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MASSACHUSETTS INVESTORS TRUST
Supplement to the May 1, 1996 Prospectus and Statement of Additional
Information
The following information should be read in conjunction with the Fund's
Prospectus and Statement of Additional Information ("SAI") dated May 1, 1996,
and contains a description of Class C shares.
EXPENSE SUMMARY
Shareholder Transaction Expenses: Class A Class B Class C
Maximum Initial Sales Charge
Imposed on Purchases of Fund
Shares (as a percentage of
offering price) 5.75% 0.00% 0.00%
Maximum Contingent Deferred
Sales Charge (as a percentage of
original purchase price or
redemption proceeds, as applicable) See Below(1) 4.00% 1.00%
Annual Operating Expenses of the Fund (as a percentage of average net assets):
Management Fees 0.26 % 0.26% 0.26%
Rule 12b-1 Fees 0.315%(2) 1.00%(3) 1.00%(3)
Other Expenses(4) 0.20 % 0.30% 0.23%(5)
Total Operating Expenses 0.775% 1.56% 1.49%
(1) Purchases of $1 million or more and certain purchases by retirement plans
are not subject to an initial sales charge; however, a contingent deferred
sales charge (a "CDSC") of 1.00% will be imposed on such purchases in the
event of certain redemption transactions within one year following such
purchases. See "Purchases" in the Prospectus.
(2) 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. The Fund is currently paying distribution fees in the amount of
0.075% per annum. 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.
Distribution expenses paid under this Plan, together with the initial sales
charge, may cause long-term shareholders to pay more than the maximum sales
charge that would have been permissible if imposed entirely as an initial
sales charge. See "Distribution Plans" in the Prospectus.
(3) The Fund has adopted separate Distribution Plans for its Class B and its
Class C shares in accordance with Rule 12b-1 under the 1940 Act, which
provide that the Fund will pay distribution/service fees aggregating up to
(but not necessarily all of) 1.00% per annum of the average daily net
assets attributable to the Class B shares under the Class B Distribution
Plan and Class C shares under the Class C Distribution Plan. See
"Distribution Plans" below and in the Prospectus. Distribution expenses
paid under these Plans, together with any CDSC payable upon redemption of
Class B and Class C shares, may cause long-term shareholders to pay more
than the maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
(4) The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund with its
custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Fund's expenses). Any such fee reductions are not
reflected under "Other Expenses."
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(5) Except for the shareholder servicing agent fee component, "Other Expenses"
is based on Class A expenses incurred during the fiscal year ended December
31, 1995. The shareholder servicing agent fee component of "Other Expenses"
is a predetermined percentage based upon the Fund's net assets attributable
to each class.
Example of Expenses
An investor would pay the following dollar amounts of expenses on a
$1,000 investment in the Fund, assuming (a) a 5% annual return and (b)
redemption at the end of each of the time periods indicated (unless otherwise
noted):
Period Class A Class B Class C
(1) (1)
1 year $65 $ 56 $ 16 $25 $15
3 years 81 79 49 47 47
5 years 98 105 85
10 years 148 165(2) 165(2)
(1) Assumes no redemption.
(2) Class B shares convert to Class A shares approximately eight years after
purchase; therefore, years nine and ten reflect Class A expenses.
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 Fund
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.
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THE FUND
Three 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 up to a maximum of 5.75% of the offering price (or a CDSC of 1.00%
upon redemption during the first year in the case of purchases of $1 million or
more and certain purchases by retirement plans) and subject to an annual
distribution fee and service fee up to a maximum of 0.35% per annum. Class B
shares are offered at net asset value without an initial sales charge but are
subject to a CDSC upon redemption (declining from 4.00% during the first year to
0% after six years) and an annual distribution fee and service fee up to a
maximum of 1.00% per annum; Class B shares will convert to Class A shares
approximately eight years after purchase. Class C shares are offered at net
asset value without an initial sales charge but are subject to a CDSC of 1.00%
upon redemption during the first year and an annual distribution fee and service
fee up to a maximum of 1.00% per annum. Class C shares do not convert to any
other class of shares of the Fund.
INFORMATION CONCERNING SHARES OF THE FUND
Purchases
The Fund offers three classes of shares which bear sales charges and
distribution fees in different forms and amounts. Class A and Class B shares are
described in the Prospectus and SAI, and Class C shares are described below.
Class C Shares: Class C shares are offered at net asset value without
an initial sales charge but are subject to a CDSC of 1.00% upon redemption
during the first year. The maximum investment in Class C shares is up to $1
million per transaction.
The CDSC imposed is assessed against the lesser of the value of the
shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. No CDSC is assessed against
shares acquired through the automatic reinvestment of dividend or capital gain
distributions. In certain circumstances, the CDSC imposed upon redemption of
Class C shares is waived. Circumstances under which sales charges imposed on
Class A and Class B shares are waived are described in the Prospectus. The CDSC
imposed upon redemption of Class C shares is waived in the same circumstances
that apply to the waiver of the Class B CDSC. See "Redemptions and Repurchases -
Contingent Deferred Sales Charge" below for further discussion of the CDSC.
MFS Fund Distributors, Inc. ("MFD") will pay dealers 1.00% of the
purchase price of Class C shares purchased through dealers and, as compensation
therefor, MFD will retain the 1.00% per annum distribution and service fee paid
under the Class C Distribution Plan by the Fund to MFD for the first year after
purchase (see "Distribution Plans" below). 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 Class C shares sold by such dealers during a
specified sales period.
Class C shares are not currently available for purchase by any
retirement plan qualified under Section 401(a) or 403(b) of the Internal Revenue
Code of 1986, as amended (the "Code"), if the retirement plan and/or the
sponsoring organization subscribe to the MFS FUNDamental 401(k) Plan or another
similar recordkeeping program made available by the Shareholder Servicing Agent.
Exchanges
Some or all of the Class C 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 Class C shares of any other MFS Fund in the MFS Family of Funds
(the "MFS Funds") at net asset value (if available for sale). No CDSC will be
imposed in connection with an exchange from Class C shares of the Fund to any
other MFS Fund; however, the holding period for purposes of calculating the CDSC
will carry over to the acquired shares.
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Redemptions and Repurchases
Contingent Deferred Sales Charge: Investments in Class C shares
("Direct Purchase") will be subject to a 1.00% CDSC upon redemption for a period
of 12 months. Purchases of Class C shares made during a calendar month,
regardless of when during the month the investment occurred, will age one year
at the close of business on the last day of such month in the following calendar
year. Prior to April 1, 1996, Class C shares of the MFS Funds were not subject
to a CDSC upon redemption. In no event will Class C shares of the MFS Funds
purchased prior to this date be subject to a CDSC. For the purpose of
calculating the CDSC upon redemption of shares acquired in an exchange on or
after April 1, 1996, 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 (if such original purchase occurred prior to April 1, 1996, then no CDSC
would be imposed upon such a redemption).
At the time of a redemption, the amount by which the value of a
shareholder's account represented by Direct Purchases exceeds the sum of 12
months 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 dividend or capital gain distributions ("Reinvested
Shares"). Therefore, at the time of redemption of Class C shares, (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 made
which will result in any such charge being imposed at the lowest possible rate.
The applicability of a CDSC for Class C shares will be unaffected by
exchanges or transfers of registration, except as described in the Prospectus
for Class B shares.
Reinstatement Privilege: Class C 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 Class
C shares credited for any CDSC paid are then redeemed within 12 months of the
initial purchase, a CDSC will be imposed upon redemption. Such purchases under
the Reinstatement Privilege are subject to all limitations in the SAI regarding
the privilege.
Distribution Plans
The Trustees have adopted separate Distribution Plans for Class A,
Class B and Class C shares pursuant to Section 12(b) of the 1940 Act and Rule
12b-1 thereunder, after having concluded that there is a reasonable likelihood
that the Distribution Plans would benefit the Fund and its shareholders. The
Distribution Plans for Class A and Class B shares are described in the
Prospectus (see "Distribution Plans" therein). The Distribution Plan for Class C
shares is described below.
The Class C Distribution Plan provides that the Fund may pay MFD a
service fee of up to 0.25% per annum of the average daily net assets
attributable to Class C shares in order that MFD may pay expenses on behalf of
the Fund relating to the servicing of Class C shares. The service fee is used by
MFD to compensate dealers which enter into a sales agreement with MFD in
consideration for all personal services and/or account maintenance services
rendered by the dealer with respect to Class C shares owned by investors for
whom such dealer is the dealer or holder of record. MFD may from time to time
reduce the amount of service fees paid for shares sold prior to a certain date.
Service fees may be reduced for a 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. 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 service fees 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 to shareholder accounts.
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The Class C Distribution Plan also provides that the Fund may pay MFD a
distribution fee equal to 0.75% per annum of the Fund's average daily net assets
attributable to Class C shares as partial consideration for distribution
services performed and expenses incurred in the performance of MFD's obligations
under its distribution agreement with the Fund. See "Management of the Fund -
Distributor" in the SAI. While the amount of compensation received by MFD in the
form of distribution fees during any year may be more or less than the expense
incurred by MFD under its distribution agreement with the Fund, the Fund is not
liable to MFD for any losses MFD may incur in performing services under its
distribution agreement with the Fund.
As discussed under the caption "Purchases" above, Class C shares are
offered at net asset value without an initial sales charge but are subject to a
CDSC of 1.00% upon redemption during the first year. MFD will pay a commission
to dealers of 1.00% of the purchase price of Class C shares purchased through
dealers at the time of purchase. In compensation for this 1.00% commission paid
by MFD to dealers, MFD will retain the 1.00% per annum distribution and service
fees paid by the Fund with respect to such shares for the first year after
purchase, and dealers will become eligible to receive from MFD the ongoing 1.00%
per annum distribution and service fees paid by the Fund to MFD with respect to
such shares commencing in the thirteenth month following purchase.
Fees payable under the Class C Distribution Plan are charged to, and
therefore reduce, income allocated to Class C shares.
Distributions
Distributions paid by the Fund with respect to Class A shares will
generally be greater than those paid with respect to Class B and Class C shares
because expenses attributable to Class B and Class C shares will generally be
higher.
Description of Shares, Voting Rights and Liabilities
The Fund has three classes of shares entitled Class A, Class B and
Class C Shares of Beneficial Interest.
Performance Information
Total rate of return quotations for Class C shares, if quoted for
periods of one year or less, will give effect to the imposition of the 1.00%
CDSC assessed upon redemption of Class C shares during the first year. Such
total rate of return quotations may be accompanied by quotations which do not
reflect the deduction of the CDSC, and will thus be higher. Yield and
distribution rate calculations for Class C shares assume no CDSC is paid.
SHAREHOLDER SERVICES
Investment and Withdrawal Programs-
Letter of Intent: Purchases of Class C shares will apply toward
completion of a Letter of Intent with respect to Class A shares. See the
Prospectus for further information on the Letter of Intent.
Right of Accumulation: The current offering price value of an
investor's holdings of Class C shares will apply toward cumulative quantity
discounts on purchases of Class A shares. See the Prospectus for further
information on the Right of Accumulation.
Systematic Withdrawal Plan: The aggregate withdrawals of Class C shares
in any year pursuant to a Systematic Withdrawal Plan ("SWP") will not be subject
to a CDSC and generally are limited to 10% of the value of the account at the
time of establishment of the SWP.
The date of this Supplement is July 1, 1996.
