<PAGE>
MFS NEW DISCOVERY FUND
500 Boylston Street, Boston, Massachusetts 02116
Notice of Special Meeting of Shareholders
To be held October 30, 1997
A Special Meeting of Shareholders of MFS New Discovery Fund (the "Fund") will be
held at 500 Boylston Street, Boston, Massachusetts, on Thursday, October 30,
1997 at 9:30 a.m. for the following purposes:
ITEM 1. To approve a new Investment Advisory Agreement between
Massachusetts Financial Services Company ("MFS") and the Fund,
pursuant to which the investment management fee paid by the Fund
to MFS would be increased from 0.75% per annum to 0.90% per annum.
ITEM 2. To transact such other business as may properly come before the
Special Meeting of Shareholders and any adjournments thereof.
Your Trustees recommend that you vote in favor of Item 1.
Only shareholders of record as of October 15, 1997 will be entitled to vote at
the Special Meeting of Shareholders and at any adjournments thereof.
STEPHEN E. CAVAN, SECRETARY
October 20, 1997
YOUR VOTE IS IMPORTANT. We would appreciate your promptly voting, signing,
dating and returning the enclosed proxy, which will help save the necessary and
additional expense of a second solicitation. The enclosed self-addressed
envelope requires no postage and is provided for your convenience.
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by and on behalf of the Board of Trustees (the "Board of Trustees") of MFS
Series Trust I (the "Trust") on behalf of MFS New Discovery Fund (the "Fund"), a
series of the Trust, to be used at a Special Meeting of Shareholders to be held
at 500 Boylston Street, Boston, Massachusetts on October 30, 1997, at 9:30 a.m.,
and at any adjournments thereof, for the purposes set forth in the accompanying
Notice (collectively the "Special Meeting").
This Proxy Statement, the Notice of Special Meeting of Shareholders and the
proxy card are being mailed to shareholders on or about October 20, 1997. All
properly executed proxies received in time for the Special Meeting will be voted
as specified on the proxy or, if no specification is made, in favor of the
proposal referred to in the Proxy Statement. Any shareholder giving a proxy has
the power to revoke it by mail (addressed to the Secretary of the Trust at its
principal executive office of the Fund, 500 Boylston Street, Boston,
Massachusetts 02116) or in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund.
Shareholders of record at the close of business as of October 15, 1997 (the
"Record Date") will be entitled to one vote for each share held. There were
__________ shares of the Fund outstanding on the Record Date.
The Fund commenced investment operations in January, 1997 and completed its
first fiscal year of operation on August 31, 1997. Accordingly, the Fund's
Annual Report is not available at this time. For a free copy of the Fund's
Semi-Annual Report dated February 28, 1997, write or call MFS Service Center,
Inc., 500 Boylston Street, Boston, Massachusetts 02116 or (800) 225-2606.
ITEM 1 TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN
MASSACHUSETTS FINANCIAL SERVICES COMPANY AND THE FUND
BACKGROUND
The Fund has retained Massachusetts Financial Services Company, a Delaware
corporation ("MFS" or the "Adviser"), to provide it with investment management
services pursuant to an Investment Advisory Agreement dated January 2, 1997 (the
"Current Agreement").
Pursuant to the Current Agreement, MFS provides the Fund with overall investment
management services, as well as general office facilities. Subject to such
polices as the Board of Trustees may determine, MFS makes investment decisions
for the Fund. For its services and facilities, MFS receives an annual management
fee under the Current Agreement, computed and paid monthly, in an amount equal
to 0.75% of the average daily net assets of the Fund on an annualized basis.
At the Special Meeting, shareholders of the Fund will be asked to approve a new
Investment Advisory Agreement (the "New Agreement"), pursuant to which the
investment management fee paid by the Fund to MFS would be increased from 0.75%
to 0.90% of the Fund's average daily net assets on an annualized basis. This fee
increase is the only material difference between the Current Agreement and the
New Agreement. A description of the New Agreement and the services provided by
MFS thereunder is set forth below.
1
<PAGE>
In approving the New Agreement and recommending its approval by shareholders,
the Trustees considered the best interests of the shareholders of the Fund, and
took into account all such factors as they deemed relevant. See "Review Process
of the Board of Trustees" below.
The Board of Trustees unanimously recommends that shareholders of the Fund
approve the New Agreement.
The Current Agreement was most recently approved by the Board of Trustees,
including a majority of the Trustees who are not "interested persons," as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")
(collectively, the "Independent Trustees"), on December 11, 1996, and by MFS, as
sole shareholder of the Fund, on January 2, 1997. On January 2, 1997, MFS was
retained by the Fund to serve as its investment adviser under the Current
Agreement. The New Agreement was approved by the Board of Trustees, including a
majority of the Independent Trustees, on October 8, 1997, subject to shareholder
approval.
EFFECT OF AN INCREASE IN THE MANAGEMENT FEE
The effect of the proposed increase in the Fund's management fee from 0.75% to
0.90% per annum is illustrated below. For the fiscal period ended August 31,
1997 (the Fund commenced investment operations on January 2, 1997), this
information illustrates the amount the Fund paid to MFS under the present fee of
0.75% per annum, and the amount the Fund would have paid to MFS had the proposed
fee of 0.90% per annum been in effect for the entire period. MFS waived its
right to receive investment management fees from the Fund during this period;
therefore, the Fund did not, in fact, incur any management fees for this period.
Period ended August 31, 1997
(commencement of investment operations on January 2, 1997)
% of Average
Daily Net Assets Amount of Fee % Change
Management Fee
Present Fee 0.75% $ 8,539
Proposed Fee 0.90% 10,247
------ --------
Difference 0.15% $ 1,708 20.0%
In addition to its provision of investment management services to the Fund, MFS
provides administrative services to the Fund for which it received an
administrative services fee from the Fund of $132 (equivalent on an annualized
basis to 0.015% of the Fund's average daily net assets) for the period
commencing March 1, 1997 (when the fee was first imposed) through August 31,
1997. MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS,
provides shareholder agency services to the Fund. The Fund pays MFS 0.13% of
it's average daily net assets for these services; however for the period from
the commencement of investment operations on January 2, 1997 through August 31,
1997, MFSC did not impose this fee.
Shown below is a chart of the expenses and fees the Fund incurred during its
fiscal period ended August 31, 1997. Due to the fee waivers and expense
limitations in place for the Fund, these expenses and fees are the same as the
expenses and fees the Fund would have incurred if the proposed increased
management fee had been in effect for this period (for information as to what
these fees and expenses would have been absent these fee waivers and expense
limitations, see Footnotes 2 and 5 to the Expense Summary table below).
2
<PAGE>
EXPENSE SUMMARY
Shareholder Transaction Expenses: Class A Class B Class C Class I
Maximum Initial Sales Charge Imposed
on Purchases of Fund Shares (as a
percentage of offering price) 4.75% 0.00% 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% None
Annual Operating Expenses (as a percentage of average daily net assets):
Class A Class B Class C Class I
Management Fees (after fee
reduction) (2) 0.00% 0.00% 0.00% 0.00%
Rule 12b-1 Fees (after fee
reduction) 0.00%(3) 1.00%(4) 1.00%(4) None
Other Expenses (after fee
reduction)(5)(6) 1.50% 1.50% 1.50% 1.50%
----- ----- ----- -----
Total Operating Expenses
(after fee reduction)(5) 1.50% 2.50% 2.50% 1.50%
- ------------------------------------
(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 ("CDSC") of 1% will be imposed on such purchases
in the event of certain redemption transactions within 12 months
following such purchases.
(2) The Adviser is currently waiving its right to receive management fees.
Absent this waiver, "Management Fees" would be 0.75% per annum under
the Current Agreement and 0.90% per annum under the New Agreement.
(3) 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") (the "Distribution Plan"), which provides
that it will pay distribution/service fees aggregating up to (but not
necessarily all of) 0.50% per annum of the average daily net assets
attributable to Class A shares. Distribution and service fees under
the Class A Distribution Plan are currently being waived; however, a
distribution/service fee of 0.35% per annum will be imposed
commencing November 1, 1997. Distribution expenses paid under the
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.
(4) The Fund has adopted a Distribution Plan for Class B shares and Class
C shares in accordance with Rule 12b-1 under the 1940 Act, which
provides that it 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 Class B shares under the Class B Distribution
Plan and Class C shares, respectively under the Class C Distribution
Plan. Distribution expenses paid under the Distribution Plans, with
respect to Class B or Class C shares, 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.
(5) "Other Expenses" are based on estimates of payments to be made during
the Fund's current fiscal year. The Adviser is bearing certain
expenses of the Fund, subject to reimbursement by the Fund, such that
"Other Expenses" do not exceed 1.50% per annum of the Fund's average
daily net assets during the current fiscal year and each fiscal year
through August 31, 2006. This arrangement may be terminated by the
Adviser at any time. Otherwise, "Other Expenses" for Class A, Class
B, Class C and Class I shares would be 1.73% per annum. Absent any
fee waivers and reductions, "Total Operating Expenses" for Class A,
Class B, Class C and Class I shares would be 2.98%, 3.48%, 3.48% and
2.48%, respectively, under the Current Agreement, and 3.13%, 3.63%,
3.63 and 2.63%, respectively, under the New Agreement.
(6) 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."
3
<PAGE>
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, unless otherwise
noted, (b) redemption at the end of each of the time periods indicated:
Class A Class B Class C Class I
(1) (1)
1 year $62 $ 65 $25 $35 $25 $15
3 years $93 $108 $78 $78 $78 $47
- ----------------------------
(1) Assumes no redemption.
Because of the expense waivers and limitations described above, the dollar
amount of expenses would be the same for the Fund's fiscal period ending August
31, 1997 had the proposed management fee been in effect.
The purpose of the expense table above is to assist investors in understanding
the various costs and expenses that a shareholder of each Fund will bear
directly or indirectly.
The "Example" set forth above should not be considered a representation of past
or future expenses of a Fund; actual expenses may be greater or less than those
shown.
FEES OF SIMILAR MFS FUNDS
MFS also acts as the investment adviser to several registered investment
companies having similar investment objectives to those of the Fund.
The table in Appendix A sets forth the name of each investment company managed
by MFS having similar investment objectives and/or policies to the Fund that
primarily invest in equity securities of domestic companies, the annual rate of
compensation (i.e., the fee MFS is paid for its services as investment adviser
to such funds) and the net assets of such Fund as of August 31, 1997. While
these funds have similar investment objectives to the Fund, none of these funds
follow the Fund's policy of seeking to maintain a weighted median capitalization
of $2 billion or less. MFS provides administrative services to these funds under
the terms of an administrative services agreement providing for a maximum fee
equal to 0.015% per annum.
INVESTMENT ADVISER
MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the United States, Massachusetts Investors
Trust. Net assets under the management of the MFS organization were
approximately $64.0 billion on behalf of over 2.6 million investor accounts as
of August 31, 1997. MFS is a subsidiary of Sun Life Assurance Company of Canada
(U.S.) ("Sun Life of Canada (U.S.)") which in turn is an indirect wholly owned
subsidiary of Sun Life Assurance Company of Canada ("Sun Life"). The Directors
of MFS are A. Keith Brodkin, Jeffrey L. Shames, John D. McNeil, Donald A.
Stewart and Arnold D. Scott. Mr. Brodkin is the Chairman, Mr. Shames is the
President and Mr. Scott is the Secretary and a Senior Executive Vice President
of MFS. Messrs. McNeil and Stewart are the Chairman and the President,
4
<PAGE>
respectively, of Sun Life. The address of Messrs. Brodkin, Scott and Shames is
500 Boylston Street, Boston, Massachusetts 02116. The address of Messrs. McNeil
and Stewart is 150 King Street West, Toronto, Canada M5H 1J9. Sun Life, a mutual
life insurance company, is one of the largest international life insurance
companies and has been operating in the United States since 1895, establishing a
headquarters office here in 1973. The executive officers of MFS report to the
Chairman of Sun Life.
James R. Bordewick, Jr., Stephen E. Cavan, W. Thomas London, James O. Yost,
Ellen M. Moynihan and Mark E. Bradley, all of whom are officers of MFS, are
also officers of the Trust.
MFS also serves as investment adviser to over 100 other funds, including the MFS
Family of Funds (the "MFS Funds"), MFS Municipal Income Trust, MFS Multimarket
Income Trust, MFS Government Markets Income Trust, MFS Intermediate Income
Trust, MFS Charter Income Trust, MFS Special Value Trust, MFS Institutional
Trust, MFS Union Standard Trust, MFS Variable Insurance Trust, MFS/Sun Life
Series Trust, and seven variable accounts, each of which is a registered
investment company established by Sun Life of Canada (U.S.) in connection with
the sales of various fixed/variable annuity contracts. MFS and its wholly owned
subsidiary, MFS Institutional Advisors, Inc., also provide investment advice to
substantial private clients.
In certain instances there may be securities which are suitable for the Fund's
portfolio as well as for portfolios of other clients of MFS. Some simultaneous
transactions are inevitable when several clients receive investment advice from
MFS, particularly when the same security is suitable for more than one client.
While in some cases this arrangement could have a detrimental effect on the
price or availability of the security as far as the Fund is concerned, in other
cases, however, it may produce increased investment opportunities for the Fund.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to MFS for no consideration other than
brokerage or underwriting commissions. Securities may be bought or sold from
time to time through such broker-dealers on behalf of the Fund.
The Board (together with the Boards of the other MFS Funds) have directed MFS to
allocate a total of $39,100 of commission business from the Fund and the MFS
Funds to the Pershing Division of Donaldson, Lufkin and Jenrette as
consideration for the annual renewal of certain publications provided by Lipper
Analytical Securities Corporation (which provides information useful to the
Board in reviewing the relationship between the Fund and MFS).
The address of MFS and MFS Fund Distributors, Inc. ("MFD"), the Fund's principal
underwriter, is 500 Boylston Street, Boston, Massachusetts 02116.
REVIEW PROCESS OF THE BOARD OF TRUSTEES
The Board of Trustees discussed approval of the New Agreement at a meeting held
on October 8, 1997. In evaluating the Agreement, the Board of Trustees reviewed
materials furnished by MFS.
In approving the proposed increase in management fees (as reflected in the New
Agreement) and in unanimously recommending this higher fee for approval by
shareholders, the Trustees considered the best interests of the shareholders of
the Fund and took into account all such factors as they deemed relevant. The
principal factors considered by the Trustees were the expenses incurred by MFS
in managing a portfolio of securities issued by small capitalization companies
and the fact that the proposed management fee is
5
<PAGE>
competitive with fees charged by other advisers for the management of similar
small capitalization portfolios.
The Fund seeks to maintain weighted median capitalization of $2 billion or less,
and consequently will invest primarily in companies with small market
capitalization relative to companies included in the Standard & Poor's 500 Stock
Index. MFS' investment style is to choose portfolio investments through
intensive analytical research, rather than through quantitative analysis or
other methods. MFS retains a group of investment research analysts who closely
follow the companies in which the funds advised by MFS invest. In considering
whether to approve the proposed management fee increase for the Fund, the
Trustees took into account the fact that MFS has devoted, and will continue to
devote, substantial resources to its research efforts with respect to small
capitalization companies, and that these efforts result in increased expenses to
MFS in providing these services to the Fund.
In addition, the Trustees took into account a comparison of the proposed
contractual management fee with fees charged by other advisers for the
management of small capitalization portfolios, and found that the proposed
contractual management fee was below the median fee charged by these advisers.
The Trustees also considered the nature, quality and scope of the services
provided by MFS, and concluded that the proposed management fee is reasonable in
light of the comparative fee information, MFS' expenses in managing small
capitalization portfolios and the nature, quality and scope of services provided
by MFS to the Fund.
DESCRIPTION OF THE NEW AGREEMENT
As noted above, the Current Agreement and the New Agreement are identical except
that the New Agreement provides for the payment by the Fund to MFS of a higher
management fee of 0.90% per annum, rather than the current fee of 0.75% per
annum (the New Agreement also has a new commencement date and termination date).
Under the New Agreement, MFS provides portfolio management services for the
Fund, including investment research, advice and supervision.
The Fund pays its expenses (other than those assumed by MFS or MFD), including:
governmental fees; interest charges; taxes; membership dues in the Investment
Company Institute allocable to the Fund; fees and expenses of independent
auditors, of legal counsel, and of any transfer agent, registrar or dividend
disbursing agent of the Fund; expenses of repurchasing and redeeming shares;
expenses of preparing, printing and mailing share certificates, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions; brokerage and other expenses connected with the execution,
recording and settlement of portfolio security transactions; insurance premiums;
fees and expenses of the Fund's custodian and transfer agent, for all services
to the Fund, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of
shares of the Fund; and expenses of shareholder meetings. Expenses relating to
the issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses for such purposes are borne by
the Fund except that its Distribution Agreement with MFD, the Fund's principal
underwriter, required MFS to pay for prospectuses that are to be used for sales
purposes.
MFS pays the compensation of the Trust's officers who are affiliated with MFS
and any Trustee who is an officer of MFS. The Adviser also furnishes at its own
expense all necessary portfolio management services, including office space,
equipment, clerical personnel, investment advisory facilities, and all executive
and supervisory personnel necessary for managing the Fund's investments and
effecting transactions in its portfolio securities.
6
<PAGE>
The New Agreement provides that in the absence of willful misfeasance, bad faith
or gross negligence, MFS shall not be liable for any act or omission in the
course of, or in connection with, the rendering of its services thereunder.
The New Agreement will remain in effect pursuant to its terms until October 30,
1999 (for the Current Agreement, this date is January 2, 1999), and thereafter
for successive one-year periods if and so long as such continuation is
specifically approved at least annually by (a) the Board of Trustees or (b) the
affirmative vote of the lesser of (1) more than fifty percent (50%) of the
outstanding shares of the Fund or (2) sixty-seven percent (67%) or more of the
shares of the Fund present at the meeting if more than fifty percent (50%) of
the outstanding shares of the Fund are represented at the meeting in person or
by proxy (a "Majority Vote"), provided that in either event the continuation
also is approved by a majority of the Independent Trustees by a vote cast in
person at a meeting called for the purpose of voting on such approval. The New
Agreement is terminable, without penalty, by the Board of Trustees, by a
Majority Vote of the Fund's shareholders or by MFS, in each case on not more
than sixty nor less than thirty days' written notice to the other party and to
the Fund. The New Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act).
The description of the New Agreement is qualified in its entirety by reference
to the New Agreement which is attached as Appendix B to this proxy statement.
REQUIRED VOTE
Approval of the New Agreement requires a Majority Vote of the Fund's
shareholders (as defined above).
The Board of Trustees unanimously recommends that the shareholders vote FOR
approval of the New Agreement.
MANNER OF VOTING PROXIES
All proxies received by the management will be voted on all matters presented at
the Special Meeting and at any adjournments thereof, and if not limited to the
contrary, will be voted FOR Item 1.
Proxies which are returned but which are marked "abstain" will be counted as
present for the purposes of a quorum. However, abstentions will not be counted
as votes cast. Abstentions will have the same effect as a vote against Item 1.
The management knows of no other matters to be brought before the Special
Meeting. If, however, any other matters come before the Special Meeting and any
adjournments thereof, it is the management's intention that proxies not limited
to the contrary will be voted in accordance with the judgment of the persons
named in the enclosed form of proxy.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Massachusetts business trust, and as such is not required to hold
annual meetings of shareholders. However, meetings of shareholders may be held
from time to time to consider such matters as the approval of investment
advisory agreements or changes in certain investment restrictions. Proposals of
shareholders which are intended to be presented at future shareholder's meetings
must be received by the Trust a reasonable time prior to the Trust's
solicitation of proxies relating to such future meeting.
7
<PAGE>
ADDITIONAL INFORMATION
The information contained in this proxy statement relating to MFS has been
furnished by MFS.
The First National Bank of Boston, Trustee for IRA R/O Ned Rigsbee, Boston, MA
and the MFS Defined Contribution Plan, 500 Boylston Street, Boston, MA, owned
approximately 12.95% and 73.67%, respectively, of the shares of the Fund as of
October 15, 1997.
In the event that sufficient votes in favor of the proposal set forth in the
Notice of Special Meeting are not received by October 30, 1997, the persons
named as appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of the holders of a
majority of the shares present in person or by proxy at the session of the
meeting to be adjourned. The persons named as appointed proxies on the enclosed
proxy card will vote in favor of the proposal for which further solicitation of
proxies is to be made. They will vote against any such adjournment those proxies
required to be voted against such proposal. The costs of any such additional
solicitation and of any adjourned session will by borne by MFS.
The expense of solicitations as well as the preparation, printing and mailing of
the enclosed form of proxy, and this Proxy Statement, will be borne by MFS. MFS
will reimburse banks, brokers and other persons holding the Fund's shares
registered in their names or in the names of their nominees, for their expenses
incurred in sending proxy material to and obtaining proxies from the beneficial
owners of such shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
October 20 , 1997 MFS New Discovery Fund
<PAGE>
APPENDIX A
SIMILAR INVESTMENT COMPANIES ADVISED BY MFS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Rate of Fees Waived
Name of Fund Investment Objective Net Assets Compensation or Reduced To
- ------------ -------------------- ---------- ------------ -------------
Massachusetts Investors Trust Long-term Capital Growth $5,017,499,275 0.30% of first $200M No
0.24% of next $300M
0.12% in excess of $500M
- -------------------------------------------------------------------------------
Massachusetts Investors Growth Long-term Capital Growth $1,677,690,241 0.50% of first $200M No
Stock Fund 0.40% of next $300M
0.20% in excess of $500M
- -------------------------------------------------------------------------------
MFS Blue Chip Fund Capital Appreciation $ 727,489 0.65% 0.00%
- -------------------------------------------------------------------------------
Capital Appreciation Series Capital Appreciation $1,290,632,877 0.75% of first $1B No
0.675% of next $500M
0.65% in excess of $1.5B
- -------------------------------------------------------------------------------
Capital Appreciation Variable Acct. Capital Appreciation $ 632,165,393 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
Conservative Growth Series Long-term Capital Growth $ 926,799,243 0.55% No
- -------------------------------------------------------------------------------
MFS Core Growth Fund Capital Appreciation $ 2,757,143 0.75% 0.00%
- -------------------------------------------------------------------------------
MFS Emerging Growth Fund Long-term Capital Growth $8,578,702,895 0.75% of first $2.5B No
0.70% of next $4.5B
0.65% in excess of $7B
- -------------------------------------------------------------------------------
MFS Emerging Growth Series Long-term Capital Growth $ 302,903,022 0.75% No
- -------------------------------------------------------------------------------
Emerging Growth Series Long-term Capital Growth $ 387,964,082 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
MFS Growth Opportunities Fund Capital Growth $ 952,113,677 0.50% of first $200M No
0.40% in excess of $200M
- -------------------------------------------------------------------------------
MFS Institutional Emerging Long-term Capital Growth $ 383,751,697 0.75% No
Equities Fund
- -------------------------------------------------------------------------------
MFS Institutional Mid-Cap Growth Long-term Capital Growth $ 26,619,145 0.60% No
Equity Fund
- -------------------------------------------------------------------------------
MFS Large Cap Growth Fund Capital Growth $ 641,057,624 0.75% of first $1B No
0.65% in excess of $1B
- -------------------------------------------------------------------------------
MFS Managed Sectors Fund Capital Appreciation $ 446,064,516 0.75% No
- -------------------------------------------------------------------------------
Managed Sectors Series Capital Appreciation $ 329,900,679 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
Managed Sectors Variable Account Capital Appreciation $ 121,447,332 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
MFS Mid Cap Growth Fund Long-term Capital Growth $ 122,510,691 0.75% No
- -------------------------------------------------------------------------------
MFS Research Fund Long-term Capital Growth $4,176,067,395 On Average Net Assets: No
---------------------
0.40% of first $100M
0.32% of next $400M
0.288% in excess of $500M
plus
On Gross Income:
----------------
5.0% of first $2M
4.0% of next $8M
3.6% in excess of $10M
- -------------------------------------------------------------------------------
MFS Research Series Long-term Capital Growth $ 241,756,218 0.75% No
- -------------------------------------------------------------------------------
MFS Institutional Research Fund Long-term Capital Growth $ 44,141,053 0.60% No
- -------------------------------------------------------------------------------
Research Series Long-term Capital Growth $ 563,233,099 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
MFS Science & Technology Fund Capital Appreciation $ 2,518,751 0.75% 0.00%
- -------------------------------------------------------------------------------
MFS Special Opportunities Fund Capital Appreciation $ 3,939,672 0.75% 0.00%
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Rate of Fees Waived
Name of Fund Investment Objective Net Assets Compensation or Reduced To
- ------------ -------------------- ---------- ------------ -------------
MFS Strategic Growth Fund Capital Appreciation $ 56,243,040 0.75% No
- -------------------------------------------------------------------------------
MFS Utilities Fund Capital Growth $ 182,081,128 0.375% of Average Net 0.50%
Assets; 6.25% Income
- -------------------------------------------------------------------------------
MFS Utilities Series Capital Growth $ 20,000,035 0.75% No
- -------------------------------------------------------------------------------
Utilities Series Capital Growth $ 92,740,341 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
MFS Union Standard Equity Fund Long-term Capital Growth $ 65,095,081 0.65% No
- -------------------------------------------------------------------------------
MFS Value Fund Capital Appreciation $1,033,403,871 0.75% No
- -------------------------------------------------------------------------------
MFS Value Series Capital Appreciation $ 5,837,260 0.75% No
- -------------------------------------------------------------------------------
Value Series Capital Appreciation $ 57,492,602 0.75% of first $300M No
0.675% in excess of $300M
- -------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
APPENDIX B
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 30th day of October, 1997, by
and between MFS SERIES TRUST I, a Massachusetts business trust (the "Trust"), on
behalf of MFS NEW DISCOVERY FUND, a series of the Trust (the "Fund"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and
WHEREAS this Investment Advisory Agreement was approved by the Trust's
Board of Trustees on October 8, 1997, and by shareholders of the Fund on October
30, 1997; and
WHEREAS the Adviser is willing to provide business services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. The Adviser shall provide the Fund
with such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its funds. The Adviser shall
act as Adviser to the Fund and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held uninvested, subject always to the restrictions of the Trust's Amended and
Restated Declaration of Trust, dated December 14, 1994, and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Fund's then-current Prospectus and
Statement of Additional Information. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the investment policy and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination shall be revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund execution at the most
reasonable price by responsible brokerage firms at reasonably competitive
commission rates. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Fund to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged
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for effecting that transaction, if the Adviser determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the Adviser as
to which the Adviser exercises investment discretion.
The Adviser may from time to time enter into sub-investment advisory agreements
with one or more investment advisers with such terms and conditions as the
Adviser may determine, provided that such sub-investment advisory agreements
have been approved in accordance with applicable provisions of the Investment
Company Act of 1940. Subject to the provisions of Article 6, the Adviser shall
not be liable for any error of judgment or mistake of law by any sub-adviser or
for any loss arising out of any investment made by any sub-adviser or for any
act or omission in the execution and management of the Fund by any sub-adviser.
Article 2. Allocation of Charges and Expenses. The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Fund and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Fund. The Adviser
shall arrange, if desired by the Trust, for Directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
"not affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; expenses of
repurchasing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing stock certificates, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholders'
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes (except to the extent that any Distribution Agreement to which
the Trust is a party provides that another party is to pay some or all of such
expenses).
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate equal to 0.90% of the
Fund's average daily net assets for its then-current fiscal year. If the Adviser
shall serve for less than the whole of any period specified in this Article 3,
the compensation to the Adviser will be prorated.
Article 4. Special Services.. Should the Trust have occasion to request
the Adviser to perform services not herein contemplated or to request the
Adviser to arrange for the services of others, the Adviser will act for the
Trust on behalf of the Fund upon request to the best of its ability, with
compensation for the Adviser's services to be agreed upon with respect to each
such occasion as it arises.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the
Investment Company Act of 1940 and the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the
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Fund except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and the By-Laws and the then-current Prospectus
and Statement of Additional Information of the Fund relative to the Adviser and
its Directors and officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. As used
in this Article 6, the term "Adviser" shall include Directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. The services of the Adviser to
the Fund are not deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Fund agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Fund, the Fund will change its name so as to delete the initials "MFS." It is
understood that the Trustees, officers and shareholders of the Trust are or may
be or become interested in the Adviser, as Directors, officers, employees, or
otherwise and that Directors, officers and employees of the Adviser are or may
become similarly interested in the Trust, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
Article 8. Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until October 30, 1999 on which date it will terminate unless its
continuance after October 30, 1999 is "specifically approved at least annually"
(i) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (ii) by the Board of
Trustees of the Trust, or by "vote of a majority of the outstanding voting
securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than sixty
days' nor less than thirty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
"vote of a majority of the outstanding voting securities" of the Fund.
Article 9. Scope of Trust's Obligations. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust on behalf of one or more series of the Trust, the Adviser further
acknowledges that the assets and liabilities of each series of the Trust are
separate and distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of the series on whose
behalf the Trust has executed this Agreement.
Article 10. Definitions. The terms "specifically approved at least
annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the Rules
and Regulations promulgated thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
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Article 11. Record Keeping. The Adviser will maintain records in a form
acceptable to the Trust and in compliance with the rules and regulations of the
Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the
Declaration.
MFS SERIES TRUST I on
behalf of MFS NEW
DISCOVERY FUND, one of its
series
By:___________________________
A. Keith Brodkin
Chairman and Trustee
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By:___________________________
Jeffrey L. Shames
President
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THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF TRUSTEES OF
MFS(R) NEW DISCOVERY FUND
Proxy for the Special Meeting of Shareholders, October 30, 1997
The undersigned hereby appoints JAMES R. BORDEWICK, JR., STEPHEN E. CAVAN, W.
THOMAS LONDON, ARNOLD D. SCOTT, and each of them, proxies with several powers
of substitution, to vote for the undersigned at the Special Meeting of
Shareholders of MFS NEW DISCOVERY FUND, to be held at 500 Boylston Street,
Boston, Massachusetts, on Thursday, October 30, 1997 at 9:30 a.m., notice of
which meeting and the Proxy Statement accompanying the same have been received
by the undersigned, or at any adjournment thereof, upon the following matters
as described in the Notice of Meeting and accompanying Proxy Statement.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. THE PROPOSAL HAS BEEN PROPOSED BY THE BOARD OF
TRUSTEES. IF NO DIRECTION IS GIVEN ON THE PROPOSAL, THIS PROXY CARD WILL BE
VOTED "FOR" ITEM 1. THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S BEST
JUDGMENT AS TO ANY OTHER MATTER.
PLEASE VOTE AND SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears. Joint owners should each
sign personally. Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority must sign. If
a corporation, this signature should be that of an authorized officer who should
state his or her title.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
1.) NEW INVESTMENT ADVISORY For Against Abstain
AGREEMENT WITH MFS
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Please be sure to sign and date this Proxy. Date:______________________
Shareholder sign here_____________________ Co-owner sign here______________
Mark line at right if comments or address change
have been noted on the reverse side of this card. _____
