Table of Contents
Letter From the Chairman 1
Fund Manager's Overview 3
Performance 5
Portfolio of Investments 7
Financial Statements 14
Notes to Financial Statements 20
It's Easy to Contact Us 26
MFS Investment Opportunities 27
The MFS Family of Funds 28
Trustees and Officers 29
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Highlights
[bullet] For the six months ended June 30, 1996, Class A shares of the Trust
provided a total return of 10.56% and Class B shares returned 10.16%,
while the Standard & Poor's 500 Composite Index returned 10.09%.
[bullet] The U.S. stock market has been paced by strong returns in retailing,
technology, consumer goods and services, and industrial goods and
services.
[bullet] The Trust was helped by strong performance from such retail holdings as
Nike, Circuit City, and TJX.
[bullet] The Trust was underweighted in technology relative to the S&P 500;
subsequent events in the market justified this position.
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<PAGE>
Letter From the Chairman
Dear Shareholders:
[Photo: A. Keith Brodkin]
Real (inflation-adjusted) economic growth in the first quarter of 1996 was
2.3% on an annualized basis, and it appears that second-quarter growth could
be even stronger. Thus, real growth in gross domestic product has started the
year at a rate exceeding our expectations. While we continue to believe that
growth from quarter to quarter will be uneven, it is now our expectation that
growth for all of 1996 could exceed 2.5%. Although individual consumers
appear to be carrying an excessive debt load, the consumer sector itself,
which represents two-thirds of the economy, continues to be impressive as the
auto and housing markets remain resilient. Consumer spending has also been
positively impacted by widespread job growth. At the same time, however, the
economies of Europe and Japan continue to be in the doldrums, weakening U.S.
export markets while subduing the capital spending plans of American
corporations. Finally, due to the pickup in economic activity and increasing
job growth, it appears that inflation may accelerate slightly this year, and
the Federal Reserve Board is expected to continue its diligent
anti-inflationary stance.
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity market this
year. Although we believe the equity market represents fair value at current
levels, the expected slowdown in the growth of corporate earnings and the
increases in interest rates experienced so far this year raise near-term
concerns. Further increases in interest rates, and an acceleration of
inflation coupled with an additional slowdown in corporate earnings growth,
could have a negative effect on the stock market. However, to the extent that
some earnings disappointments are taken as a sign that the economy is not
overheating, this may prove beneficial for the longer-term health of the
equity market. We continue to believe that many of the technology-driven
productivity gains that U.S. companies have made in recent years will
continue to enhance corporate America's competitiveness and profitability.
Therefore, while we have some near-term concerns, we remain quite
constructive on the long-term viability of the equity market.
Finally, as you may have noticed, this report to shareholders incorporates a
number of changes which we believe will make it more informative and useful
to you. Following the letter from the Fund Manager, you will find new
information on the Fund's holdings,
1
<PAGE>
including charts illustrating the portfolio's concentration in the different
types of investments that meet its criteria. Near the back of the report, you
will find a list of phone numbers and addresses in case you need to contact
MFS. We hope to hear from you.
We appreciate your support and welcome any questions or comments you may
have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
July 12, 1996
2
<PAGE>
Fund Manager's Overview
Dear Shareholders:
The stock market has followed last year's remarkable performance with further
gains in 1996. The Trust participated in this performance, with returns that
exceeded the 10.09% return of the Standard & Poor's 500 Composite Index (the
S&P 500), a popular, unmanaged index of common stock performance. For the six
months ended June 30, 1996, Class A shares of the Trust provided a total
return of 10.56%, while Class B shares had a total return of 10.16%. These
figures include the reinvestment of distributions but exclude the effects of
any sales charges. The Trust's performance also exceeded the 8.67% return for
the Lipper Growth and Income Fund Average, an unmanaged,
net-asset-value-weighted index of the largest qualifying mutual funds within
their respective investment objectives.
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. In doing so, 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.
The Trust is essentially fully invested, which is our long-term policy. We
believe that the long-term returns of the stock market outweigh its normal
fluctuations. Currently, the Trust is positioned with overweightings in
financial services, where we find many strong growth companies selling at
substantial discounts to the market, and industrial goods and services,
particularly in the aerospace and defense industry. We are underweighted in
basic materials, where we do not see demand strong enough to offset high
capacity growth, and utilities, where we see little growth and increased
competition.
The performance of the U.S. equity market, represented by the S&P 500, was
paced by strong returns in retailing (up 21.7% during the period), technology
(up 15.9%), consumer goods and services (up 14.4%), and industrial goods and
services (up 14.8%). The Trust's performance in the retail sector was quite
strong as we held major positions in Nike, Circuit City, and TJX. Our
overweighting in retail was due in part to our belief that retail was
inexpensive late last year. In technology, the Trust was underweighted
relative to the S&P 500, and subsequent events in the market have justified
this position. The stocks we did own, such as Intel and Computer Associates,
performed quite well relative to the S&P 500 during the period. Our consumer
goods and services holdings lagged the market, partly because we did not own
Coca-Cola, which rose 32% during the first six months of the year. In
industrial goods and services, we were overweighted and outperformed this
segment of the index.
On the negative side, our overweighting in financial services stocks
underperformed the market because of a disappointing performance from the
insurance sector. We were also underweighted in energy, and the stocks we did
own underperformed the market.
3
<PAGE>
Despite the long duration of the current economic upturn, we look forward to
continued economic growth. The combination of low short-term interest rates
and a vigilant long bond market leads us to believe the economy will unfold
in a slow-growth, low-inflation pattern. This has two implications for the
equity market. First, the valuation levels of the market, while high relative
to periods of higher inflation, should, in our opinion, be sustainable.
Second, we believe profit growth will slow relative to last year's very
healthy pace and that, going forward, the most important factor in portfolio
performance will be individual company earnings performance.
Looking ahead, we see a market where sector or industry trends are likely to
be less important than individual company earnings. We expect this to be our
prime focus for the rest of 1996.
Respectfully,
/s/ Mitchell D. Dynan /s/ John D. Laupheimer, Jr. /s/Kevin R. Parke
Mitchell D. Dynan John D. Laupheimer, Jr. Kevin R. Parke
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Fund Manager Profiles
Mitch Dynan joined the MFS Research Department in 1986. A graduate of Tufts
University, he was named Assistant Vice President -- Investments in 1987 and
Vice President -- Investments in 1988. Mr. Dynan became a Portfolio Manager of
Massachusetts Investors Trust in 1995.
John Laupheimer joined the MFS Research Department in 1981 as an industry
specialist. A graduate of Boston University and the Sloan School of Management
of Massachusetts Institute of Technology, he was named Investment Officer in
1983, Assistant Vice President -- Investments in 1984, Vice President --
Investments in 1986 and Senior Vice President in January 1995. Mr. Laupheimer
became a Portfolio Manager of Massachusetts Investors Trust in 1993.
Kevin Parke joined the MFS Research Department in 1985 as an industry
specialist. A graduate of Lehigh University and the Harvard University Graduate
School of Business Administration, he was named Assistant Vice President --
Investments in 1987, Vice President -- Investments in 1988, Senior Vice
President -- Investments in 1993 and Director of Research in 1995. Mr. Parke
bacame a Portfolio Manager of Massachusetts Investors Trust in 1992.
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4
<PAGE>
Performance Summary
Because mutual funds like Massachusetts Investors Trust are designed for
investors with long-term goals, we have provided cumulative results as well
as the average annual total returns for Class A and Class B shares for the
applicable time periods.
Average Annual and Cumulative Total Rates of Return
Class A Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
========================================================================
Cumulative Total Return +10.56% +29.62% +106.62% +260.76%
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Average Annual Total
Return -- +29.62% +15.62% +13.69%
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The average annual total returns, calculated for the period ended as of the
most recent calendar quarter as required by the Securities and Exchange
Commission (the SEC), with all distributions reinvested and reflecting the
maximum sales charge of 5.75% on the initial investment for the 1-, 5- and
10-year periods ended June 30, 1996, were +22.19%, +14.26% and +13.02%,
respectively.
Class B Investment Results
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
========================================================================
Cumulative Total Return +10.16% +28.57% +101.57% +251.98%
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Average Annual Total
Return -- +28.57% +15.05% +15.05%
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The average annual total returns, calculated for the period ended as of the
most recent calendar quarter as required by the SEC, with all distributions
reinvested and reflecting the current maximum contingent deferred sales
charge (CDSC) of 4%, 2% and 0% for the 1- and 5-year periods ended June 30,
1996 and for the period from September 7, 1993 to June 30, 1996, were +24.57%
and +14.82%, and 13.41%, respectively.
Class B share performance includes the performance of the fund's Class A
shares for periods prior to the commencement of offering of Class B shares on
September 7, 1993. Sales charges and operating expenses for Class A and Class
B shares differ. The Class A share performance, which is included within the
Class B SEC performance, has been adjusted to reflect the CDSC generally
applicable to Class B shares rather than the initial sales charge generally
applicable to Class A shares. Class B share performance has not been
adjusted, however, to reflect differences in operating expenses (e.g., Rule
12b-1 fees).
All results represent past performance and are not an indication of future
results. Investment return and principal value will fluctuate, and shares,
when redeemed, may be worth more or less than their original cost. All Class
A share results reflect the applicable expense subsidy which is explained in
the Notes to Financial Statements. No subsidy is in effect at this time.
5
<PAGE>
Portfolio Concentration as of June 30, 1996
Top Ten Holdings
Philip Morris Cos., Inc.
Tobacco, food, and beverage conglomerate
General Electric Co.
Diversified manufacturing and services conglomerate
Gillette Co.
Manufacturer of cosmetics, personal care products, and office products
Mobil Corp.
International oil and gas company
Lockheed Martin Corp.
Aerospace/defense contractor
First Bank System, Inc.
Bank with operations in Midwest and Rocky Mountain states
McDonnell-Douglas Co.
Aerospace/defense contractor
CSX Corp.
Railroad, ocean shipping, and distribution company
Norwest Corp.
Commercial and retail banking company
Raytheon Co.
Aerospace/defense contractor
Largest Sectors
- -----------------------------------[Pie chart]----------------------------------
Other 34.2%
Financial Services 18.9%
Industrial Goods & Svcs. 15.0%
Consumer Staples 14.6%
Health Care 10.6%
Retailing 6.7%
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Fund Facts
Strategy: The Trust's investment objectives are to improve reasonable
current income and long-term growth of capital and income.
Commencement
of investment
operations: July 15, 1924
Size: $2.6 billion as of June 30, 1996
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6
<PAGE>
Portfolio of Investments (Unaudited) - June 30, 1996
Common Stocks - 95.8%
=============================================================================
Issuer Shares Value
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U.S. Stocks - 90.8%
Aerospace - 8.0%
Allied Signal, Inc. 480,000 $ 27,420,000
Boeing Co. 150,000 13,068,750
General Dynamics Corp. 144,000 8,928,000
Lockheed Martin Corp. 530,000 44,520,000
McDonnell-Douglas Co. 830,000 40,255,000
Raytheon Co. 761,300 39,302,113
United Technologies Corp. 294,000 33,810,000
--------
$207,303,863
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Apparel and Textiles - 1.6%
Nike, Inc., "B" 256,000 $ 26,304,000
VF Corp. 240,000 14,310,000
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$ 40,614,000
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Automotive - 0.8%
Eaton Corp. 120,000 $ 7,035,000
Ford Motor Co. 100,000 3,237,500
General Motors Corp. 100,000 5,237,500
Goodrich (B.F.) Co. 140,000 5,232,500
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$ 20,742,500
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Banks and Credit Companies - 7.4%
Chase Manhattan Corp. 104,000 $ 7,345,000
Comerica, Inc. 38,500 1,718,063
Corestates Financial Corp. 36,750 1,414,875
First Bank System, Inc. 710,000 41,180,000
First Chicago NBD Corp. 610,000 23,866,250
Firstar Corp. 310,000 14,298,750
National City Corp. 425,000 14,928,125
Northern Trust Corp. 30,000 17,325,000
Norwest Corp. 1,143,000 39,862,125
Suntrust Banks, Inc. 500,000 18,500,000
U.S. Bancorp 320,000 11,560,000
--------
$191,998,188
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Biotechnology - 0.4%
Guidant Corp.* 200,000 $ 9,850,000
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Business Machines - 1.2%
Digital Equipment Corp.* 225,000 $ 10,125,000
Hewlett-Packard Co. 50,000 4,981,250
International Business Machines Corp. 18,000 1,782,000
Sun Microsystems, Inc.* 200,000 11,775,000
Xerox Corp. 30,000 1,605,000
--------
$ 30,268,250
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Business Services - 1.3%
ALCO Standard Corp. 408,200 $ 18,471,050
Ceridian Corp.* 35,000 1,767,500
Computer Sciences, Inc.* 170,000 12,707,500
--------
$ 32,946,050
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7
<PAGE>
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U.S. Stocks - continued
Cellular Telephones - 0.1%
AirTouch Communications, Inc.* 60,000 $ 1,695,000
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Chemicals - 1.2%
duPont (E. I.) de Nemours & Co. 165,000 $ 13,055,625
Grace (W.R.) & Co. 50,000 3,543,750
Monsanto Co. 382,500 12,431,250
Praxair, Inc. 40,000 1,690,000
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$ 30,720,625
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Computer Software - Personal Computers - 0.8%
First Data Corp. 31,500 $ 2,508,188
Microsoft Corp.* 149,000 17,898,625
--------
$ 20,406,813
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Computer Software - Systems - 1.7%
Computer Associates International, Inc. 404,900 $ 28,849,125
Electronic Data Systems Corp.* 27,000 1,451,250
Oracle Systems Corp.* 375,000 14,789,063
--------
$ 45,089,438
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Consumer Goods and Services - 9.4%
Colgate-Palmolive Co. 309,500 $ 26,230,125
Gillette Co. 882,000 55,014,750
Philip Morris Cos., Inc. 750,000 78,000,000
Procter & Gamble Co. 324,000 29,362,500
Service Corp. International 182,700 10,505,250
Sherwin Williams Co. 113,900 5,296,350
Tyco International Ltd. 264,000 10,758,000
UST, Inc. 825,600 28,276,800
--------
$243,443,775
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Defense Electronics - 0.2%
Loral Space and Communications Corp.* 450,000 $ 6,131,250
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Electrical Equipment - 3.4%
General Electric Co. 646,000 $ 55,879,000
Honeywell, Inc. 610,000 33,245,000
--------
$ 89,124,000
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Electronics - 1.6%
Intel Corp. 460,000 $ 33,781,250
LSI Logic Corp.* 250,000 6,500,000
Xilinx, Inc.* 25,000 793,750
--------
$ 41,075,000
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Entertainment - 1.9%
Circus Circus Enterprises, Inc.* 125,200 $ 5,133,200
Comcast Corp., Special, "A" 60,000 1,110,000
Disney (Walt) Co. 265,000 16,661,875
Harrah's Entertainment, Inc.* 236,000 6,667,000
Mirage Resorts, Inc.* 75,000 4,050,000
Viacom, Inc.* 390,000 15,161,250
--------
$ 48,783,325
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8
<PAGE>
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U.S. Stocks - continued
Financial Institutions - 3.8%
Associates First Capital Corp., "A"* 114,800 $ 4,319,350
Beneficial Corp. 691,000 38,782,375
Federal Home Loan Mortgage Corp. 157,000 13,423,500
MBNA Corp. 70,050 1,996,425
State Street Boston Corp. 680,000 34,680,000
Union Planters Corp. 200,000 6,075,000
--------
$ 99,276,650
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Food and Beverage Products - 4.5%
CPC International, Inc. 300,000 $ 21,600,000
Campbell Soup Co. 21,600 1,522,800
General Mills, Inc. 693,500 37,795,750
Nabisco Holdings Corp., "A" 100,000 3,537,500
PepsiCo, Inc. 1,052,000 37,214,500
Ralston Purina Co. 240,000 15,390,000
--------
$117,060,550
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Forest and Paper Products - 1.1%
Kimberly-Clark Corp. 360,000 $ 27,810,000
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Insurance - 6.1%
AFLAC, Inc 462,000 $ 13,802,250
American Re Corp. 32,000 1,436,000
CIGNA Corp. 294,000 34,655,250
CNA Financial Corp.* 75,000 7,725,000
MBIA, Inc. 128,000 9,968,000
Progressive Corp. - Ohio 585,000 27,056,250
St. Paul Cos., Inc. 300,000 16,050,000
Torchmark, Inc. 460,000 20,125,000
Transamerica Corp. 344,600 27,912,600
--------
$158,730,350
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Machinery - 3.4%
AGCO Corp. 200,000 $ 5,550,000
Case Corp. 271,100 13,012,800
Deere & Co., Inc. 466,200 18,648,000
Ingersoll Rand Co. 480,000 21,000,000
York International Corp. 570,000 29,497,500
--------
$ 87,708,300
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Medical and Health Products - 6.1%
American Home Products Corp. 237,400 $ 14,273,675
Baxter International, Inc. 250,000 11,812,500
Johnson & Johnson 660,000 32,670,000
Lilly (Eli) & Co. 229,766 14,934,790
Pfizer, Inc. 380,000 27,122,500
Rhone-Poulenc Rorer, Inc. 378,750 25,423,594
Warner-Lambert Co. 560,000 30,800,000
--------
$157,037,059
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9
<PAGE>
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U.S. Stocks - continued
Medical and Health Technology and Services - 1.8%
Medtronic, Inc. 150,000 $ 8,400,000
Pacificare Health Systems, Inc., "B"* 231,000 15,650,250
St. Jude Medical, Inc. 400,000 13,400,000
United Healthcare Corp. 202,000 10,201,000
--------
$ 47,651,250
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Metals and Minerals - 0.7%
Aluminum (Cos.) of America 75,000 $ 4,303,125
Phelps Dodge Corp. 240,000 14,970,000
--------
$ 19,273,125
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Oil Services - 0.3%
Schlumberger Ltd. 94,000 $ 7,919,500
- -----------------------------------------------------------------------------
Oils - 4.8%
Amoco Corp. 120,000 $ 8,685,000
Chevron Corp. 120,000 7,080,000
Exxon Corp. 328,000 28,495,000
Mobil Corp. 445,000 49,895,625
Texaco, Inc. 179,600 15,063,950
USX-Marathon Group 800,000 16,100,000
--------
$125,319,575
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Photographic Products - 1.0%
Eastman Kodak Co. 320,000 $ 24,880,000
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Pollution Control - 0.2%
WMX Technologies, Inc. 150,000 $ 4,912,500
- -----------------------------------------------------------------------------
Printing and Publishing - 1.7%
Gannett Co., Inc. 175,000 $ 12,381,250
Tribune Co., Inc. 420,000 30,502,500
--------
$ 42,883,750
- -----------------------------------------------------------------------------
Railroads - 3.7%
Burlington Northern (Santa Fe) Railroad
Co. 18,000 $ 1,455,750
CSX Corp. 832,000 40,144,000
Conrail, Inc. 380,000 25,222,500
Illinois Central Corp. 600,000 17,025,000
Norfolk Southern Corp. 150,000 12,712,500
--------
$ 96,559,750
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Restaurants and Lodging
Promus Hotel Corp.* $
19,500 577,688
- -----------------------------------------------------------------------------
Special Products and Services - 0.3%
Stanley Works 300,000 $ 8,925,000
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10
<PAGE>
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U.S. Stocks - continued
Stores - 4.0%
Circuit City Stores, Inc. 420,000 $ 15,172,500
Home Depot, Inc. 270,000 14,580,000
Lowe's Cos., Inc. 400,000 14,450,000
May Department Stores Co. 505,000 22,093,750
Penney (J.C.), Inc. 360,000 18,900,000
Sears, Roebuck & Co. 225,000 10,940,625
TJX Companies, Inc. (The) 206,000 6,952,500
--------
$ 103,089,375
- -----------------------------------------------------------------------------
Supermarkets - 0.8%
Kroger Co.* 40,000 $ 1,580,000
Safeway, Inc.* 345,300 11,394,900
Vons Cos., Inc.* 200,000 7,475,000
--------
$ 20,449,900
- -----------------------------------------------------------------------------
Telecommunications - 0.4%
Lucent Technologies, Inc. 292,900 $ 11,093,588
- -----------------------------------------------------------------------------
Utilities - Electric - 1.6%
CMS Energy Corp. 42,000 $ 1,296,750
Cinergy Corp. 204,600 6,547,200
DPL, Inc. 209,500 5,106,563
FPL Group, Inc. 200,000 9,200,000
Illinova Corp. 46,000 1,322,500
Peco Energy Co. 200,000 5,200,000
Pinnacle West Capital Corp. 50,000 1,518,750
Portland General Electric Corp. 350,000 10,806,250
--------
$ 40,998,013
- -----------------------------------------------------------------------------
Utilities - Gas - 0.5%
Pacific Enterprises 180,000 $ 5,332,500
PanEnergy Corp. 250,000 8,218,750
--------
$ 13,551,250
- -----------------------------------------------------------------------------
Utilities - Telephone - 3.2%
AT&T Corp. 120,000 $ 7,440,000
Ameritech Corp. 204,000 12,112,500
Bell Atlantic Corp. 53,000 3,378,750
BellSouth Corp. 262,000 11,102,250
GTE Corp. 497,000 22,240,750
MCI Communications Corp. 323,700 8,294,813
Pacific Telesis Group 200,000 6,750,000
SBC Communications (NQB), Inc. 190,000 9,357,500
Sprint Corp. 72,500 3,045,000
--------
$ 83,721,563
- -----------------------------------------------------------------------------
Total U.S. Stocks $2,359,620,813
- -----------------------------------------------------------------------------
11
<PAGE>
- -----------------------------------------------------------------------------
Foreign Stocks - 5.0%
Hong Kong - 0.4%
Hong Kong Land Holdings Ltd.
(Real Estate)* 2,000,000 $ 4,500,000
Wharf Holdings (Real Estate) 1,400,000 5,010,206
--------
$ 9,510,206
- -----------------------------------------------------------------------------
Italy - 0.1%
Telecom Italia Mobile, S.p.A.
(Telecommunications) 700,000 $ 1,563,927
- -----------------------------------------------------------------------------
Japan - 0.9%
Bank of Tokyo-Mitsubishi (Finance) 320,800 $ 7,469,321
Canon, Inc. (Consumer Goods) 319,000 6,640,979
Takeda Chemical Industries (Chemicals)* 502,000 8,892,257
--------
$ 23,002,557
- -----------------------------------------------------------------------------
Netherlands - 0.4%
IHC Caland, NV (Transportation) 88,100 $ 4,337,104
Royal Dutch Petroleum Co. (Oils) 42,000 6,457,500
--------
$ 10,794,604
- -----------------------------------------------------------------------------
New Zealand - 0.2%
Lion Nathan Ltd. (Food and Beverage
Products) 2,000,000 $ 5,228,844
- -----------------------------------------------------------------------------
Singapore - 0.3%
Mandarin Oriental International Ltd.
(Restaurants and Lodging) 1,842,000 $ 2,578,800
Singapore Press Holdings Ltd.
(Publishing)* 250,000 4,908,910
--------
$ 7,487,710
- -----------------------------------------------------------------------------
South Korea - 0.3%
Korea Mobile Telecom, ADR
(Telecommunications)*## 484,000 $ 8,288,500
- -----------------------------------------------------------------------------
Sweden - 1.0%
Astra AB, "B" (Pharmaceuticals) 430,000 $ 18,757,736
Hennes & Mauritz, "B" (Retail) 24,250 2,251,132
Sparbanken Svergie AB (Finance) 420,100 5,453,374
Tornet Fastighets AB (Real Estate)* 42,010 342,421
--------
$ 26,804,663
- -----------------------------------------------------------------------------
Switzerland - 0.3%
Ciba-Geigy AG (Medical and Health
Products) 7,300 $ 8,895,326
- -----------------------------------------------------------------------------
United Kingdom - 1.1%
British Petroleum PLC, ADR (Oils) 15,500 $ 1,656,563
PowerGen PLC (Utilities - Electric) 1,956,800 14,246,981
PowerGen PLC, ADR (Utilities - Electric) 2,093,700 10,693,353
SmithKline Beecham PLC, ADR
(Medical and Health Products) 25,000 1,359,375
--------
$ 27,956,272
- -----------------------------------------------------------------------------
Total Foreign Stocks $129,532,609
- -----------------------------------------------------------------------------
12
<PAGE>
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $1,784,180,058) $2,489,153,422
- -----------------------------------------------------------------------------
Convertible Preferred Stock - 0.1%
=============================================================================
Atlantic Richfield Co. (Oils)
(Identified Cost, $2,970,000) 120,000 $ 2,925,000
- -----------------------------------------------------------------------------
Convertible Bonds - 0.9%
=============================================================================
Principal
Amount
(000
Omitted)
- -----------------------------------------------------------------------------
Costco Wholesale Corp., 5.75s, 2002
(Stores) $ 2,500 $ 2,287,500
Equitable (Cos.), Inc., 6.125s, 2024
(Insurance) 6,250 7,046,875
Roche Holdings, Inc., 0s, 2010
(Medical and Health Technology and
Services)## 20,512 8,666,320
Sandoz, 2s, 2002 (Chemicals)## 4,750 5,058,750
- -----------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $20,420,912) $ 23,059,445
- -----------------------------------------------------------------------------
Short-Term Obligations - 3.2%
=============================================================================
Federal Home Loan Mortgage Corp.,
due 7/01/96 - 7/22/96 $ 56,206 $ 56,108,041
Federal National Mortgage Association,
due 7/09/96 - 7/25/96 20,305 20,261,610
McDonald's Corp., due 7/03/96 7,000 6,997,927
- -----------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost and Value $ 83,367,578
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $1,890,938,568) $2,598,505,445
- -----------------------------------------------------------------------------
Other Assets, Less Liabilities (795,839)
=============================================================================
Net Assets - 100.0% $2,597,709,606
- -----------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
13
<PAGE>
Financial Statements
Statement of Assets and Liabilities (Unaudited)
=============================================================================
June 30, 1996
-----------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,890,938,568) $2,598,505,445
Cash 517,329
Foreign currency, at value (identified cost, $42,517) 42,444
Net receivable for forward foreign currency exchange
contracts sold 313,862
Receivable for investments sold 30,069,722
Receivable for Fund shares sold 5,049,992
Interest and dividends receivable 5,134,968
-----------
Total assets $2,639,633,762
===========
Liabilities:
Distributions payable $ 3,483,654
Payable for investments purchased 35,625,266
Payable for Trust shares reacquired 1,359,776
Payable to affiliates -
Management fee 41,503
Shareholder servicing agent fee 925,357
Distribution fee 25,577
Accrued expenses and other liabilities 463,023
-----------
Total liabilities $ 41,924,156
===========
Net assets $2,597,709,606
===========
Net assets consist of:
Paid-in capital $1,755,324,264
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 707,880,160
Accumulated undistributed net realized gain on investments
and foreign currency transactions 133,329,805
Accumulated undistributed net investment income 1,175,377
-----------
Total $2,597,709,606
===========
Shares of beneficial interest outstanding 186,394,183
===========
Class A shares:
Net asset value and redemption price per share
(net assets of $2,331,114,448 / 167,158,607 shares of
beneficial interest outstanding) $13.95
======
Offering price per share (100/94.25) $14.80
======
Class B shares:
Net asset value and offering price per share
(net assets of $266,595,158 / 19,235,576 shares of
beneficial interest outstanding) $13.86
======
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
14
<PAGE>
Statement of Operations (Unaudited)
==========================================================================
Six Months Ended June 30, 1996
- --------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 26,043,527
Interest 2,481,311
Foreign taxes withheld (363,608)
-----------
Total investment income $ 28,161,230
-----------
Expenses -
Management fee $ 2,806,387
Trustees' compensation 46,193
Shareholder servicing agent fee (Class A) 1,219,263
Shareholder servicing agent fee (Class B) 234,688
Distribution and service fee (Class A) 3,226,331
Distribution and service fee (Class B) 1,066,777
Custodian fee 278,161
Postage 153,564
Auditing fees 40,770
Printing 39,866
Legal fees 5,553
Miscellaneous 370,781
-----------
Total expenses $ 9,488,334
Fees paid indirectly (94,000)
Net expenses $ 9,394,334
-----------
Net investment income $ 18,766,896
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $134,559,285
Foreign currency transactions 2,169
-----------
Net realized gain on investments and foreign currency
transactions $134,561,454
-----------
Change in unrealized appreciation -
Investments $ 86,430,466
Translation of assets and liabilities in foreign
currencies 488,609
-----------
Net unrealized gain on investments $ 86,919,075
-----------
Net realized and unrealized gain on investments
and foreign currency $221,480,529
-----------
Increase in net assets from operations $240,247,425
===========
See notes to financial statements
15
<PAGE>
Statement of Changes in Net Assets
=============================================================================
Six Months
Ended
June 30, Year Ended
1996 December 31,
(Unaudited) 1995
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 18,766,896 $ 39,964,770
Net realized gain on investments and
foreign currency transactions 134,561,454 172,091,827
Net unrealized gain on investments and
foreign currency transactions 86,919,075 421,749,883
---------- --------------
Increase in net assets from operations $ 240,247,425 $ 633,806,480
---------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (16,601,975) $ (38,309,881)
From net investment income (Class B) (914,954) (1,554,192)
From net realized gain on investments and
foreign currency transactions (Class A) -- (158,264,565)
From net realized gain on investments and
foreign currency transactions (Class B) -- (12,389,102)
---------- --------------
Total distributions declared to
shareholders $ (17,516,929) $ (210,517,740)
---------- --------------
Trust share (principal) transactions -
Net proceeds from sale of shares $ 344,118,168 $ 286,048,738
Net asset value of shares issued to
shareholders in reinvestment of
distributions 10,869,112 154,187,632
Cost of shares reacquired (219,391,987) (227,698,069)
---------- --------------
Increase in net assets from Trust share
transactions $ 135,595,293 $ 212,538,301
---------- --------------
Total increase in net assets $ 358,325,789 $ 635,827,041
Net assets:
At beginning of period 2,239,383,817 1,603,556,776
---------- --------------
At end of period (including accumulated
undistributed net investment income and
accumulated distribution in excess of
net investment income of $1,175,377 and
$(75,463), respectively) $2,597,709,606 $2,239,383,817
========== ==============
See notes to financial statements
16
<PAGE>
Financial Highlights
=============================================================================
Six Months
Ended June 30,
1996
(Unaudited) 1995 1994 1993 1992
------------------------------------------------------------------------------
Class A
------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $12.71 $10.07 $11.50 $12.31 $13.87
----- ---- ---- ---- ------
Income from investment
operations# -
Net investment income $ 0.08 $ 0.25 $ 0.25 $ 0.39 $ 0.32
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions 1.21 3.67 (0.36) 0.86 0.69
----- ---- ---- ---- ------
Total from investment
operations $ 1.29 $ 3.92 $(0.11) $ 1.25 $ 1.01
----- ---- ---- ---- ------
Less distributions
declared to
shareholders -
From net investment
income+++ $(0.05) $(0.46) $(0.25) $(0.39) $(0.33)
From net realized gain on
investments and foreign
currency transactions -- (0.82) (1.05) (1.67) (2.22)
In excess of net realized
gain on investments and
foreign currency
transactions -- -- (0.02) -- --
From paid-in capital -- -- -- -- (0.02)
----- ---- ---- ---- ------
Total distributions
declared to
shareholders $(0.05) $(1.28) $(1.32) $(2.06) $(2.57)
----- ---- ---- ---- ------
Net asset value - end of
period $13.95 $12.71 $10.07 $11.50 $12.31
----- ---- ---- ---- ------
Total return@ 10.56%+++ 39.34% (1.02)% 10.03% 7.68%
Ratios (to average net
assets)/Supplemental
data:
Expenses## 0.71% + 0.70% 0.71% 0.68% 0.62%
Net investment income 1.62% + 2.13% 2.20% 3.04% 2.30%
Portfolio turnover 24% 54% 87% 41% 46%
Average commission rate### $ 0.05 -- -- -- --
Net assets at end of
period (000,000 omitted) $2,331 $2,074 $1,535 $1,626 $1,548
+ Annualized.
++ Not annualized.
+++ For the year ended December 31, 1994, the per share distribution in
excess of net investment income was $0.0004 for Class A shares.
# Per share data for the periods subsequent to December 31, 1992 is based
on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Trust's expenses
are calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years
beginning on or after September 1, 1995.
@ Total returns for Class A shares do not include the applicable sales
charge (except for reinvested dividends prior to January 2, 1991). If
the charge had been included, the results would have been lower.
See notes to financial statements
17
<PAGE>
Financial Highlights - continued
=============================================================================
1991 1990 1989 1988 1987
-----------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period $12.28 $13.55 $11.22 $11.26 $12.09
---- ---- ---- ---- ------
Income from investment
operations -
Net investment income $ 0.38 $ 0.43 $ 0.45 $ 0.40 $ 0.38
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions 2.95 (0.45) 3.56 0.76 0.57
---- ---- ---- ---- ------
Total from investment
operations $ 3.33 $(0.02) $ 4.01 $ 1.16 $ 0.95
---- ---- ---- ---- ------
Less distributions
declared to
shareholders -
From net investment
income $(0.39) $(0.43) $(0.45) $(0.39) $(0.39)
From net realized gain on
investments and
foreign currency
transactions (1.32) (0.82) (1.22) (0.81) (1.39)
In excess of net realized
gain on investments
and foreign currency
transactions 0.00++ -- -- -- --
From paid-in capital (0.03) -- (0.01) 0.00** --
---- ---- ---- ---- ------
Total distributions
declared to
shareholders $(1.74) $(1.25) $(1.68) $(1.20) $(1.78)
---- ---- ---- ---- ------
Net asset value - end of
period $13.87 $12.28 $13.55 $11.22 $11.26
---- ---- ---- ---- ------
Total return@ 27.41% (0.33)% 35.80% 10.12% 7.25%
Ratios (to average net
assets)/Supplemental
data:
Expenses 0.62% 0.47% 0.50% 0.55% 0.45%
Net investment income 2.73% 3.28% 3.40% 3.39% 2.63%
Portfolio turnover 44% 26% 20% 19% 23%
Net assets at end of
period (000,000 omitted) $1,530 $1,265 $1,382 $1,139 $1,177
++ For the year ended December 31, 1991, the per share distribution in excess
of net realized gain on investments was $0.0041.
** For the year ended December 31, 1988, the per share distribution from
paid-in capital was $0.001.
@ 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.
See notes to financial statements
18
<PAGE>
Financial Highlights - continued
=============================================================================
Six Months
Ended June 30,
1996
(Unaudited) 1995 1994 1993*
- -----------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of
period $12.63 $ 10.03 $11.48 $13.02
------ ---- ---- ------
Income from investment operations
-
Net investment income $ 0.05 $ 0.15 $ 0.15 $ 0.04
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.18 3.64 (0.36) 0.32
------ ---- ---- ------
Total from investment
operations $ 1.23 $ 3.79 $(0.21) $ 0.36
------ ---- ---- ------
Less distributions declared to shareholders -
From net investment income*** $(0.05) $ (0.37) $(0.17) $(0.23)
From net realized gain on
investments and foreign
currency transactions -- (0.82) (1.05) (1.67)
In excess of net realized gain
on investments and foreign
currency transactions -- -- (0.02) --
Total distributions declared to
shareholders $(0.05) $ (1.19) $(1.24) $(1.90)
------ ---- ---- ------
Net asset value - end of period $13.86 $ 12.63 $10.03 $11.48
------ ---- ---- ------
Total return 10.16% +++ 38.05% (1.88)% 2.62%
Ratios (to average net assets)/Supplemental
data:
Expenses## 1.52%+ 1.56% 1.61% 1.56%
Net investment income 0.85%+ 1.25% 1.37% 1.05%
Portfolio turnover 24% 54% 87% 41%
Average commission rate### $ 0.05 -- -- --
Net assets at end of period
(000,000 omitted) $267 $165 $69 $15
+ Annualized.
+++ Not annualized.
* For the period from the commencement of offering of Class B shares,
September 7, 1993 to December 31, 1993.
*** For the year ended December 31, 1994, the per share distribution in
excess of net investment income was $0.0003 for Class B shares.
## For fiscal years ending after September 1, 1995, the Trust's expenses are
calculated without reduction for fees paid indirectly.
### Average commission rate is calculated for funds with fiscal years
beginning on or after September 1, 1995.
See notes to financial statements
19
<PAGE>
Notes to Financial Statements (Unaudited)
(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 an open-end
management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates. Investments in foreign securities are vulnerable
to the effects of changes in the relative values of the local currency and
the U.S. dollar and to the effects of changes in each country's legal,
political and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are
not available are valued at last quoted bid prices. Debt securities (other
than short-term obligations which mature in 60 days or less), including
listed issues and forward contracts, are valued on the basis of valuations
furnished by dealers or by a pricing service with consideration to factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and
other market data, without exclusive reliance upon exchange or
over-the-counter prices. Short-term obligations, which mature in 60 days or
less, are valued at amortized cost, which approximates market value.
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.
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.
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
20
<PAGE>
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 financial statement
and tax reporting purposes as required by federal income tax regulations.
Dividend income is recorded on the ex-dividend date for dividends received in
cash. Dividend payments received in additional securities are recorded on the
ex-dividend date in an amount equal to the value of the security on such
date.
Fees Paid Indirectly - The Trust's custodian bank calculates its fee based on
the Trust's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based upon a
formula developed to measure the value of cash deposited with the custodian
by the Trust. This amount is shown as a reduction of expenses on the
Statement of Operations.
MFS has directed certain portfolio trades to brokers who paid a portion of
the Trust's expenses. For the period, the Trust's expenses were reduced by
$17,808 under this agreement.
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 taxable
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
21
<PAGE>
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 tax return
of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are
classified as distributions in excess of net investment income or accumulated
net realized gains.
Multiple Classes of Shares of Beneficial Interest - The Trust offers both
Class A and Class B shares. The classes of shares differ in their respective
shareholder servicing agent, distribution and service fees. 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.
(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 is computed daily and paid monthly at an effective annual rate
of 0.23% of average daily net assets.
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 and Mr.
Bailey. Included in Trustees' compensation is a net periodic pension expense
of $14,068 for the period ended June 30, 1996.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$368,721 as its portion of the sales charge on sales of Class A shares of the
Trust.
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% per annum of its average daily net assets attributable to Class A
shares 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,
22
<PAGE>
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 retains the service fee for accounts not
attributable to a securities dealer which amounted to $703,205 for the period
ended June 30, 1996. The Trust is currently paying distribution fees in the
amount of 0.075%. Payment of the remaining portion of the 0.10% per annum
distribution fee equal to 0.025% per annum will commence on such date as the
Trustees of the Trust may determine. The 0.25% per annum service fee is
reduced to 0.15% per annum for shares purchased prior to January 2, 1991.
Fees incurred under the distribution plan during the period ended June 30,
1996 were 0.295% of average daily net assets attributable to Class A shares
on an annualized basis.
The Class B distribution plan provides that the Trust will pay MFD a monthly
distribution fee of 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. The service fee is currently suspended on Class B shares held
over one year. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class
B shares. The service fee is intended to be additional consideration for
services rendered by the dealer with respect to Class B shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $13,877 for Class B shares for the period ended June 30, 1996.
Fees incurred under the distribution plan during the period ended June 30,
1996 were 1.00% of average daily net assets attributable to Class B shares on
an annualized basis.
Purchases over $1 million of Class A shares are subject to a contingent
deferred sales charge in the event of a shareholder redemption within 12
months following such purchase. A contingent deferred sales charge is imposed
on shareholder redemptions of Class B shares in the event of a shareholder
redemption within six years of purchase. MFD receives all contingent deferred
sales charges. Contingent deferred sales charges imposed during the period
ended June 30, 1996 were $15,343 and $120,847 for Class A and Class B shares,
respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the average daily net assets of each class of shares at an
effective annual rate of up to 0.15% and up to 0.22% attributable to Class A
and Class B shares, respectively.
23
<PAGE>
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, aggregated $681,825,195 and $576,397,294,
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 $1,890,938,568
===========
Gross unrealized
appreciation $ 722,468,589
Gross unrealized
depreciation (14,901,712)
-----------
Net unrealized appreciation $ 707,566,877
===========
(5) Shares of Beneficial Interest
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Trust shares were as follows:
Class A Shares Six Months Ended
June 30, 1996 Year Ended
(Unaudited) December 31, 1995
---------------------------------------------------------
Shares Amount Shares Amount
==============================================================================
Shares sold 18,336,340 $ 246,642,663 17,087,194 $ 204,278,899
Shares issued to
shareholders in
reinvestment of
distributions 731,126 10,003,801 11,238,706 141,190,710
Shares reacquired (15,181,300) (204,078,621) (17,466,366) (207,986,831)
--------- --------- --------- -----------
Net increase 3,886,166 $ 52,567,843 10,859,534 $ 137,482,778
========= ========= ========= ===========
Class B Shares Six Months Ended
June 30, 1996 Year Ended
(Unaudited) December 31, 1995
---------------------------------------------------------
Shares Amount Shares Amount
==============================================================================
------------------------------------------------------------------------------
Shares sold 7,263,271 $ 97,475,505 6,848,511 $ 81,769,839
Shares issued to
shareholders in
reinvestment of
distributions 63,316 865,311 1,037,328 12,996,922
Shares reacquired (1,140,918) (15,313,366) (1,667,587) (19,711,238)
--------- --------- --------- -----------
Net increase 6,185,669 $ 83,027,450 6,218,252 $ 75,055,523
========= ========= ========= ===========
(6) Line of Credit
The Trust entered into an agreement which enables it to participate with
other funds managed by MFS in an unsecured line of credit with a bank which
permits borrowings up to $350 million, collectively. Borrowings may be made
to temporarily finance the repurchase of 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 period ended
June 30, 1996 was $13,800.
24
<PAGE>
(7) Financial Instruments
The Trust trades financial instruments with off-balance sheet risk in the
normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates.
These financial instruments include forward foreign currency exchange
contracts. The notional or contractual amounts of these instruments represent
the investment the Trust has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered. A summary
of obligations under these financial instruments at June 30, 1996, is as
follows:
Forward Foreign Currency Exchange Contracts
Net
In Unrealized
Contracts Exchange Contracts Appreciation
Settlement Date to Deliver for at Value (Depreciation)
================================================================================
Sales 1/22/97 JPY 1,414,980,000 $14,000,000 $13,297,982 $702,018
8/02/96 SEK 88,704,000 12,996,923 13,385,079 (388,156)
-------- -------- -----------
$26,996,923 $26,683,061 $313,862
======== ======== ===========
At June 30, 1996, the Trust had sufficient cash and/or securities to cover
any commitments under these contracts.
JPY = Japanese Yen SEK = Swedish Kronor
============
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanies by a current prospectus.
25
<PAGE>
It's Easy to Contact Us
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Account Information:
Call 1-800-MFS-TALK (1-800-637-8255)
anytime.
Investment Outlook:
Call 1-800-637-4458 anytime for the MFS
outlook on the bond and stock markets.
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Account Service Literature:
Call 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
Product Information:
Call 1-800-637-2929 any business day
from 9 a.m. to 5 p.m. Eastern time.
Service for the Hearing Impaired:
Call 1-800-637-6576 any business day
from 9 a.m. to 5 p.m. Eastern time (TDD
required).
[graphic icon: envelope] MFS Mailing Addresses
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
Web Site:
http: / / www.mfs.com
26
<PAGE>
MFS Investment Opportunities
MFS Family of Funds(R), falls into the eight general categories below. All
offer full-time professional management, a diversified portfolio, and a wide
array of shareholder services.
Stock funds seek growth of capital rather than income through investments in
stocks.
Stock and bond funds seek current income and growth of capital through
investments in both stocks and bonds.
Bond funds seek current income through investments in debt securities.
Limited-maturity bond funds seek current income and preservation of capital
through investments in debt securities with remaining maturities of five
years or less.
World funds seek stock, balanced, and bond fund objectives through
investments in U.S. and foreign stocks and bonds.
National tax-free bond funds seek current income exempt from federal income
tax through investments in debt securities issued by states and
municipalities.(1)
State tax-free bond funds seek current income exempt from federal and state
income taxes through investments in debt securities issued by a single state
and its municipalities.(1)
Money market funds seek preservation of capital and current income through
investments in short-term debt securities.(2)
To determine which MFS fund may be appropriate for you, please contact your
financial adviser, who can help you relate these investment opportunities to
your financial goals. If you prefer, you may call us for literature(3) on MFS
products and services: 1-800-637-2929, from 9 a.m. to 5 p.m. Eastern time any
business day (leave a message any time).
(1) A small portion of the income may be subject to federal, state and/or
alternative minimum
tax.
(2) Investments in money market funds are not issued or guaranteed by the
U.S. government and there is no assurance that the fund will be able to
maintain a stable net asset value.
(3) Including a prospectus containing more complete information including
charges and expenses. Read the prospectus carefully before investing.
27
<PAGE>
The MFS Family of Funds(R)
America's Oldest Mutual Fund Group
The members of the MFS Family of Funds are grouped below according to the
types of securities in their portfolios. For free prospectuses containing
more complete information, including the exchange privilege and all charges
and expenses, please contact your financial adviser or call MFS at
1-800-637-2929 any business day from 9 a.m. to 5 p.m. Eastern time (or, leave
a message anytime). This material should be read carefully before investing
or sending money.
Stock World
================================= =======================================
Massachusetts Investors Trust MFS(R)/Foreign & Colonial Emerging
--------------------------------- Markets Equity Fund
Massachusetts Investors Growth ---------------------------------------
Stock Fund MFS(R)/Foreign & Colonial International
--------------------------------- Growth Fund
MFS(R) Capital Growth Fund ---------------------------------------
--------------------------------- MFS(R)/Foreign & Colonial International
MFS(R) Emerging Growth Fund Growth and Income Fund
--------------------------------- ---------------------------------------
MFS(R) Gold & Natural Resources MFS(R) World Asset Allocation Fund(SM)
Fund ---------------------------------------
--------------------------------- MFS(R) World Equity Fund
MFS(R) Growth Opportunities Fund ---------------------------------------
--------------------------------- MFS(R) World Governments Fund
MFS(R) Managed Sectors Fund ---------------------------------------
--------------------------------- MFS(R) World Growth Fund
MFS(R) OTC Fund ---------------------------------------
--------------------------------- MFS(R) World Total Return Fund
MFS(R) Research Fund ---------------------------------------
---------------------------------
MFS(R) Value Fund National Tax-Free Bond
--------------------------------- =======================================
MFS(R) Municipal Bond Fund
Stock and Bond ---------------------------------------
================================= MFS(R) Municipal High Income Fund
MFS(R) Total Return Fund (closed to new investors)
--------------------------------- ---------------------------------------
MFS(R) Utilities Fund MFS(R) Municipal Income Fund
--------------------------------- ---------------------------------------
Bond State Tax-Free Bond
================================= =======================================
MFS(R) Bond Fund Alabama, Arkansas, California, Florida,
--------------------------------- Georgia, Maryland, Massachusetts,
MFS(R) Government Mortgage Fund Mississippi, New York, North Carolina,
--------------------------------- Pennsylvania, South Carolina, Tennessee,
MFS(R) Government Securities Fund Virginia, West Virginia
--------------------------------- ---------------------------------------
MFS(R) High Income Fund
--------------------------------- Money Market
MFS(R) Intermediate Income Fund =======================================
--------------------------------- MFS(R) Cash Reserve Fund
MFS(R) Strategic Income Fund ---------------------------------------
--------------------------------- MFS(R) Government Money Market Fund
---------------------------------------
Limited Maturity Bond MFS(R) Money Market Fund
================================= ---------------------------------------
MFS(R) Government Limited Maturity
Fund
---------------------------------
MFS(R) Limited Maturity Fund
---------------------------------
MFS(R) Municipal Limited Maturity
Fund
---------------------------------
28
<PAGE>
Massachusetts Investors Trust
Trustees
A. Keith Brodkin* - Chairman and President
Richard B. Bailey* - Private Investor; Former
Chairman and Director (until 1991), Massachusetts
Financial Services Company; Director, Cambridge
Bancorp; Director, Cambridge Trust Company
Peter G. Harwood - Private Investor
J. Atwood Ives - Chairman and Chief Executive
Officer, Eastern Enterprises
Lawrence T. Perera - Partner, Hemenway & Barnes
William J. Poorvu - Adjunct Professor, Harvard
University Graduate School of Business
Administration
Charles W. Schmidt - Private Investor
Arnold D. Scott* - Senior Executive Vice
President, Director and Secretary, Massachusetts
Financial Services Company
Jeffrey L. Shames* - President and Director,
Massachusetts Financial Services Company
Elaine R. Smith - Independent Consultant
David B. Stone - Chairman, North American
Management Corp. (investment advisers)
Investment Adviser
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116-3741
Distributor
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
Portfolio Managers
Mitchell D. Dynan*
John D. Laupheimer Jr.*
Kevin R. Parke*
Treasurer
W. Thomas London
Assistant Treasurer
James O. Yost*
Secretary
Stephen E. Cavan*
*Affiliated with the Investment Adviser
Assistant Secretary
James R. Bordewick, Jr.*
Custodian
State Street Bank and Trust Company
Investor Information
For MFS stock and bond market outlooks, call toll
free: 1-800-637-4458 anytime from a touch-tone
telephone.
For information on MFS mutual funds, call your
financial adviser or, for an information kit, call
toll free: 1-800-637-2929 any business day from 9
a.m. to 5 p.m. Eastern time (or leave a message
anytime).
Investor Service
MFS Service Center, Inc.
P.O. Box 2281
Boston, MA 02107-9906
For general information, call toll free:
1-800-225-2606 any business day from
8 a.m to 8 p.m. Eastern time.
For service to speech- or hearing-impaired, call
toll free: 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use this service,
your phone must be equipped with a
Telecommunications Device for the Deaf.)
For share prices, account balances and
exchanges, call toll free: 1-800-MFS-TALK
(1-800-637-8255) anytime from a touch-tone
telephone.
Web Site: http: / / www.mfs.com
- --------------------------------------------------
[DALBAR seal] For the second year in
DALBAR a row, MFS earned
MFS #1 MFS a #1 ranking in
DALBAR DALBAR, Inc.'s
TOP-RATED SERVICE Broker/Dealer Survey,
Main Office
Operations Service
Quality category. The firm
achieved a 3.49 overall score -- on a scale of
1 to 4 -- in the 1995 survey. A total of 71 firms
responded, offering input on the quality of service
they receive from 36 mutual fund companies
nationwide. The survey contained questions
about service quality in 17 categories, including
"knowledge of phone service contacts," "accuracy
of transaction processing," and "overall ease of
doing business with the firm."
- --------------------------------------------------
29
<PAGE>
[Back cover]
Massachusetts
Investors Trust
500 Boylston Street
Boston, MA 02116
[MFS logo]
THE FIRST NAME IN MUTUAL FUNDS
Dalbar seal:
DALBAR MFS #1
TOP-RATED SERVICE
Bulk Rate
U.S. Postage
P A I D
Permit #55638
Boston, MA
MIT-3 8/96 150M 12/212
<PAGE>
[Front cover]
[MFS logo]
THE FIRST NAME IN MUTUAL FUNDS
Semiannual Report
June 30, 1996
Massachusetts Investors Trust
[Graphic representation of two people talking in an office,
in front of a large picture window]
