter Agreement by the
addition of the following terms and conditions;
1. Appointment Of Foreign Sub-Custodians
The Fund hereby authorizes and instructs the Custodian to employ
as sub-custodians for the Fund's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of proper instructions, together with a certified resolution of the
Fund's Board of Trustees, the Custodian and the Fund may agree to amend Schedule
A hereto from time to time to designate additional foreign banking institutions
and foreign securities depositories to act as sub-custodian. Upon receipt of
proper instructions, the Fund may instruct the Custodian to cease the employment
of any one or more of such sub-custodians for maintaining custody of the Fund's
assets.
2. Assets to be Held
The Custodian shall limit the securities and other assets
maintained in the custody of the foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment
Company Act of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to effect the
Fund's foreign securities transactions.
3. Foreign Securities Depositories
Except as may otherwise be agreed upon in writing by the
Custodian and the Fund, assets of the Fund shall be maintained in foreign
securities depositories only through arrangements implemented by the foreign
banking institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into agreements containing
the provisions set forth in Section 5 hereof.
4. Segregation of Securities
The Custodian shall identify on its books as belonging to the
Fund, the foreign securities of the Fund held by each foreign sub-custodian.
Each agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody account for
the Custodian on behalf of the Fund and physically segregate in that account,
securities and other assets of the Fund, and, in the event that such institution
deposits the Fund's securities in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as agent for the Fund, the
securities so deposited.
5. Agreements with Foreign Banking Institutions
Each agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1 hereto and shall provide that:
(a) the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agents, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the assets
as belonging to the Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be given
access to the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of the Fund
held by the foreign sub-custodian will be subject only to the instructions of
the Custodian or its agents.
6. Access of Independent Accountants of the Fund
Upon request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of the Fund to be afforded
access to the books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with the
Custodian.
7. Reports by Custodian
The Custodian will supply to the Fund from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of the Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and other
assets and advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking institution for the
Custodian on behalf of the Fund indicating, as to securities acquired for the
Fund, the identify of the entity having physical possession of such securities.
8. Transactions in Foreign Custody Account
(a) Notwithstanding any provision of the Letter Agreement to the
contrary, settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
(b) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee, and the
Fund agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
9. Liability of Foreign Sub-Custodians
Each agreement pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and to indemnify, and
hold harmless, the Custodian and each Fund from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian with respect
to any claims against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense, liability
or claim.
10. Liability of Custodian
The Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any foreign
banking institution so employed than such institution has to the Custodian; and,
regardless of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 13 hereof, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any loss
where the sub-custodian has otherwise exercised reasonable care. Notwithstanding
the foregoing provisions of this paragraph 10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such loss
as may result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses (excluding
a bankruptcy or insolvency of State Street London Ltd. not caused by political
risk) due to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised reasonable care.
11. Reimbursement for Advances
The Fund agrees to indemnify and hold harmless the Custodian and
its nominee from and against all taxes, charges, expenses, assessments, claims
and liabilities (including counsel fees) incurred or assessed against it or its
nominee in connection with the performance of this Letter Agreement, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct. The Custodian is authorized to charge any account of
the Fund for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of the Fund for any purpose which results in the Fund incurring an overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Fund hereby grants to the Custodian a security interest in
and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or its
investment adviser (the "Pledged Securities"). Should the Fund fail to repay
promptly any advances of cash or securities, the Custodian shall be entitled to
use available cash and to dispose of the Pledged Securities as is necessary to
repay any such advances. This paragraph 11 shall apply to the Letter Agreement
generally and not exclusively with respect to the scope of this amendment.
12. Monitoring Responsibilities
The Custodian shall furnish annually to the Fund, during the
month of June, information concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope to that furnished
to the Fund in connection with the initial approval of this amendment to the
Letter Agreement. In addition, the Custodian will promptly inform the Fund in
the event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the subject
of an exemptive order from the Securities and Exchange Commission is notified by
such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
13. Branches of U.S. Banks
(a) Except as otherwise set forth in this amendment to the
Letter Agreement, the provisions hereof shall not apply where the custody of the
Fund assets is maintained in a foreign branch of a banking institution which is
a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act.
(b) Cash held for the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London Branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.
14. Applicability of Letter Agreement
Except as specifically superseded or modified herein, the terms
and provisions of the Letter Agreement shall continue to apply with full force
and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed as of the 15th day of December, 1993.
ATTEST: MASSACHUSETTS INVESTORS
TRUST
By:
- ------------------------------------- -------------------------
Title: Title:
ATTEST: STATE STREET BANK AND TRUST
COMPANY
By:
- ------------------------------------- -------------------------
Title: Title:
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Massachusetts
Investors Trust for use as sub-custodians for the Fund's securities and other
assets:
<TABLE>
<CAPTION>
COUNTRY BANK
<S> <C>
Argentina Citibank, N.A.
Australia ANZ Banking Group Ltd.
Austria Girozentrale Und Bank Der Osterreichischen
Belgium Banque Bruxelles Lambert
Canada Canada Trust Company
Chile Citibank, N.A.
Denmark Den Danske Bank
Finland Kansallis-Osake Pankki
France Credit Commercial De France
Germany Berliner Handels Und Frankfurter Bank
Greece National Bank of Greece
Hong Kong Standard Chartered Bank
Indonesia Standard Chartered Bank
Ireland Bank of Oreland
Italy Credito Italiano
Japan Sumitomo Trust & Banking Company Limited
Korea Bank of Seoul
Malaysis Standard Chartered Bank
Mexico Citibank Mexico
Netherlands Bank Mees & Hope, N.V. Algemene Bank Nederland
New Zealand Westpac Banking Corp.
Norway Christiania Bank Og Kreditkasse
Pakistan Deutsche Bank AG
Philippines Standard Chartered Bank
Portugal Banco Commercial Portugues
Singapore The Development Bank of Singapore, Banking Corporation Ltd.
Spain Banco HispanoAmericano, S.A.
Sri Lanka The Hong Kong and Shanghai Banking Corporation Ltd.
Sweden Skandinaviska Enskilda Banken
Switzerland Union Bank of Switzerland
Taiwan Central Trust of China
Thailand Standard Chartered Bank
Turkey Citibank, N.A.
United Kingdom State Street Bank and Trust Company
Uruguay Citibank, N.A.
Venezuela Citibank, N.A.
<CAPTION>
DEPOSITORIES
<S> <C>
Argentina Caja de Valores, CDV
Australia Austraclear Limited
Austria Oesterreichischen Kontrollbank AG
Wertpapiersammelbank beider (OeKB-WSB)
Belgium Caisse Interprofessionelle de Depots
et de Virements de Titres S.A. (C.I.K.)
Canada The Canada Depository for Securities Ltd. (CDS)
Denmark Vaerdipapircentralen (VP-Centralen)
France Mobilieres SICOVAM, Societe Interprofessionelle pour
la compensation des Valeuis
Germany Kassenverein
Greece The Central Depository
Italy Monte Titoli SPA
Mexico Instituto Para el Deposito Valores, INDEVAL
Netherlands Netherlands Centraal Instituut vour Giraal
Effectenverkeer B.V. (NECIGEF)
New Zealand The Reserve Bank of New Zealand
Norway Verdipapirsentraien, The Norwegian Registry of Securities
Portugal Central de Valores Mobiliarios, Central
Singapore The Central Depository (Pte) Limited, CDP
Spain Legal depository system (through the Junita Sindical
in force in Spain)
Sri Lanka Central Depository System (Pvt) Limited
Sweden Verdepapperscentraler, The Swedish Securities Register Center, VPC
Switzerland Schweizerische Effekten Giro (A.G. (SEGA)
Euroclear (Bruzzels, Belgium)
Cedel (Luxembourg)
</TABLE>
<PAGE>
EXHIBIT 1
CUSTODIAN AGREEMENT
TO:
Gentlemen:
The undersigned ("State Street") hereby requests that you (the "Bank")
establish a custody account and a cash account for each State Street client
whose account is identified to this Agreement. Each such custody or cash account
as applicable will be referred to herein as the "Account" and will be subject to
the following terms and conditions:
1. The Bank shall hold as agent for State Street and shall physically
segregate in the Account such cash, bullion, coin, stocks, shares, bonds,
debentures, notes and other securities and other property which is delivered to
the Bank for that State Street Account (the "Property").
2. (a) Without the prior approval of State Street it will not deposit
securities in any securities depository or utilize a clearing agency,
incorporated or organized under the laws of a country other than the United
States, unless such depository or clearing house operates the central system for
handling of securities or equivalent book-entries in that country or operates a
transnational system for the central handling of securities or equivalent
book-entries.
(b) When Securities held for an Account are deposited in a
securities depository or clearing agency by the Bank, the Bank shall identify on
its books as belonging to State Street as agent for such Account, the Securities
so deposited.
THE BANK REPRESENTS THAT EITHER:
3. (a) It currently has stockholders' equity in excess of $200 million
(US dollars or the equivalent of US dollars computed in accordance with
generally accepted US accounting principles) and will promptly inform State
Street in the event that there appears to be a substantial likelihood that its
stockholders' equity will decline below $200 million, or in any event, at such
time as its stockholders' equity in fact declines below $200 million; or
(b) It is the subject of an exemptive order issued by the United
States Securities and Exchange Commission, which such order permits State Street
to employ the Bank as a subcustodian, notwithstanding the fact that the Bank's
stockholders' equity is currently below $200 million or may in the future
decline below $200 million due to currency fluctuation.
4. Upon the written instructions of State Street as permitted by
Section 8, the Bank is authorized to pay out cash from the Account and to sell,
assign, transfer, deliver or exchange, or to purchase for the Account, any and
all stocks, shares, bonds, debentures, notes and other securities
("Securities"), bullion, coin and other property, but only as provided in such
written instructions. The Bank shall not be held liable for any act or omission
to act on instructions given or purported to be given should there be any error
in such instructions.
5. Unless the Bank receives written instructions of State Street to the
contrary, the Bank is authorized:
a. To promptly receive and collect all income and principal with
respect to the Property and to credit cash receipts to the
Account;
b. To promptly exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary Securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
Securities, for the Securities themselves);
c. To promptly surrender Securities at maturity or when called for
redemption upon receiving payment therefor;
d. Whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or stock
split is received for the Account and such rights entitlement or
fractional interest bears an expiration date, the Bank will
endeavor to obtain State Street's instructions, but should these
not be received in time for the Bank to take timely action, the
Bank is authorized to sell such rights entitlement or fractional
interest and to credit the Account;
e. To hold registered in the name of the nominee of the Bank or its
agents such Securities as are ordinarily held in registered form;
f. To execute in State Street's name for the Account, whenever the
Bank deems it appropriate, such ownership and other certificates
as may be required to obtain the payment of income from the
Property; and
g. To pay or cause to be paid from the Account any and all taxes and
levies in the nature of taxes imposed on such assets by any
governmental authority, and shall use reasonable efforts to
promptly reclaim any foreign withholding tax relating to the
Account.
6. If the Bank shall receive any proxies, notices, reports, or other
communications relative to any of the Securities of the Account in connection
with tender offers, reorganizations, mergers, consolidations, or similar events
which may have an impact upon the issuer thereof, the Bank shall promptly
transmit any such communication to State Street by means as will permit State
Street to take timely action with respect thereto.
7. The Bank is authorized in its discretion to appoint brokers and
agents in connection with the Bank's handling of transactions relating to the
Property provided that any such appointment shall not relieve the Bank of any of
its responsibilities or liabilities hereunder.
8. Written instructions shall include (i) instructions in writing
signed by such persons as are designed in writing by State Street (ii) telex or
tested telex instructions of State Street, (iii) other forms of instruction in
computer readable form as shall be customarily utilized for the transmission of
like information and (iv) such other forms of communication as from time to time
shall be agreed upon by State Street and the Bank.
9. The Bank shall supply periodic reports with respect to the
safekeeping of assets held by it under this Agreement. The content of such
reports shall include but not be limited to any transfer to or from any Account
held by the Bank hereunder and such other information as State Street may
reasonably request.
10. In addition to its obligations under Section 2 hereof, the Bank
shall maintain such other records as may be necessary to identify the assets
hereunder as belonging to each State Street client identified to this Agreement
from time to time.
11. The Bank agrees that its books and records relating to its actions
under this Agreement shall be opened to the physical, on-premises inspection and
audit at reasonable times by officers of, auditors employed by or other
representatives of State Street (including to the extent permitted under
___________ law the independent public accountants for any entity whose Property
is being held hereunder) and shall be retained for such period as shall be
agreed by State Street and the Bank.
12. The Bank shall be entitled to reasonable compensation for its
services and expenses as custodian under this Agreement, as agreed upon from
time to time by the Bank and State Street.
13. The Bank shall exercise reasonable care in the performance of its
duties as are set forth or contemplated herein or contained in instructions
given to the Bank which are not contrary to this Agreement, and shall maintain
adequate insurance and agrees to indemnify and hold State Street and each
Account from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Bank's performance of its obligations
hereunder.
14. The Bank agrees that (i) the Property is not subject to any right,
charge, security interest, lien or claim of any kind in favor of the Bank or any
of its agents or its creditors except a claim of payment for their safe custody
and administration and (ii) the beneficial ownership of the Property shall be
freely transferable without the payment of money or other value other than for
safe custody or administration.
15. This Agreement may be terminated by the Bank or State Street by at
least 60 days' written notice to the other, sent by registered mail or express
courier. The Bank, upon the date this Agreement terminates pursuant to notice
which has been given in a timely fashion, shall deliver the Property in
accordance with written instructions of State Street specifying the name(s) of
the person(s) to whom the Property shall be delivered.
16. The Bank and State Street shall each use its best efforts to
maintain the confidentiality of the Property in each Account, subject, however,
to the provisions of any laws requiring the disclosure of the Property.
17. The Bank agrees to follow such Operating Requirements as State
Street may require from time to time. A copy of the current State Street
Operating Requirements is attached as an exhibit to this Agreement.
18. Unless otherwise specified in this Agreement, all notices with
respect to matters contemplated by this Agreement shall be deemed duly given
when received in writing or by tested telex by the Bank of State Street at their
respective addresses set forth below, or at such other address as specified in
each case in a notice similarly given:
To State Street: Global Custody Services Division
STATE STREET BANK AND TRUST
COMPANY
P.O. Box 470
Boston, MA 02102
To the Bank:
19. This Agreement shall be governed by and construed in accordance
with the laws of ________________.
Please acknowledge your agreement to the foregoing by executing a copy
of this letter.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY
By: ________________________
Agreed to by:
By:_________________________
Date:_______________________
EXHIBIT 99.10
April 25, 1995
Massachusetts Investors Trust
500 Boylston Street
Boston, MA 02116
Re: POST-EFFECTIVE AMENDMENT NO. 68 TO REGISTRATION STATEMENT ON FORM
N-1A (FILE NO. 2-11401) (THE "REGISTRATION STATEMENT")
Gentlemen:
I am Vice President and Associate General Counsel of Massachusetts
Financial Services Company, which serves as investment adviser to Massachusetts
Investors Trust (the "Trust"). I am admitted to practice law in The Commonwealth
of Massachusetts. The Trust is a trust created under a written Agreement and
Declaration of Trust dated March 21, 1924, as amended through September 29,
1994, executed and delivered in Boston, Massachusetts. The beneficial interest
thereunder is represented by transferable shares. The Trustees have the powers
set forth in the Agreement and Declaration of Trust, as modified by various
amendments, subject to the terms, provisions and conditions therein provided.
I am of the opinion that the legal requirements have been complied with
in the original creation of the Trust and that said Agreement Declaration of
Trust, as amended, is legal and valid.
Under Article III, Section 1(i), the Trustees are empowered in their
absolute and uncontrolled discretion from time to time to sell shares of the
Trust either for cash or for property, whenever and in such amounts as the
Trustees may deem desirable, except that under Article VIII, Section 5, no
shares may be sold to net the Trust (before taxes and expenses exclusive of
sales charge or commission) less than the net asset value in effect at the time
of the sale. Under Article VIII, Section 5, it is provided that the number of
shares shall be fixed from time to time by the Trustees, and such number may be
increased or reduced by them, and that the Trustees shall have the right to sell
additional shares without offering them to the holders of the then outstanding
shares.
The Trust is about to register under the Securities Act of 1933, as
amended, 13,774,467 shares of beneficial interest by Post-Effective Amendment
No. 68 to the Trust's Registration Statement. I am of the opinion that all
necessary Trust action precedent to the issue of the shares of beneficial
interest of the Trust comprising the shares covered by Post-Effective Amendment
No. 68 to the Registration Statement, has been duly taken, and that all such
shares may legally and validly by issued for cash, and when sold will be fully
paid and nonassessable by the Trust upon receipt by the Trust or its agent of
consideration therefor in accordance with the terms described in the
Registration Statement, subject to compliance with the Securities Act of 1933,
the Investment Company Act of 1940 and applicable state laws regulating the sale
of securities.
I consent to your filing this opinion with the Securities and Exchange
Commission as an Exhibit to Post-Effective Amendment No. 68 to the Registration
Statement.
Very truly yours,
JAMES R. BORDEWICK, JR.
James R. Bordewick, Jr.
JRB/bjn
EXHIBIT 99.11
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 68 to Registration Statement No. 2-11401 of Massachusetts Investors Trust of
our report dated February 1, 1995, appearing in the annual report to
shareholders for the year ended December 31, 1994 and to the references to us
under the headings "Condensed Financial Information" in the Prospectus and
"Independent Accountants and Financial Statements" in the Statement of
Additional Information, both of which are part of such Registration Statement.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
April 26, 1995
EXHIBIT 99.15(A)
MASSACHUSETTS INVESTORS TRUST
AMENDED AND RESTATED DISTRIBUTION PLAN
AMENDED AND RESTATED DISTRIBUTION PLAN with respect to the shares of beneficial
interest to be designated "CLASS A" of the MASSACHUSETTS INVESTORS TRUST (the
"Fund"), a business trust organized and existing under the laws of The
Commonwealth of Massachusetts, dated the 3rd day of December, 1990, amended and
restated the 23rd day of August, 1993 and amended this 21st day of December,
1994.
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940 (the "Act");
and
WHEREAS, a plan of distribution pursuant to Rule 12b-1 of the Act was previously
adopted and approved by the Trustees of the Fund, including the Qualifying
Trustees (as defined below), and by the shareholders of the Fund; and
WHEREAS, the Fund intends to continue to distribute the Shares of Beneficial
Interest (without par value) of the Fund designated Class A Shares (the
"Shares") in part in accordance with Rule 12b-1 under the Act ("Rule 12b-1"),
and desires to adopt this amended and restated Distribution Plan (the "Plan") as
a plan of distribution pursuant to such Rule; and
WHEREAS, the Fund has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of the Trust (the "Board
of Trustees") in the manner specified in Rule 12b-1, with MFS Fund Distributors,
Inc., a Delaware corporation, as distributor (the "Distributor"), whereby the
Distributor provides facilities and personnel and renders services to the Fund
in connection with the offering and distribution of the Shares; and
WHEREAS, the Fund recognizes and agrees that the Distributor will enter into
agreements ("Dealer Agreements") with various securities dealers and other
financial intermediaries ("Dealers") pursuant to which the Dealers will act as
dealers of the Shares in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that a sales charge may be paid by
investors who purchase Shares and that the Distributor and Dealers will receive
such sales charge as partial compensation for their services in connection with
sale of Shares; and
WHEREAS, the Board of Trustees, in considering whether the Fund should adopt and
implement this Plan, has evaluated such information as it deemed necessary to an
informed determination as to whether this Plan should be adopted and implemented
and has considered such pertinent factors as it deemed necessary to form the
basis for a decision to use assets of the Fund for such purposes, and has
determined that there is a reasonable likelihood that the adoption and
implementation of this Plan will benefit the Fund and its Class A shareholders;
NOW, THEREFORE, the Board of Trustees hereby adopts this Plan for the Fund as a
plan of distribution relating to the Shares in accordance with Rule 12b-1 under
the Act, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor
shall provide facilities, personnel and a program with respect to the offering
and sale of Shares. Among other things, the Distributor shall be responsible for
all expenses of printing (excluding typesetting) and distributing prospectuses
to prospective shareholders and providing such other related services as are
reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to
the extent specified in the Distribution Agreement in providing the services
described in Section 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. As partial consideration for the services performed and expenses
incurred in the performance of its obligations under the Distribution Agreement,
the Fund shall pay the Distributor a distribution fee periodically at a rate of
0.10% per annum of the average daily net assets of the Fund attributable to the
Shares. Such payments shall commence following Shareholder approval of the Plan
but only upon notification by the Distributor to the Fund of the commencement of
the Plan ("Commencement Date").
4. As partial consideration for the personal services and/or
account maintenance services performed by each Dealer in the performance of its
obligations under its Dealer Agreement, the Fund shall on or after the
Commencement Date, pay each Dealer a service fee periodically at a rate not to
exceed 0.25% per annum of the portion of the average daily net assets of the
Fund that is represented by Shares that are owned by investors for whom such
Dealer is the holder or dealer of record. The Distributor may from time to time
reduce the amount of the service fee paid to a Dealer for Shares sold prior to
certain date.
5. In addition to fees payable pursuant to Sections 3 and 4 hereof,
the expenses permitted to be paid by the Fund pursuant to this Plan on or after
the Commencement Date, shall include other distribution related expenses. These
other distribution related expenses may include, but are not limited to, a
dealer commission and a payment to wholesalers employed by the Distributor on
net asset value purchases at or above a certain dollar level.
The aggregate amount of fees and expenses paid pursuant to Sections
3 and 4 hereof and this Section 5 shall not exceed 0.35% per annum of the
average daily net assets of the Fund attributable to the Shares. No fees shall
be paid pursuant to Section 4 hereof or this Section 5 to any insurance company
which has entered into an agreement with the Fund and the Distributor that
permits such insurance company to purchase Shares from the Fund at their net
asset value in connection with annuity agreements issued in connection with the
insurance company's separate accounts. That portion of the Fund's average daily
net assets on which fees payable under Section 4 hereof and this Section 5 are
calculated may be subject to certain minimum amount requirements as may be
determined, and additional or different dealer or wholesaler qualification
standards that may be established, from time to time by the Distributor. The
Distributor shall be entitled to be paid any fees payable under Section 4 hereof
or this Section 5 with respect to accounts for which no Dealer of record exists
or qualification standards have not been met as partial consideration for
personal services and/or account maintenance services provided by the
Distributor to the Shares. The fees and expenses payable pursuant to Section 4
and this Section 5 may from time to time be paid by the Fund to the Distributor
and the Distributor will then pay these expenses on behalf of the Fund.
6. Nothing herein contained shall be deemed to require the Fund to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
7. This Plan shall become effective upon (a) approval by a vote of
at least a "majority of the outstanding voting securities" of the Shares, and
(b) approval by a vote of the Board of Trustees and vote of a majority of the
Trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided,
however, that such continuance is subject to annual approval by a vote of the
Board of Trustees and a majority of the Qualified Trustees, such votes to be
cast in person at a meeting called for the purpose of voting on continuance of
this Plan. If such annual approval is not obtained, this Plan shall expire 12
months after the effective date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees;
provided that (a) any amendment to increase materially the amount to be spent
for the services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of the Shares and (b)
any material amendment of this Plan shall be effective only upon approval by a
vote of the Board of Trustees and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Shares.
10. The Distributor shall provide the Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
11. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Fund.
12. For the purposes of this Plan, the terms "interested person"
and "majority of the outstanding voting securities" are used as defined in the
Act. In addition, for purposes of determining the fees payable to Dealers and
wholesalers, the value of the Share's net assets shall be computed in the manner
specified in the Fund's then current prospectus for computation of the net asset
value of the Shares.
13. The Fund shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in Section 10 hereof (collectively
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record keeping.
14. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the Act.
15. If any provision of this Plan shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
EXHIBIT 99.15(B)
MASSACHUSETTS INVESTORS TRUST
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION with respect to the shares of beneficial interest to be
designated "CLASS B" of MASSACHUSETTS INVESTORS TRUST (the "Fund"), a
Massachusetts business trust, dated September 1, 1993 and amended this 21st day
of December, 1994.
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the Fund intends to distribute the shares of beneficial interest
(without par value) of the Fund designated Class B Shares (the "Shares") in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Distribution Plan (the "Plan") as a plan of distribution pursuant to
such Rule; and
WHEREAS, the Fund desires for MFS Fund Distributors, Inc., a Delaware
corporation, to provide certain distribution services for the Fund (the
"Distributor"); and
WHEREAS, the Fund has entered into a distribution agreement (the
"Distribution Agreement") (in a form approved by the Board of Trustees of the
Fund in a manner specified in such Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Fund in connection with the offering and distribution of the Shares; and
WHEREAS, the Fund recognizes and agrees that (a) the Distributor may
retain the services of firms or individuals to act as dealers (the "Dealers") of
the Shares in connection with the offering of Shares, and (b) the Distributor
may make payments for such services to the Dealers out of the fee paid to the
Distributor hereunder, any deferred sales charges imposed by the Distributor in
connection with the repurchase of Shares, its profits or any other source
available to it; and
WHEREAS, the Fund recognizes and agrees that the Distributor may impose
certain deferred sales charges in connection with the repurchase of Shares by
the Fund, and the Distributor may retain (or receive from the Fund, as the case
may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Fund, in considering whether the
Fund should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its Class B
shareholders;
NOW, THEREFORE, the Board of Trustees of the Fund hereby adopts this Plan
for the Fund as a plan for distribution relating to the Shares in accordance
with Rule 12b-1, on the following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares. Among other things, the Distributor shall be responsible for
commissions payable to Dealers, all expenses of printing (excluding typesetting)
and distributing prospectuses to prospective shareholders and providing such
other related services as are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the services
described in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs.
3. It is understood that the Distributor may impose certain deferred sales
charges in connection with the repurchase of Shares by the Fund and the
Distributor may retain (or receive from the Fund, as the case may be) all such
deferred sales charges. As additional consideration for all services performed
and expenses incurred in the performance of its obligations under the
Distribution Agreement, the Fund shall pay the Distributor a distribution fee
periodically at a rate of 0.75% per annum of the Fund's average daily net assets
attributable to the Shares.
4. As partial consideration for the personal services and/or account
maintenance services performed by each Dealer in the performance of its
obligations under its dealer agreement with the Distributor, the Fund shall pay
each Dealer a service fee periodically at a rate not to exceed 0.25% per annum
of the portion of the average daily net assets of the Fund that is represented
by Shares that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets on which
the fees payable under this paragraph 4 hereof are calculated may be subject to
certain minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established from time to
time, by the Distributor. The Distributor shall be entitled to be paid any fees
payable under this paragraph 4 hereof with respect to Shares for which no Dealer
of record exists or qualification standards have not been met as partial
consideration for personal services and/or account maintenance services provided
by the Distributor to the Shares. The service fee payable pursuant to this
paragraph 4 may from time to time be paid by the Fund to the Distributor and the
Distributor will then pay these fees on behalf of the Fund.
5. The Fund understands that agreements between the Distributor and the
Dealers may provide for payment of commissions to Dealers in connection with the
sales of Shares and may provide for a portion (which may be all or substantially
all) of the fees payable by the Fund to the Distributor under the Distribution
Agreement to be paid by the Distributor to the Dealers in consideration of the
Dealer's services as a dealer of the Shares. Except as described in paragraph 4,
nothing in this Plan shall be construed as requiring the Fund to make any
payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and any Dealer
shall provide that, except as provided in paragraph 4, such Dealer shall look
solely to the Distributor for compensation for its services thereunder and that
in no event shall such Dealer seek any payment from the Fund.
6. The Fund shall pay all fees and expenses of any independent auditor,
legal counsel, investment adviser, administrator, transfer agent, custodian,
shareholder servicing agent, registrar or dividend disbursing agent of the Fund;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to shareholders of the Fund, except that the Distributor shall
be responsible for the distribution-related expenses as provided in paragraphs 1
and 2 hereof.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the responsibility for
and control of the conduct of the affairs of the Fund.
8. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of the Shares, and (b)
approval by a vote of the Board of Trustees and a vote of a majority of the
Trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in person
at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Fund and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire 12 months after
the effective date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees;
provided that this Plan may not be amended to increase materially the amount of
permitted expenses hereunder without the approval of holders of a "majority of
the outstanding voting securities" of the Shares and may not be materially
amended in any case without a vote of a majority of both the Trustees and the
Qualified Trustees. This Plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or by a vote of the holders of a "majority of
the outstanding voting securities" of the Shares.
11. The Fund and the Distributor shall provide the Board of Trustees, and
the Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Plan and the purposes for which such expenditures
were made.
12. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons",
"majority of the outstanding voting securities" and "specifically approved at
least annually" are used as defined in the 1940 Act. In addition, for purposes
of determining the fees payable to the Distributor hereunder, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
then-current prospectus and statement of additional information for computation
of the net asset value of the Shares of the Fund.
14. The Fund shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof (collectively,
the "Records") for a period of six years from the end of the fiscal year in
which such Record was made and each such record shall be kept in an easily
accessible place for the first two years of said record-keeping.
15. This Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF MFS MASSACHUSETTS INVESTORS TRUST AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>
<NAME> MFS MASSACHUSETTS INVESTORS TRUST CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 1,398,844,346
<INVESTMENTS-AT-VALUE> 1,598,049,689
<RECEIVABLES> 9,369,780
<ASSETS-OTHER> 22,322
<OTHER-ITEMS-ASSETS> 935,459
<TOTAL-ASSETS> 1,608,377,250
<PAYABLE-FOR-SECURITIES> 2,011,504
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,808,970
<TOTAL-LIABILITIES> 4,820,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,407,190,670
<SHARES-COMMON-STOCK> 152,412,907
<SHARES-COMMON-PRIOR> 141,378,119
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (59,285)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,785,811)
<ACCUM-APPREC-OR-DEPREC> 199,211,202
<NET-ASSETS> 1,603,556,776
<DIVIDEND-INCOME> 43,624,688
<INTEREST-INCOME> 4,762,379
<OTHER-INCOME> 0
<EXPENSES-NET> 12,233,797
<NET-INVESTMENT-INCOME> 36,153,270
<REALIZED-GAINS-CURRENT> 153,086,960
<APPREC-INCREASE-CURRENT> (207,006,595)
<NET-CHANGE-FROM-OPS> (17,766,365)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (34,711,320)
<DISTRIBUTIONS-OF-GAINS> (150,428,102)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,401,171
<NUMBER-OF-SHARES-REDEEMED> (13,044,429)
<SHARES-REINVESTED> 12,678,046
<NET-CHANGE-IN-ASSETS> (37,268,285)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,655
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,385,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,849,564
<AVERAGE-NET-ASSETS> 1,615,766,548
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> (0.36)
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> (1.07)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF MFS MASSACHUSETTS INVESTORS TRUST AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>
<NAME> MFS MASSACHUSETTS INVESTORS TRUST CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 1,398,844,346
<INVESTMENTS-AT-VALUE> 1,598,049,689
<RECEIVABLES> 9,369,780
<ASSETS-OTHER> 22,322
<OTHER-ITEMS-ASSETS> 935,459
<TOTAL-ASSETS> 1,608,377,250
<PAYABLE-FOR-SECURITIES> 2,011,504
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,808,970
<TOTAL-LIABILITIES> 4,820,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,407,190,670
<SHARES-COMMON-STOCK> 6,831,655
<SHARES-COMMON-PRIOR> 1,270,050
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (59,285)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,785,811)
<ACCUM-APPREC-OR-DEPREC> 199,211,202
<NET-ASSETS> 1,603,556,776
<DIVIDEND-INCOME> 43,624,688
<INTEREST-INCOME> 4,762,379
<OTHER-INCOME> 0
<EXPENSES-NET> 12,233,797
<NET-INVESTMENT-INCOME> 36,153,270
<REALIZED-GAINS-CURRENT> 153,086,960
<APPREC-INCREASE-CURRENT> (207,006,595)
<NET-CHANGE-FROM-OPS> (17,766,365)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (722,860)
<DISTRIBUTIONS-OF-GAINS> (6,554,910)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,590,985
<NUMBER-OF-SHARES-REDEEMED> (703,746)
<SHARES-REINVESTED> 674,366
<NET-CHANGE-IN-ASSETS> (37,268,285)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,655
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,385,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,849,564
<AVERAGE-NET-ASSETS> 42,397,633
<PER-SHARE-NAV-BEGIN> 11.48
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> (0.36)
<PER-SHARE-DIVIDEND> (0.17)
<PER-SHARE-DISTRIBUTIONS> (1.07)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.03
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
