<PAGE>
[logo] Annual Report for
THE FIRST NAME IN MUTUAL FUNDS Year Ended
June 30, 1996
MFS(R) INSTITUTIONAL MID-CAP GROWTH EQUITY FUND
[graphic omitted: two men sitting in front of a window]
<PAGE>
MFS(R) INSTITUTIONAL MID-CAP GROWTH EQUITY FUND
ASSISTANT TREASURER
TRUSTEES James O. Yost*
A. Keith Brodkin*
Chairman and President SECRETARY
Stephen E. Cavan*
Nelson J. Darling, Jr.
Trustee, Eastern Enterprises ASSISTANT SECRETARY
(diversified holding company) James R. Bordewick, Jr.*
William R. Gutow SHAREHOLDER SERVICE CENTER
Vice Chairman, MFS Service Center, Inc.
Capitol Entertainment P.O. Box 2281
(Blockbuster Video Franchise) Boston, MA 02107-9906
INVESTMENT ADVISER For general information,
Massachusetts Financial Services Company call toll free: 1-800-637-2262
500 Boylston Street
Boston, MA 02116-3741 CUSTODIAN
State Street Bank and Trust Company
DISTRIBUTOR
MFS Fund Distributors, Inc. AUDITORS
500 Boylston Street Deloitte & Touche LLP
Boston, MA 02116-3741
PORTFOLIO MANAGERS
John W. Ballen*
Mark Regan*
TREASURER
W. Thomas London*
*Affiliated with the Investment Adviser
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders:
The Fund commenced operations on December 28, 1995, and from that date through
June 30, 1996 provided a total return of 11.30%. For the six months from January
1, 1996 through June 30, 1996, the Standard & Poor's 500 Composite Index (the
S&P 500), a popular, unmanaged index of common stock performance, returned
10.09%, while the Russell 2000 Total Return Index (an index comprised of 2,000
of the smallest U.S.-domiciled company common stocks which are traded on the New
York Stock Exchange, the American Stock Exchange and NASDAQ) returned 11.92%. A
discussion of the Fund's performance during this reporting period may be found
in the Portfolio Performance and Strategy section of this letter.
Economic Outlook
Real (inflation-adjusted) economic growth in the first quarter of 1996 was 2.3%
on an annualized basis, and it appears that second-quarter growth could be even
stronger. Thus, real growth in gross domestic product has started the year at a
rate exceeding our expectations. While we continue to believe that growth from
quarter to quarter will be uneven, it is now our expectation that growth for all
of 1996 could exceed 2.5%. Although individual consumers appear to be carrying
an excessive debt load, the consumer sector itself, which represents two-thirds
of the economy, continues to be impressive as the auto and housing markets
remain resilient. Consumer spending has also been positively impacted by
widespread job growth. At the same time, however, the economies of Europe and
Japan continue to be in the doldrums, weakening U.S. export markets while
subduing the capital spending plans of American corporations. Finally, due to
the pickup in economic activity and increasing job growth, it appears that
inflation may accelerate slightly this year, and the Federal Reserve Board is
expected to continue its diligent anti-inflationary stance.
Stock Market
While we do not expect the stock market to match the extraordinary performance
of 1995, we continue to be positive about the equity market this year. Although
we believe the equity market represents fair value at current levels, the
expected slowdown in the growth of corporate earnings and the increases in
interest rates experienced so far this year raise near-term concerns. Further
increases in interest rates, and an acceleration of inflation coupled with an
additional slowdown in corporate earnings growth, could have a negative effect
on the stock market. However, to the extent that some earnings disappointments
are taken as a sign that the economy is not overheating, this may prove
beneficial for the longer-term health of the equity market. We continue to
believe that many of the technology-driven productivity gains that U.S.
companies have made in recent years will continue to enhance corporate America's
competitiveness and profitability. Therefore, while we have some near-term
concerns, we remain constructive on the long-term viability of the equity
market.
Portfolio Performance and Strategy
The Fund's performance has benefited from the strong appreciation in the stock
prices of many of its holdings in the technology and consumer sectors. The
technology sector started the year with very poor performance as investors
worried about the slowdown in this sector's earnings growth versus 1995's, which
saw very strong earnings growth of 50% for this sector.
Consumer stocks, which were some of the most disappointing in terms of
earnings and stock performance in 1995, have rebounded very smartly in 1996. One
sector which has not performed as yet for the Fund in 1996 is health care.
Perhaps because of the strength in other areas of the market, many of our health
care companies have lagged the general market in spite of strong earnings
growth.
The performance of our consumer-oriented stocks has been particularly
helpful. HFS, the nation's largest franchiser of hotels and real estate
companies, has seen the price of its stock appreciate almost 50% since the
beginning of the year as strong earnings gains and acquisitions such as Coldwell
Banker appeared to assure investors of its future growth prospects.
Several of the Fund's retail and restaurant stocks rebounded dramatically
based on strong consumer sentiment. Applebee's, the nation's largest franchiser
of casual restaurants, appreciated substantially as strong earnings were
reported from the first quarter. Similarly, Gymboree, perhaps the retailer
best-positioned to service the lucrative children's clothing niche, soared
almost 100% from depressed levels as first-quarter earnings were very strong.
While the Fund's technology stocks had, on average, mixed results, the Fund
was fortunately overweighted in software and networking stocks relative to
computer systems and semiconductors. Meanwhile, an excess of inventories held by
customers of semiconductor manufacturers has been a drag on earnings for this
sector so far this year. While we expect this overhang to dissipate, other
investors have aggressively sold their positions and depressed the stocks.
We have been surprised that the health care sector has not performed better.
United Healthcare, the largest managed health care company in the nation, which
had been one of the Fund's largest positions, has been a particularly poor
performer this year. Despite reporting strong earnings versus last year's and
maintaining its position as a dominant force in the sector, the stock is down
for the year. However, we believe health maintenance organization (HMO)
companies may perform better by the end of the year and still have positions in
such stocks as Healthsource, which operates HMOs in New England, the Midwest,
and the Southeast, and Pacificare Health Systems.
Respectfully,
/s/ A. Keith Brodkin /s/ John W. Ballen /s/ Mark Regan
A. Keith Brodkin John W. Ballen Mark Regan
Chairman and President Portfolio Manager Portfolio Manager
July 10, 1996
PORTFOLIO MANAGER PROFILES
John Ballen began his career at MFS in 1984 as an industry specialist and was
promoted to Investment Officer in 1986, Vice President - Investments in 1987,
Director of Research in 1988, and Senior Vice President in 1990. In 1993, he
became Director of Equity Portfolio Management.
Mark Regan began his career at MFS in 1989 as a research analyst. A graduate of
Cornell University and the Sloan School of Management at the Massachusetts
Institute of Technology, he was promoted to Investment Officer in 1990,
Assistant Vice President - Investments in 1991, and Vice President Investments
in 1992.
OBJECTIVE AND POLICIES
The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in equity securities of companies
with medium market capitalizations (mid-cap companies). Mid-cap companies are
those companies with a market capitalization within the range of approximately
$500 million to $4 billion. Such companies generally would be expected to show
earnings growth over time that is well above the growth rate of the overall
economy and the rate of inflation, and would have the products, management and
market opportunities which are usually necessary to continue sustained growth.
Shares of the Fund are purchased at net asset value.
The minimum initial investment is generally $3 million.
TAX FORM SUMMARY
In January 1997, shareholders will be mailed a Tax Form Summary reporting the
federal tax status of all distributions paid during the calendar year 1996.
<PAGE>
PORTFOLIO OF INVESTMENTS - June 30, 1996
Common Stocks - 94.7%
- -----------------------------------------------------------------------------
Issuer Shares Value
- -----------------------------------------------------------------------------
U.S. Stocks - 94.2%
Apparel and Textiles - 1.3%
Nine West Group, Inc.* 2,000 $ 102,250
- -----------------------------------------------------------------------------
Banks and Credit Companies - 1.6%
Capital One Financial Co.* 3,000 $ 85,500
Northern Trust Co. 800 46,200
----------
$ 131,700
- -----------------------------------------------------------------------------
Business Machines - 0.2%
Gateway 2000, Inc.* 600 $ 20,400
- -----------------------------------------------------------------------------
Business Services - 9.5%
ADT Limited* 5,500 $ 103,813
BISYS Group, Inc.* 1,300 49,075
CUC International, Inc.* 4,000 142,000
Ceridian Corp.* 2,000 101,000
Computer Sciences, Inc.* 1,350 100,912
First USA Paymentech* 100 4,000
Fiserv, Inc.* 3,250 97,500
Franklin Quest Co.* 3,300 68,475
SPS Transaction Services Corp.* 3,300 59,400
----------
$ 726,175
- -----------------------------------------------------------------------------
Cellular Telephones - 1.2%
Telephone & Data Systems, Inc. 2,150 $ 96,750
- -----------------------------------------------------------------------------
Computer Software - Personal Computers - 3.5%
Autodesk, Inc. 3,900 $ 116,513
Electronic Arts, Inc.* 4,175 111,681
Symantec Corp.* 4,500 56,250
----------
$ 284,444
- -----------------------------------------------------------------------------
Computer Software - Systems - 17.0%
Adobe Systems, Inc. 3,000 $ 107,625
BMC Software, Inc.* 3,300 197,175
Cadence Design Systems, Inc.* 2,050 69,188
Compuware Corp.* 1,900 75,050
Davidson & Associates, Inc.* 800 24,000
Informix Corp.* 4,500 101,250
Oracle Systems Corp.* 9,975 393,389
Sybase, Inc.* 5,675 134,072
Synopsis, Inc.* 4,650 184,837
System Software Associates, Inc. 5,600 95,200
----------
$1,381,786
- -----------------------------------------------------------------------------
Consumer Goods and Services - 1.5%
Department 56, Inc.* 2,300 $ 52,038
Service Corp. International 1,300 74,750
----------
$ 126,788
- -----------------------------------------------------------------------------
Electronics - 2.1%
LSI Logic Corp.* 3,800 $ 98,800
Xilinx, Inc.* 2,300 73,025
----------
$ 171,825
- -----------------------------------------------------------------------------
Entertainment - 8.6%
Bally's Entertainment, Inc.* 6,900 $ 189,750
Grand Casinos, Inc.* 2,650 68,237
Harrah's Entertainment, Inc.* 7,150 201,988
Heritage Media Corp.* 1,300 51,838
Infinity Broadcasting Corp., "A"* 2,300 69,000
Showboat, Inc. 3,900 117,487
----------
$ 698,300
- -----------------------------------------------------------------------------
Financial Institutions - 6.9%
Advanta Corp., "B" 2,000 $ 90,500
Countrywide Credit Industries 2,900 71,775
Credit Acceptance Corp.* 4,500 94,500
Finova Group, Inc. 1,300 63,375
Franklin Resources, Inc. 2,300 140,300
Green Tree Financial Corp. 3,300 103,125
----------
$ 563,575
- -----------------------------------------------------------------------------
Medical and Health Products - 1.7%
Ventritex, Inc.* 8,200 $ 140,425
- -----------------------------------------------------------------------------
Medical and Health Technology and Services - 13.5%
Foundation Health Corp.* 2,150 $ 77,131
Health Management Assoc., Inc., "A"* 6,750 136,688
Healthsource, Inc.* 4,200 73,500
HealthSouth Corp.* 2,020 72,720
Manor Care, Inc. 1,850 72,844
Mariner Health Group, Inc.* 3,200 58,800
Pacificare Health Systems, Inc., "A"* 3,450 227,700
St. Jude Medical, Inc. 3,850 128,975
United Healthcare Corp. 4,950 249,975
----------
$1,098,333
- -----------------------------------------------------------------------------
Metals and Minerals - 0.1%
Titanium Metals Corp.* 500 $ 12,937
- -----------------------------------------------------------------------------
Oils - 1.4%
Belco Oil & Gas Corp.* 3,200 $ 113,600
- -----------------------------------------------------------------------------
Printing and Publishing - 0.6%
Pulitzer Publishing Co. 800 $ 47,400
- -----------------------------------------------------------------------------
Railroads - 2.0%
Wisconsin Central Transportation Corp.* 4,950 $ 160,875
- -----------------------------------------------------------------------------
Restaurants and Lodging - 7.4%
Applebee's International, Inc. 4,500 $ 144,563
Buffets, Inc.* 3,800 46,550
HFS, Inc.* 3,850 269,500
Promus Hotel Corp.* 3,850 114,056
Renaissance Hotel Group, N.V.* 1,300 27,950
----------
$ 602,619
- -----------------------------------------------------------------------------
Special Products and Services - 0.4%
Loewen Group, Inc. 1,500 $ 45,375
- -----------------------------------------------------------------------------
Stores - 4.9%
AutoZone, Inc.* 1,350 $ 46,912
General Nutrition Cos., Inc.* 6,200 108,500
Gymboree Corp.* 3,000 91,500
Office Depot, Inc.* 7,300 148,738
----------
$ 395,650
- -----------------------------------------------------------------------------
Telecommunications - 9.3%
Cable Design Technology* 2,300 $ 75,325
Cabletron Systems, Inc.* 2,450 168,131
Glenayre Technologies, Inc.* 2,300 115,000
Paging Network, Inc.* 3,000 72,000
Rogers Cantel Mobile Communications, Inc., "B"* 6,800 158,950
U.S. Robotics Corp.* 1,000 85,500
Worldcom, Inc.* 1,467 81,235
----------
$ 756,141
- -----------------------------------------------------------------------------
Total U.S. Stocks (Identified Cost, $7,630,367) $7,677,348
- -----------------------------------------------------------------------------
Foreign Stock - 0.5%
- -----------------------------------------------------------------------------
Canada
Loewen Group, Inc.## (Identified Cost, $28,727) 1,000 $ 30,487
- -----------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $7,659,094) $7,707,835
- -----------------------------------------------------------------------------
Convertible Preferred Stock
- -----------------------------------------------------------------------------
Printing and Publishing
Times Mirror Co., "B" (PERCS) (Identified Cost, $155) 6 $ 161
- -----------------------------------------------------------------------------
Short-Term Obligation - 4.5%
- -----------------------------------------------------------------------------
Principal Amount
(000 Omitted)
- -----------------------------------------------------------------------------
Federal Home Loan Bank, due 7/12/96, at
Amortized Cost $370 $ 369,403
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $8,028,652) $8,077,399
Other Assets, Less Liabilities - 0.8% 71,964
- -----------------------------------------------------------------------------
Net Assets - 100.0% $8,149,363
- -----------------------------------------------------------------------------
* Non-income producing security.
## SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
June 30, 1996
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $8,028,652) $8,077,399
Cash 7,034
Receivable for investments sold 63,910
Dividends receivable 1,487
Deferred organization expenses 6,267
----------
Total assets $8,156,097
----------
Liabilities:
Payable to affiliates -
Management fee $ 399
Accrued expenses and other liabilities 6,335
----------
Total liabilities $ 6,734
----------
Net assets $8,149,363
==========
Net assets consist of:
Paid-in capital $7,963,442
Unrealized appreciation on investments 48,747
Accumulated undistributed net realized gain on investments 137,174
----------
Total $8,149,363
==========
Shares of beneficial interest outstanding 731,884
==========
Net asset value, redemption price, and offering price per share
(net assets of $8,149,363 / 731,884 shares of beneficial
interest outstanding) $11.13
======
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- ------------------------------------------------------------------------------
Period Ended June 30, 1996*
- ------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 7,150
Dividends 3,686
--------
Total investment income $ 10,836
--------
Expenses -
Management fee $ 14,827
Trustees' compensation 2,820
Shareholder servicing agent fee 180
Registration fees 24,090
Printing 10,572
Auditing fees 8,900
Custodian fee 845
Legal fees 752
Amortization of organization expenses 706
Miscellaneous 163
--------
Total expenses $ 63,855
Fees paid indirectly (190)
Reduction of expenses by investment adviser (46,566)
--------
Net expenses $ 17,099
--------
Net investment loss $ (6,263)
--------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) on
investment transactions $143,437
Change in unrealized appreciation on investments 48,747
--------
Net realized and unrealized gain on investments $192,184
--------
Increase in net assets from operations $185,921
========
* For the period from the commencement of investment operations, December 28,
1995 to June 30, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
Period Ended June 30, 1996*
- ------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment loss $ (6,263)
Net realized gain on investments 143,437
Net unrealized gain on investments 48,747
----------
Increase in net assets from operations $ 185,921
----------
Fund share (principal) transactions -
Net proceeds from subscriptions in kind $2,963,332
Net proceeds from sale of shares 5,000,100
----------
Increase in net assets from Fund share transactions $7,963,432
----------
Total increase in net assets $8,149,353
Net assets:
At beginning of period 10
----------
At end of period $8,149,363
==========
*For the period from the commencement of investment operations, December 28,
1995 to June 30, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
- ------------------------------------------------------------------------------
Period Ended June 30, 1996*
- ------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $10.00
------
Income from investment operations# -
Net investment loss(S) $(0.01)
Net realized and unrealized gain on investments 1.14
------
Total from investment operations $ 1.13
------
Net asset value - end of period $11.13
======
Total return 11.30%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.70%+
Net investment loss (0.25)%+
Portfolio turnover 33%
Average commission rate### $0.0505
Net assets at end of period (000 omitted) $8,149
* For the period from the commencement of investment operations, December 28,
1995 to June 30, 1996.
+ Annualized.
++ Not annualized.
# Per share data for the period is based on average shares outstanding.
## The Fund'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.
(S) The Adviser voluntarily agreed to maintain the expenses of the Fund at not
more than 0.65% of average daily net assets effective May 3, 1996. During
the period December 28, 1995 to May 2, 1996, the Adviser agreed to maintain
the expenses at not more than 0.75%. To the extent actual expenses were over
these limitations, the net investment loss per share and ratios would have
been:
Net investment loss $(0.09)
Ratios (to average net assets):
Expenses## 2.59%+
Net investment loss (2.14)%+
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Institutional Mid-Cap Growth Equity Fund (the Fund) is a diversified series
of MFS Institutional Trust (the Trust). The Trust is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities 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.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed issues
and forward contracts, are valued on the basis of valuations furnished by
dealers or by a pricing service with consideration to factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon exchange or over-the-counter prices.
Short-term obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value. Securities for which there are no such
quotations or valuations are valued at fair value as determined in good faith by
or at the direction of the Trustees.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of
operations of the Fund.
Investment Transactions and Income - Investment transactions are recorded on the
trade date. Interest income is recorded on the accrual basis. All premium and
original issue discount are amortized or accreted for financial statement and
tax reporting purposes as required by federal income tax regulations. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
Dividend 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 Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The Fund 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 Fund'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 Fund distinguishes between distributions on a tax basis and a financial
reporting basis and requires that only distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains. During the period ended June 30, 1996, $6,263 was reclassified from
undistributed net investment loss to accumulated net realized gain on
investments due to differences between book and tax accounting for net operating
loss. This change has no effect on net assets or net asset value per share.
(3) Transactions with Affiliates
Investment Adviser - The Fund 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 annual rate of 0.60% of
average daily net assets.
MFS has voluntarily agreed to pay the Fund's operating expenses exclusive of
management fees such that the Fund's aggregate expenses do not exceed 0.65% of
its average daily net assets.
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive remuneration
for their services to the Fund from MFS. Certain of the officers and Trustees of
the Fund are officers or directors of MFS and MFS Service Center, Inc. (MFSC).
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 average daily net assets of the Fund at an effective annual rate
of up to 0.0075%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, aggregated $6,346,035 and $1,690,892, respectively. In
addition, securities with a value of $2,860,514 were received as a subscription
in kind.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $8,031,890
==========
Gross unrealized appreciation $ 591,428
Gross unrealized depreciation (545,919)
----------
Net unrealized appreciation $ 45,509
==========
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Period Ended June 30, 1996* Shares Amount
- ------------------------------------------------------------------------------
Subscriptions in kind 296,333 $ 2,963,332
Shares sold 435,550 5,000,100
-------- -----------
Net increase 731,883 $ 7,963,432
======= ===========
* For the period from the commencement of investment operations, December 28,
1995 to June 30, 1996.
(6) Line of Credit
The Fund entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Fund 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 Fund for the year ended June 30,
1996 was $19.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Institutional Trust and Shareholders of MFS Institutional
Mid-Cap Growth Equity Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Institutional Mid-Cap Growth Equity Fund
(one of the series comprising MFS Institutional Trust) as of June 30, 1996, and
the related statement of operations, the statement of changes in net assets and
the financial highlights for the period from December 28, 1995, the commencement
of operations, to June 30, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at June 30, 1996 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MFS Institutional
Mid-Cap Growth Equity Fund at June 30, 1996, the results of its operations, the
changes in its net assets, and its financial highlights for the period from
December 28, 1995, the commencement of operations, to June 30, 1996 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 2, 1996
--------------------------------------------
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.
