<PAGE>
[LOGO] M F S(SM) Semiannual Report
INVESTMENT MANAGEMENT June 30, 1997
MASSACHUSETTS INVESTORS TRUST
[Graphic omitted]
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman ................................................... 1
Portfolio Managers' Overview ............................................... 2
Portfolio Managers' Profiles ............................................... 3
Fund Facts ................................................................. 4
Performance Summary ........................................................ 4
Portfolio Concentration .................................................... 6
Portfolio of Investments ................................................... 7
Financial Statements ....................................................... 14
Notes to Financial Statements .............................................. 21
The MFS Family of Funds(R) ................................................. 28
Trustees and Officers ...................................................... 29
HIGHLIGHTS
o FOR THE SIX MONTHS ENDED JUNE 30, 1997, CLASS A SHARES OF THE TRUST
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 18.93%, CLASS B AND CLASS C
SHARES 18.47%, AND CLASS I SHARES 20.19%. (SEE PERFORMANCE SUMMARY FOR
MORE INFORMATION.)
o THE TRUST SLIGHTLY UNDERPERFORMED THE STANDARD & POOR'S 500 COMPOSITE
INDEX DURING THE PAST SIX MONTHS AS FOUR SECTORS -- ENERGY, HEALTH CARE,
INDUSTRIAL GOODS AND SERVICES, AND TRANSPORTATION -- LAGGED THE INDEX,
ALTHOUGH THE COMPANIES HELD IN THE TRUST IN EACH OF THESE SECTORS
PERFORMED WELL.
o SEVERAL COMPANIES, INCLUDING DU PONT, AIR PRODUCTS & CHEMICALS, AND
PRAXAIR, HAVE ENHANCED THE TRUST'S RETURNS AS THESE COMPANIES HAVE
ACHIEVED STRONG STOCK PERFORMANCE THROUGH FOCUSED COST- SAVINGS EFFORTS
AND THE INTRODUCTION OF NEW, HIGHER-MARGIN PRODUCTS AND SERVICES.
o THE TRUST REMAINS UNDERWEIGHTED IN COMPANIES IN ENERGY, AUTOMOBILES AND
HOUSING, AND UTILITIES AND COMMUNICATIONS, WHOSE EARNINGS OUTLOOKS WE HAVE
DETERMINED REMAIN BLEAK.
LETTER FROM THE CHAIRMAN
[Graphic Omitted]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still uncomfortably
high. While some lenders are beginning to tighten standards to address this
problem, consumer debt and personal bankruptcies continue to rise. Because of
this, plus slight declines in other indicators such as average hourly wages and
the corporate purchasing- managers index, we do not expect the rapid pace of
growth seen in the first quarter of 1997 to continue. While second-quarter
growth has slowed dramatically, we do expect the second half of the year to pick
up once again with real (inflation-adjusted) growth centering around 2 1/2%.
We have been surprised by the strength of the U.S. equity market in the first
half of 1997. Much of this is the result of continuing gains in corporate
earnings. Even as the current recovery enters its seventh year, more and more
U.S. companies have been exceeding MFS analysts' earnings estimates. In the
first quarter of 1997, for example, two-thirds of all companies met or exceeded
MFS analysts' expectations, a trend that could be an important indicator of the
U.S. equity market's future direction. However, while the near-term outlook for
profits is generally favorable, we believe equity valuations have risen to a
point where a cautious investment approach seems warranted.
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 14, 1997
<PAGE>
PORTFOLIO MANAGERS' OVERVIEW
Dear Shareholders:
For the six months ended June 30, 1997, Class A shares of the Trust provided a
total return of 18.93%, Class B and Class C shares 18.47%, and Class I shares
20.19%. These returns, which include the reinvestment of distributions but
exclude the effects of any sales charges, compare to a 20.60% return for the
Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index
of common stock total return performance, for the same period.
The Trust's underperformance versus the S&P 500 during the past six months can
be attributed to four sectors: energy, health care, industrial goods and
services, and transportation. The companies held in the Trust in each of these
sectors are leaders in their respective industries and, overall, performed well
during the period; however, they were unable to maintain the torrid pace of
equivalent sectors in the S&P 500. The Trust did outperform the S&P 500 in the
financial services, basic materials, technology, leisure, and utilities and
communications sectors during the period.
Sector weightings in the Trust have shifted slightly. Most notably, the health
care sector increased by 2.2%. Select pharmaceutical companies have introduced
new products that have been well received, resulting in strong revenue growth.
In addition, the slow-growth, low-inflation economic environment has allowed
choice banks and insurance companies to flourish during the first half of 1997,
and many of the banking and insurance stocks in the Trust have performed well.
Several companies within the chemical and specialty chemical industries,
including du Pont, Air Products & Chemicals, and Praxair, have also enhanced the
Trust's returns. These companies have achieved strong stock performance through
focused cost-savings efforts and the introduction of new, higher- margin
products and services that have complemented their existing product lines.
The Trust's weighting in the technology sector increased by 1.8% during the
past six months. Several stocks within this sector positively contributed to
performance, including Microsoft, BMC Software, Sun Microsystems, Sony Corp.,
and Lucent Technologies. These companies have developed what we regard as solid
competitive positions within their industries that have translated into
successful stock performance. We believe that the earnings outlook for all of
the technology companies held in the Trust remains strong.
The Trust remains underweighted in energy, automobiles and housing, and
utilities and communications. While individual stocks within these sectors can
positively contribute to the Trust's returns, we have determined that the
earnings outlook for many of the companies in these sectors remains bleak. We
have also reduced our exposure to the transportation sector based on an
uncertain profit picture.
The stocks in the Trust are selected after careful, in-depth, fundamental
analysis of individual companies' earnings outlooks. Although we incorporate
general economic forecasts into our decision-making process, ultimately, stocks
selected for the Trust represent companies that we believe offer the best
possibility for capital appreciation regardless of the economic outlook. These
companies typically demonstrate dominant and/or growing market share, quality
new and existing products, superior management teams, and strong financial
statements. However, we revisit weightings regularly to assure agreement within
the changing economic landscape.
Respectfully,
/s/ Mitchell D. Dynan /s/ John D. Laupheimer, Jr. /s/ Kevin R. Parke
Mitchell D. Dynan John D. Laupheimer, Jr. Kevin R. Parke
Portfolio Manager Portfolio Manager Portfolio Manager
PORTFOLIO MANAGERS' PROFILES
MITCHELL D. 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 D. LAUPHEIMER, JR., 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 1995. MR. LAUPHEIMER BECAME A PORTFOLIO MANAGER OF MASSACHUSETTS
INVESTORS TRUST IN 1992.
KEVIN R. 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 IN 1993, AND DIRECTOR OF
RESEARCH IN 1995. MR. PARKE BECAME A PORTFOLIO MANAGER OF MASSACHUSETTS
INVESTORS TRUST IN 1992.
FUND FACTS
STRATEGY: THE TRUST'S INVESTMENT OBJECTIVES ARE TO PROVIDE
REASONABLE CURRENT INCOME AND LONG-TERM GROWTH OF
CAPITAL AND INCOME.
COMMENCEMENT OF
INVESTMENT OPERATIONS: CLASS A: JULY 15, 1924
CLASS B: SEPTEMBER 7, 1993
CLASS C: JULY 2, 1996
CLASS I: JANUARY 2, 1997
SIZE: $4.6 BILLION NET ASSETS AS OF JUNE 30, 1997
<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, Class B, Class C, and Class I
shares for the applicable time periods.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF JUNE 30, 1997
CLASS A INVESTMENT RESULTS
(net asset value change including reinvested distributions)
<TABLE>
<CAPTION>
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +18.93% +35.43% +149.45% +290.70%
- --------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +35.43% + 20.06% + 14.60%
- --------------------------------------------------------------------------------------------------------------------------------
SEC Results -- +27.65% + 18.65% + 13.92%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +18.47% +34.48% +141.76% +278.60%
- --------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +34.48% + 19.31% + 14.24%
- --------------------------------------------------------------------------------------------------------------------------------
SEC Results -- +30.48% + 19.11% + 14.24%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +18.47% +33.56% +146.15% +285.62%
- --------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +33.56% + 19.74% + 14.45%
- --------------------------------------------------------------------------------------------------------------------------------
SEC Results -- +32.56% + 19.74% + 14.45%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS I INVESTMENT RESULTS
(net asset value change including reinvested distributions)
6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +20.19% +35.63% +149.87% +291.38%
- --------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +35.63% + 20.10% + 14.62%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 5.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase. Class I shares,
which became available on January 2, 1997, have no sales charge or Rule 12b-1
fees and are only available to certain institutional investors.
Class B and Class C share results include the performance and the operating
expenses (e.g., Rule 12b-1 fees) of the Fund's Class A shares for periods prior
to the commencement of offering of Class B and Class C shares. Because operating
expenses attributable to Class A shares are lower than those of Class B and
Class C shares, Class B and Class C share performance generally would have been
lower than Class A share performance. The Class A share performance included in
the Class B and Class C share SEC performance has been adjusted to reflect the
CDSC generally applicable to Class B and Class C shares rather than the initial
sales charge generally applicable to Class A shares.
Class I share results include the performance and the operating expenses (e.g.,
Rule 12b-1 fees) of the Fund's Class A shares for periods prior to the
commencement of offering of Class I shares. Beacuse operating expenses
attributable to Class A shares are greater than those of Class I shares, Class I
share performance generally would have been higher than Class A share
performance. The Class A share performance included in the Class I share
performance has been adjusted to reflect the fact that Class I shares have no
initial sales charge.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
PORTFOLIO CONCENTRATION AS OF JUNE 30, 1997
TOP 10 HOLDINGS
DU PONT (E.I.) DE NEMOURS & CO., INC. CIGNA CORP.
Diversified chemical company Multi-line insurance company
BRITISH PETROLEUM PLC, ADR EXXON CORP.
Oil exploration and production International oil and gas company
company
PHILIP MORRIS COS., INC.
NORWEST CORP. Tobacco, food, and beverage conglomerate
Commercial and retail banking
company COLGATE-PALMOLIVE CO.
Cosmetics and toiletries company
BRISTOL-MYERS SQUIBB CO.
Pharmaceutical products company FIRST BANK SYSTEMS, INC.
Bank with operations in Midwest and Rocky
GILLETTE CO. Mountain states
Manufacturer of cosmetics, personal
care products, and office products
Largest Sectors
Consumer Staples 13.2%
Health Care 12.0%
Industrial Goods and Services 10.7%
Energy 7.2%
Financial Services 23.0%
Other Sectors 33.9%
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED) - June 30, 1997
Stocks - 95.7%
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
U.S. Stocks - 90.5%
Aerospace - 5.2%
Allied Signal, Inc. 601,500 $ 50,526,000
General Dynamics Corp. 122,500 9,187,500
Goodrich (B.F.) Co. 594,560 25,751,880
Lockheed-Martin Corp. 607,221 62,885,325
McDonnell-Douglas Corp. 190,900 13,076,650
Raytheon Co. 240,000 12,240,000
United Technologies Corp. 721,400 59,876,200
--------------
$ 233,543,555
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Apparel and Textiles - 1.5%
Reebok International Ltd. 403,000 $ 18,840,250
VF Corp. 603,000 51,104,250
--------------
$ 69,944,500
- --------------------------------------------------------------------------------
Banks and Credit Companies - 9.4%
BankBoston Corp. 176,000 $ 12,683,000
Chase Manhattan Corp. 128,100 12,433,706
Comerica, Inc. 613,500 41,718,000
Corestates Financial Corp. 197,300 10,604,875
First Bank Systems, Inc. 797,600 68,095,100
Firstar Corp. 1,192,000 36,356,000
National City Corp. 488,800 25,662,000
Northern Trust Corp. 415,000 20,075,625
Norwest Corp. 1,431,600 80,527,500
State Street Corp. 1,160,000 53,650,000
SunTrust Banks, Inc. 500,000 27,531,250
U.S. Bancorp 320,000 20,520,000
Washington Mutual, Inc. 311,000 18,582,250
--------------
$ 428,439,306
- --------------------------------------------------------------------------------
Business Machines - 1.1%
International Business Machines Corp. 540,500 $ 48,746,344
Sun Microsystems, Inc.* 290 10,793
--------------
$ 48,757,137
- --------------------------------------------------------------------------------
Business Services - 1.9%
Computer Sciences Corp.* 468,300 $ 33,776,137
DST Systems, Inc.* 412,900 13,754,731
First Data Corp. 771,800 33,910,963
Ikon Office Solutions, Inc. 261,800 6,528,638
--------------
$ 87,970,469
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Chemicals - 3.9%
Air Products & Chemicals, Inc. 793,200 $ 64,447,500
du Pont (E.I.) de Nemours & Co., Inc. 1,337,200 84,076,450
Praxair, Inc. 483,000 27,048,000
--------------
$ 175,571,950
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Computer Software - Personal Computers - 1.2%
Microsoft Corp.* 408,600 $ 51,636,825
- --------------------------------------------------------------------------------
Computer Software - Systems - 1.6%
BMC Software, Inc.* 178,800 $ 9,901,050
Computer Associates International, Inc. 797,100 44,388,506
Oracle Systems Corp.* 404,600 20,381,725
--------------
$ 74,671,281
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Construction Services - 0.2%
Champion International Corp. 145,820 $ 8,056,555
- --------------------------------------------------------------------------------
Consumer Goods and Services - 7.4%
Avon Products, Inc. 149,100 $ 10,520,869
Colgate-Palmolive Co. 1,066,600 69,595,650
Gillette Co. 799,200 75,724,200
Hertz Corp., "A"* 13,900 500,400
Philip Morris Cos., Inc. 1,582,600 70,227,875
Procter & Gamble Co. 277,600 39,211,000
Service Corp. International 320,200 10,526,575
Sherwin Williams Co. 318,700 9,839,862
Tupperware Corp. 300,000 10,950,000
Tyco International Ltd. 572,300 39,810,619
--------------
$ 336,907,050
- --------------------------------------------------------------------------------
Containers - 0.7%
Corning, Inc. 610,000 $ 33,931,250
- --------------------------------------------------------------------------------
Defense Electronics - 0.1%
Loral Space & Communications Corp.* 450,000 $ 6,750,000
- --------------------------------------------------------------------------------
Electrical Equipment - 3.0%
Cooper Industries, Inc. 786,000 $ 39,103,500
General Electric Co. 778,600 50,900,975
Honeywell, Inc. 635,500 48,218,562
--------------
$ 138,223,037
- --------------------------------------------------------------------------------
Electronics - 0.6%
Intel Corp. 193,100 $ 27,383,994
- --------------------------------------------------------------------------------
Entertainment - 0.6%
ITT Corp.* 200,000 $ 12,212,500
Time Warner, Inc. 328,900 15,869,425
--------------
$ 28,081,925
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Financial Institutions - 3.1%
American Express Co., Inc. 234,000 $ 17,433,000
Beneficial Corp. 566,000 40,221,375
Federal Home Loan Mortgage Corp. 787,700 27,077,187
Household International, Inc. 380,000 44,626,250
Merrill Lynch & Co., Inc. 200,000 11,925,000
--------------
$ 141,282,812
- --------------------------------------------------------------------------------
Food and Beverage Products - 5.1%
Archer-Daniels-Midland Co. 660,000 $ 15,510,000
Coca-Cola Co. 767,300 51,792,750
CPC International, Inc. 312,800 28,875,350
General Mills, Inc. 150,000 9,768,750
Hershey Foods Corp. 173,400 9,591,188
Interstate Bakeries Corp. 74,400 4,412,850
McCormick & Co., Inc. 350,600 8,852,650
Nabisco Holdings Corp. 229,800 9,163,275
PepsiCo, Inc. 1,064,100 39,970,256
Ralston-Ralston Purina Co. 240,000 19,725,000
Tyson Foods, Inc. - Delaware 600,000 11,475,000
Wrigley (Wm) Junior Co. 361,000 24,187,000
--------------
$ 233,324,069
- --------------------------------------------------------------------------------
Forest and Paper Products - 1.5%
Kimberly-Clark Corp. 873,400 $ 43,451,650
Temple-Inland, Inc. 100,000 5,400,000
Weyerhaeuser Co. 270,000 14,040,000
Willamette Industries, Inc. 104,000 7,280,000
--------------
$ 70,171,650
- --------------------------------------------------------------------------------
Insurance - 9.2%
AFLAC, Inc. 460,000 $ 21,735,000
Allstate Corp. 675,500 49,311,500
ARM Financial Group, Inc., "A"* 9,800 196,000
Chubb Corp. 610,000 40,793,750
CIGNA Corp. 414,200 73,520,500
Conseco, Inc. 210,000 7,770,000
Hartford Financial Services Group, Inc. 767,600 63,518,900
Hartford Life, Inc.* 30,200 1,132,500
Lincoln National Corp. 209,000 13,454,375
MBIA, Inc. 144,300 16,278,844
Nationwide Financial Services, Inc., "A" 640,200 17,005,312
Progressive Corp. - Ohio 605,100 52,643,700
Torchmark Corp. 553,500 39,436,875
Travelers Group, Inc. 368,866 23,261,612
--------------
$ 420,058,868
- --------------------------------------------------------------------------------
Machinery - 1.5%
Case Corp. 260,000 $ 17,907,500
Deere & Co., Inc. 186,000 10,206,750
Ingersoll Rand Co. 400,000 24,700,000
York International Corp. 350,000 16,100,000
--------------
$ 68,914,250
- --------------------------------------------------------------------------------
Medical and Health Products - 8.0%
American Home Products Corp. 423,900 $ 32,428,350
Bristol-Myers Squibb Co. 986,500 79,906,500
Johnson & Johnson 1,008,300 64,909,313
Lilly (Eli) & Co. 282,266 30,855,202
Mckesson Corp. 249,000 19,297,500
Merck & Co., Inc. 144,700 14,976,450
Pfizer, Inc. 396,600 47,393,700
Pharmacia & Upjohn, Inc. 180,000 6,255,000
Rhone-Poulenc Rorer, Inc. 180,000 16,357,500
Warner-Lambert Co. 430,000 53,427,500
--------------
$ 365,807,015
- --------------------------------------------------------------------------------
Medical and Health Technology and Services - 2.8%
Cardinal Health, Inc. 283,100 $ 16,207,475
Columbia/HCA Healthcare Corp. 100,000 3,931,250
Healthsouth Corp.* 427,800 10,668,262
Medtronic Inc. 157,000 12,717,000
Pacificare Health Systems, Inc., "B"* 170,000 10,858,750
St. Jude Medical, Inc.* 714,000 27,846,000
United Healthcare Corp. 869,700 45,224,400
--------------
$ 127,453,137
- --------------------------------------------------------------------------------
Oil Services - 0.4%
Schlumberger Ltd. 139,100 $ 17,387,500
- --------------------------------------------------------------------------------
Oils - 4.2%
Chevron Corp. 415,600 $ 30,728,425
Exxon Corp. 1,157,300 71,173,950
Mobil Corp. 822,600 57,479,175
Texaco, Inc. 293,700 31,939,875
--------------
$ 191,321,425
- --------------------------------------------------------------------------------
Photographic Products - 0.5%
Eastman Kodak Co. 302,000 $ 23,178,500
- --------------------------------------------------------------------------------
Precious Metals and Minerals - 0.5%
Phelps Dodge Corp. 240,000 $ 20,445,000
- --------------------------------------------------------------------------------
Printing and Publishing - 1.5%
Gannett Co., Inc. 400,000 $ 39,500,000
Tribune Co. 595,600 28,626,025
--------------
$ 68,126,025
- --------------------------------------------------------------------------------
Railroads - 1.3%
Burlington Northern Santa Fe Railway Co. 476,800 $ 42,852,400
CSX Corp. 300,000 16,650,000
--------------
$ 59,502,400
- --------------------------------------------------------------------------------
Restaurants and Lodging - 0.3%
HFS, Inc.* 195,700 $ 11,350,600
- --------------------------------------------------------------------------------
Solid Waste - 1.5%
Browning Ferris Industries, Inc. 861,000 $ 28,628,250
Waste Management, Inc. 1,280,000 41,120,000
--------------
$ 69,748,250
- --------------------------------------------------------------------------------
Special Products and Services - 0.1%
McDonalds Corp. 101,700 $ 4,913,381
- --------------------------------------------------------------------------------
Stores - 2.5%
American Stores Co. 170,100 $ 8,398,688
CVS Corp. 260,000 13,325,000
Home Depot, Inc. 470,000 32,400,625
Penney (J.C.), Inc. 450,000 23,484,375
Rite Aid Corp. 405,700 20,234,287
Staples, Inc.* 390,200 9,072,150
Wal-Mart Stores, Inc. 200,000 6,762,500
--------------
$ 113,677,625
- --------------------------------------------------------------------------------
Supermarkets - 1.0%
Kroger Co.* 497,500 $ 14,427,500
Safeway, Inc.* 689,900 31,821,638
--------------
$ 46,249,138
- --------------------------------------------------------------------------------
Telecommunications - 0.6%
AirTouch Communications, Inc.* 240,500 $ 6,583,688
Lucent Technologies, Inc. 312,000 22,483,500
--------------
$ 29,067,188
- --------------------------------------------------------------------------------
Utilities - Electric - 2.0%
Cinergy Corp. 516,200 $ 17,970,212
CMS Energy Corp. 196,100 6,912,525
DPL, Inc. 209,500 5,158,938
Duke Energy Corp. 271,544 13,017,140
Edison International 240,000 5,970,000
FPL Group, Inc. 362,000 16,674,625
Pinnacle West Capital Corp. 192,500 5,787,031
Portland General Corp. 281,000 11,152,188
Public Service Co. of New Mexico 358,600 6,409,975
--------------
$ 89,052,634
- --------------------------------------------------------------------------------
Utilities - Gas - 0.9%
Columbia Gas System, Inc. 128,300 $ 8,371,575
Consolidated Natural Gas Co. 182,000 9,793,875
KN Energy, Inc. 145,400 6,124,975
Pacific Enterprises 200,000 6,725,000
Union Pacific Resources Group, Inc. 339,000 8,432,625
--------------
$ 39,448,050
- --------------------------------------------------------------------------------
Utilities - Telephone - 3.6%
BellSouth Corp. 486,000 $ 22,538,250
GTE Corp. 555,000 24,350,625
MCI Communications Corp. 1,015,000 38,855,469
SBC Communications, Inc. 495,700 30,671,438
Sprint Corp. 865,100 45,525,887
--------------
$ 161,941,669
- --------------------------------------------------------------------------------
Total U.S. Stocks $4,122,290,020
- --------------------------------------------------------------------------------
Foreign Stocks - 5.2%
France - 0.2%
Elf Aquitaine, ADR (Oils) 129,300 $ 7,038,769
- --------------------------------------------------------------------------------
Germany - 0.1%
Henkel KGaA (Consumer Goods and Services) 77,000 $ 4,370,986
- --------------------------------------------------------------------------------
Japan - 0.6%
Canon, Inc. (Consumer Goods) 518,000 $ 14,113,702
Sony Corp. (Electronics) 156,000 13,609,641
--------------
$ 27,723,343
- --------------------------------------------------------------------------------
Netherlands - 0.8%
Akzo Nobel (Chemicals) 198,300 $ 27,180,994
Royal Dutch Petroleum Co. (Oils) 176,000 9,570,000
--------------
$ 36,750,994
- --------------------------------------------------------------------------------
Sweden - 0.4%
Skandia Foersaekrings AB (Insurance) 220,000 $ 8,122,814
Sparbanken Sverige AB (Banks and Credit Cos.) 420,100 9,360,953
--------------
$ 17,483,767
- --------------------------------------------------------------------------------
Switzerland - 0.4%
Novartis AG (Pharmaceuticals) 12,786 $ 20,442,885
- --------------------------------------------------------------------------------
United Kingdom - 2.7%
British Petroleum PLC, ADR (Oils) 1,079,418 $ 80,821,423
Grand Metropolitan PLC (Food and Beverage
Products) 1,909,300 18,359,082
PowerGen PLC (Utilities - Electric) 1,956,800 23,243,075
--------------
$ 122,423,580
- --------------------------------------------------------------------------------
Total Foreign Stocks $ 236,234,324
- --------------------------------------------------------------------------------
Total Stocks (Identified Cost, $3,058,864,598) $4,358,524,344
- --------------------------------------------------------------------------------
<PAGE>
Convertible Bonds - 0.3%
- --------------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- --------------------------------------------------------------------------------
Roche Holdings, Inc., 0s, 2010 (Medical and
Health Technology and Services)## $10,256 $ 5,166,460
Sandoz Capital BVI Ltd., 2s, 2002 (Chemicals) 4,750 7,196,250
- --------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost,
$8,354,287) $ 12,362,710
- --------------------------------------------------------------------------------
Short-Term Obligations - 3.7%
- --------------------------------------------------------------------------------
American Express Credit Corp., due 7/07/97 $15,000 $ 14,986,175
Federal Farm Credit Bank, due 8/07/97 8,000 7,955,518
Federal Home Loan Bank, due 7/24/97 1,540 1,534,647
Federal Home Loan Mortgage Corp.,
due 7/03/97 - 7/25/97 39,589 39,514,937
Federal National Mortgage Assn.,
due 7/01/97 - 9/08/97 63,735 63,553,153
General Electric Co., due 7/01/97 17,020 17,020,000
Southern New England Tele-Communications,
due 8/04/97 10,000 9,947,489
Tennessee Valley Authority, due 8/22/97 5,000 4,960,639
Weyerhaeuser Co., due 8/04/97 10,000 9,947,678
- --------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 169,420,236
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $3,236,639,121) $4,540,307,290
Other Assets, Less Liabilities - 0.3% 13,044,895
- --------------------------------------------------------------------------------
Net Assets - 100.0% $4,553,352,185
- --------------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------------------------
June 30, 1997
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $3,236,639,121) $4,540,307,290
Cash 8,496
Foreign currency, at value (identified cost, $291) 299
Net receivable for foreign currency exchange contracts
closed or subject to master netting agreements 56,924
Receivable for Trust shares sold 24,194,711
Receivable for investments sold 8,791,645
Dividends and interest receivable 6,698,171
Other assets 27,455
--------------
Total assets $4,580,084,991
==============
Liabilities:
Distributions payable $ 3,720,123
Payable for investments purchased 14,122,157
Payable for Trust shares reacquired 8,002,181
Payable to affiliates -
Management fee 73,672
Administrative fee 3,066
Shareholder servicing agent fee 48,519
Distribution and service fee 177,770
Accrued expenses and other liabilities 585,318
--------------
Total liabilities $ 26,732,806
--------------
Net assets $4,553,352,185
==============
Net assets consists of:
Paid-in capital $2,975,277,647
Unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 1,303,732,532
Accumulated undistributed net realized gain on
investments and foreign currency transactions 275,382,733
Accumulated distributions in excess of net investment
income (1,040,727)
--------------
Total $4,553,352,185
==============
Shares of beneficial interest outstanding 266,762,256
===========
Class A shares:
Net asset value per share
(net assets of $3,500,584,338 / 204,698,465 shares of
beneficial interest outstanding) $17.10
======
Offering price per share (100 / 94.25) $18.14
======
Class B shares:
Net asset value and offering price per share
(net assets of $941,296,632 / 55,485,476 shares of
beneficial interest outstanding) $16.96
======
Class C shares:
Net asset value and offering price per share
(net assets of $92,836,564 / 5,488,761 shares of
beneficial interest outstanding) $16.91
======
Class I shares:
Net asset value, offering price and redemption price per share (net assets of
$18,634,651 / 1,089,554 shares of beneficial
interest outstanding) $17.10
======
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, Class
B, and Class C shares. See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended June 30, 1997
- ------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 32,478,000
Interest 3,733,905
Foreign taxes withheld (373,634)
------------
Total investment income $ 35,838,271
------------
Expenses -
Management fee $ 3,714,947
Trustees' compensation 57,109
Shareholder service agent fee 2,390,389
Shareholder servicing agent fee (Class A) 23
Shareholder servicing agent fee (Class B) 13
Distribution and service fee (Class A) 4,915,269
Distribution and service fee (Class B) 3,167,473
Distribution and service fee (Class C) 218,414
Administrative fee 125,681
Custodian fee 445,467
Postage 280,975
Printing 20,360
Auditing fee 16,529
Legal fee 14,120
Miscellaneous 669,436
------------
Total expenses $ 16,036,205
Fees paid indirectly (169,933)
------------
Net expenses $ 15,866,272
------------
Net investment income $ 19,971,999
============
Realized and unrealized gain (loss) on investments:
Realized gain (identified cost basis) -
Investment transactions $273,088,346
Foreign currency transactions 2,510,803
------------
Net realized gain on investments and foreign
currency transactions $275,599,149
------------
Change in unrealized appreciation (depreciation) -
Investments $371,930,845
Translation of assets and liabilities in foreign
currencies (955,294)
------------
Net unrealized gain on investments and foreign
currency translation $370,975,551
------------
Net realized and unrealized gain on investments
and foreign currency $646,574,700
------------
Increase in net assets from operations $666,546,699
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 19,971,999 $ 37,472,710
Net realized gain on investments and foreign
currency transactions 275,599,149 264,646,010
Net unrealized gain on investments and foreign
currency translation 370,975,551 311,795,896
-------------- --------------
Increase in net assets from operations $ 666,546,699 $ 613,914,616
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (18,002,434) $ (34,290,506)
From net investment income (Class B) (1,724,969) (2,257,259)
From net investment income (Class C) (125,554) (41,906)
From net investment income (Class I) (119,044) --
From net realized gain on investments and foreign
currency transactions (Class A) -- (227,454,227)
From net realized gain on investments and foreign
currency transactions (Class B) -- (36,115,432)
From net realized gain on investments and foreign
currency transactions (Class C) -- (967,699)
In excess of net investment income (Class A) (111,686) --
In excess of net investment income (Class B) (701,005) --
In excess of net investment income (Class C) (129,220) --
In excess of net investment income (Class I) (682) --
-------------- --------------
Total distributions declared to shareholders $ (20,914,594) $ (301,127,029)
-------------- --------------
Trust share (principal) transactions -
Net proceeds from sale of shares $1,288,144,337 $ 835,578,893
Net asset value of shares issued to shareholders in
reinvestment of distributions 14,248,475 232,834,058
Cost of shares reacquired (521,292,465) (493,934,622)
-------------- --------------
Increase in net assets from Trust share
transactions $ 781,070,347 $ 574,478,329
-------------- --------------
Total increase in net assets $1,426,702,452 $ 887,265,916
Net assets:
At beginning of period 3,126,649,733 2,239,383,817
-------------- --------------
At end of period (including distributions in excess
of net investment income of $1,040,727 and $98,132,
respectively) $4,553,352,185 $3,126,649,733
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 1997 --------------------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.46 $12.71 $10.07 $11.50 $12.31 $13.87
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.09 $ 0.21 $ 0.25 $ 0.25 $ 0.39 $ 0.32
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 2.64 3.07 3.67 (0.36) 0.86 0.69
------ ------ ------ ------ ------ ------
Total from investment
operations $ 2.73 $ 3.28 $ 3.92 $(0.11) $ 1.25 $ 1.01
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income(++) $(0.09) $(0.21) $(0.46) $(0.25) $(0.39) $(0.33)
From net realized gain on
investments
and foreign currency
transactions -- (1.32) (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 $(0.09) $(1.53) $(1.28) $(1.32) $(2.06) $(2.57)
----- ----- ----- ----- ----- -----
Net asset value - end of period $17.10 $14.46 $12.71 $10.07 $11.50 $12.31
====== ====== ====== ====== ====== ======
Total return(+) 18.93%++ 25.90% 39.34% (1.02)% 10.03% 7.68%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.74%+ 0.74% 0.70% 0.71% 0.68% 0.62%
Net investment income 1.20%+ 1.51% 2.13% 2.20% 3.04% 2.30%
Portfolio turnover 26% 47% 54% 87% 41% 46%
Average commission rate### $0.0540 $0.0520 $ -- $ -- $ -- $ --
Net assets at end of period (000,000
omitted) $ 3,501 $ 2,678 $2,074 $1,535 $1,626 $1,548
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to December 31, 1992, are 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. If the charge had been included, the
results would have been lower.
(++) For the six months ended June 30, 1997 and the year ended December 31, 1994, the per share distributions in excess
of net investment income were $0.0004 and $0.0006, respectively.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
(+) 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.
(++) 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.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 1997 ------------------------------------------------------
(Unaudited) 1996 1995 1994 1993**
- -------------------------------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.36 $12.63 $10.03 $11.48 $13.02
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.04 $ 0.10 $ 0.15 $ 0.15 $ 0.04
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 2.61 3.06 3.64 (0.36) 0.32
------ ------ ------ ------ ------
Total from investment operations $ 2.65 $ 3.16 $ 3.79 $(0.21) $ 0.36
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $(0.11) $(0.37) $(0.17) $(0.23)
From net realized gains on investments and
foreign currency transactions -- (1.32) (0.82) (1.05) (1.67)
In excess of net investment income(++) (0.01) -- -- (0.00) --
In excess of net realized gain on
investments and foreign currency
transactions -- -- -- (0.02) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(0.05) $(1.43) $(1.19) $(1.24) $(1.90)
------ ------ ------ ------ ------
Net asset value - end of period $16.96 $14.36 $12.63 $10.03 $11.48
====== ====== ====== ====== ======
Total return 18.47%++ 25.05% 38.05% (1.88)% 2.62%
Ratios (to average net assets)/Supplemental data:
Expenses## 1.43%+ 1.54% 1.56% 1.61% 1.56%+
Net investment income 0.53%+ 0.72% 1.25% 1.37% 1.05%+
Portfolio turnover 26% 47% 54% 87% 41%
$ $ $
Average commission rate### $0.0540 $0.0520 -- -- --
Net assets at end of period (000,000
omitted) $ 941 $ 437 $ 165 $ 69 $ 15
** For the period from the commencement of offering of Class B shares, September 7, 1993, through December 31, 1993.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Trust's expenses are calculated without reduction for fee paid
indirectly.
### Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
(++) For the year ended December 31, 1994, the per share distribution in excess of net investment income was $0.0003.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended
June 30, 1997 December 31, June 30, 1997****
(Unaudited) 1996*** (Unaudited)
- ---------------------------------------------------------------------------------------------------
Class C Class I
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $14.33 $13.93 $14.33
------ ------ ------
Income from investment operations# -
Net investment income $ 0.04 $ 0.05 $ 0.12
Net realized and unrealized gain on
investments and foreign currency
transactions 2.60 1.76 2.77
------ ------ ------
Total from investment
operations $ 2.64 $ 1.81 $ 2.89
------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.04) $(0.09) $(0.12)
From net realized gain on
investments and
foreign currency transactions -- (1.32) --
In excess of net investment income(++) (0.02) -- (0.00)
------ ------ ------
Total distributions declared to
shareholders $(0.06) $(1.41) $(0.12)
------ ------ ------
Net asset value - end of period $16.91 $14.33 $17.10
====== ====== ======
Total return 18.47%++ 12.74%++ 20.19%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.43%+ 1.49%+ 0.43%+
Net investment income 0.55%+ 0.77%+ 1.57%+
Portfolio turnover 26% 47% 26%
Average commission rate $0.0540 $0.0520 $0.0540
Net assets at end of period (000 omitted) $92,837 $ 12 $18,635
*** For the period from the commencement of offering of Class C shares, July 2, 1996, through December 31, 1996.
**** For the period from the commencement of offering of Class I shares, January 2, 1997, through June 30, 1997.
+ Annualized.
++ Not annualized.
(++) For the six months ended June 30, 1997, the per share distribution in excess of net investment income was $0.0007
for Class I shares.
# Per share data are based on average shares outstanding.
## The Trust's expenses are calculated without reduction for fees paid indirectly.
</TABLE>
See notes to financial statements
<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 a diversified, 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. 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 reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using last quoted bid
prices. Debt securities (other than short-term obligations which mature in 60
days or less), including listed issues and forward contracts, interest rate
swaps, 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, 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 result 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 into 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. The Trust 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 as unrealized until the contract settlement date. On
contract settlement date, the gains or losses are recorded as realized gains or
losses on foreign currency transactions.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premiums and
original issue discounts are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend and interest
payments received in additional securities are recorded on the ex- dividend or
ex-interest date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Trust's custody fee is calculated as a percentage of
the Trust's average daily net assets. The fee is reduced according to an
arrangement, which measures 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.
Expense Reductions - 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 $5,130 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 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.
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 multiple
classes of shares. The classes of shares differ in their respective 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
0.15% of average daily net assets and 3.52% of investment income.
Administrator - Effective March 1, 1997, the Trust has an administrative
services agreement with MFS to provide the Trust with certain financial, legal,
and other administrative services. As a partial reimbursement for the cost of
providing these services, the Trust pays MFS an administrative fee up to 0.015%
per annum of the Trust's average daily net assets, provided that the
administrative fee is not assessed on Trust assets that exceed $3 billion.
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 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 15,976
for the period ended June 30, 1997.
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$1,047,702 for the period ended June 30, 1997, as its portion of the sales
charge on sales of Class A shares of the Trust.
The Trustees have adopted a distribution plan for Class A, Class B, and Class C
shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as follows:
The Trust's 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, 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 $851,621 for the period ended June 30, 1997. Payment of the remaining portion
of the 0.10% per annum distribution fee equal to 0.25% 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, 1997, were 0.32% of average daily net assets attributable to Class A shares
on an annualized basis.
The Trust's distribution plan provides that the Trust will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per annum,
of the Trust's average daily net assets attributable to Class B and Class C
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 and Class C
shares, and will pay to such securities dealers all of the distribution fee
attributable to Class C shares. The service fee is intended to be additional
consideration for services rendered by the dealer with respect to Class B and
Class C shares. MFD retains the service fee for accounts not attributable to a
securities dealer, which amounted to $294,266 and $114 for Class B and Class C
shares, respectively, for the period ended June 30, 1997. Fees incurred under
the distribution plan during the period ended June 30, 1997, were 1.00% and
1.00% of average daily net assets attributable to Class B and Class C shares on
an annualized basis, respectively.
Purchases over $1 million of Class A shares and certain purchases by retirement
plans 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. A contingent
deferred sales charge is imposed on shareholder redemptions of Class C shares in
the event of a shareholder redemption within 12 months of purchase. MFD receives
all contingent deferred sales charges. Contingent deferred sales charges imposed
during the period ended June 30, 1997, were $13,055, $376,171, and $7,301 for
Class A, Class B, and Class C 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 Trust's average daily net assets at an effective annual rate
of 0.13%. Prior to January 1, 1997, the fee was 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%, up to 0.22%, and up to 0.15% attributable to Class A, Class B,
and Class C shares, respectively.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, aggregated $1,715,628,449 and $942,688,673,
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 $3,236,639,121
==============
Gross unrealized appreciation $1,315,511,084
Gross unrealized depreciation (11,842,915)
--------------
Net unrealized appreciation $1,303,668,169
==============
(5) Shares of Beneficial Interest
The 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
<TABLE>
<CAPTION>
Period Ended June 30, 1997 Year Ended December 31, 1996
------------------------------ ----------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Shares sold 49,280,670 $759,013,344 40,132,064 $567,992,774
Shares issued to shareholders in
reinvestment of distributions 728,258 11,734,603 13,545,436 196,263,540
Shares transferred to Class I (977,846) (14,217,885) -- --
Shares reacquired (29,458,918) (452,272,569) (31,823,640) (448,678,542)
----------- ------------ ----------- ------------
Net increase 19,572,164 $304,257,493 21,853,860 $315,577,772
=========== ============ =========== ============
Class B Shares
<CAPTION>
Period Ended June 30, 1997 Year Ended December 31, 1996
------------------------------ ----------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Shares sold 29,118,553 $451,258,915 18,025,772 $255,006,792
Shares issued to shareholders in
reinvestment of distributions 137,460 2,216,785 2,481,401 35,764,019
Shares reacquired (4,174,713) (64,034,752) (3,152,904) (44,728,804)
----------- ------------ ----------- ------------
Net increase 25,081,300 $389,440,948 17,354,269 $246,042,007
=========== ============ =========== ============
Class C Shares
<CAPTION>
Period Ended June 30, 1997 Year Ended December 31, 1996*
------------------------------ ----------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,905,565 $76,047,334 849,655 $12,579,327
Shares issued to shareholders in
reinvestment of distributions 10,944 177,491 56,001 806,499
Shares reacquired (298,279) (4,601,103) (35,125) (527,276)
----------- ------------ ----------- ------------
Net increase 4,618,230 $71,623,722 870,531 $12,858,550
=========== ============ =========== ============
Class I Shares
<CAPTION>
Period Ended June 30, 1997**
------------------------------
Shares Amount
- --------------------------------------------------------------------
<S> <C> <C>
Shares sold 129,383 $ 1,794,744
Shares issued to shareholders in
reinvestment of distributions 7,421 119,596
Shares from Class A 977,846 14,217,885
Shares reacquired (25,096) (384,041)
----------- ------------
Net increase 1,089,554 $15,748,184
=========== ============
* For the period from the commencement of investment operations, July 2, 1996, through December 31, 1996.
** For the period from the commencement of investment operations, January 3, 1997, through June 30, 1997.
</TABLE>
(6) Line of Credit
The Trust and other affiliated funds participate in a $400 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. 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, 1997, was $7,250.
(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.
Forward foreign currency purchases and sales under master netting agreements and
closed forward foreign currency exchange contracts excluded above amounted to a
net receivable of $56,924 with Swiss Bank Corporation at June 30, 1997.
At June 30, 1997, the Trust had sufficient cash and/or securities to cover any
commitments under these contracts.
--------------------------------------------
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>
MASSACHUSETTS INVESTORS TRUST
TRUSTEES CUSTODIAN
A. Keith Brodkin* - Chairman and State Street Bank and Trust Company
President
INVESTOR INFORMATION
Richard B. Bailey* - Private Investor; For MFS stock and bond market outlooks,
Former Chairman and Director (until call toll free: 1-800-637-4458 anytime
1991), Massachusetts Financial Services from a touch-tone telephone.
Company; Director, Cambridge Bancorp;
Director, Cambridge Trust Company For information on MFS mutual funds,
call your financial adviser or, for an
Peter G. Harwood - Private Investor information kit, call toll free:
1-800-637-2929 any business day from 9
J. Atwood Ives - Chairman and Chief a.m. to 5 p.m. Eastern time (or leave a
Executive Officer, Eastern Enterprises message anytime).
Lawrence T. Perera - Partner, INVESTOR SERVICE
Hemenway & Barnes MFS Service Center, Inc.
William J. Poorvu - Adjunct Professor, P.O. Box 2281
Harvard University Graduate School of Boston, MA 02107-9906
Business Administration
For general information, call toll
Charles W. Schmidt - Private Investor free: 1-800-225-2606 any business day
from 8 a.m. to 8 p.m. Eastern time.
Arnold D. Scott* - Senior Executive
Vice President, Director and Secretary, For service to speech- or hearing-
Massachusetts Financial Services impaired, call toll free:
Company 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use
Jeffrey L. Shames* - President and this service, your phone must be
Director, Massachusetts Financial equipped with a Telecommunications
Services Company Device for the Deaf.)
Elaine R. Smith - Independent For share prices, account balances,
Consultant and exchanges, call toll free:
1-800-MFS-TALK (1-800-637-8255)
David B. Stone - Chairman, North anytime from a touch-tone telephone.
American Management Corp. (investment
advisers) WORLD WIDE WEB
www.mfs.com
INVESTMENT ADVISER [DALBAR For the third year in a row,
Massachusetts Financial Services LOGO] MFS earned a #1 ranking in the
Company DALBAR, Inc. Broker/Dealer Survey,
500 Boylston Street Main Office Operations Service Quality
Boston, MA 02116-3741 Category. The firm achieved a 3.48
overall score on a scale of 1 to 4 in
DISTRIBUTOR the 1996 survey. A total of 110 firms
MFS Fund Distributors, Inc. responded, offering input on the
500 Boylston Street quality of service they received from
Boston, MA 02116-3741 29 mutual fund companies nationwide.
The survey contained questions about
PORTFOLIO MANAGERS service quality in 15 categories,
Mitchell D. Dynan* including "knowledge of phone service
John D. Laupheimer, Jr.* contacts," "accuracy of transaction
Kevin R. Parke* processing," and "overall ease of
doing business with the firm."
TREASURER
W. Thomas London*
ASSISTANT TREASURERS
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
<PAGE>
-------------
MASSACHUSETTS [DALBAR LOGO: #1 BULK RATE
INVESTORS TRUST TOP RATED SERVICE] U.S. POSTAGE
PAID
500 Boylston Street MFS
Boston, MA 02116-3741 -------------
[LOGO: M F S(SM)]
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
MIT-3 8/97 237M 12/212/312/812
