<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
The MFS Series Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
THE MFS SERIES TRUST
May 2, 1997
Dear Shareholders:
The enclosed proxy statement seeks your approval of the investment advisory
agreement between the MFS Aggressive Small Cap Equity Fund and Massachusetts
Financial Services Company ("MFS") at a Special Meeting of Shareholders to be
held in Boston on Friday, May 23, 1997 at 9:30 a.m.
This action on your part is required under the federal securities law following
your Board of Trustees' decision not to renew the investment advisory agreement
and other arrangements with your Fund's former investment adviser, Navellier
Management, Inc. and its affiliates ("NMI"), and its decision to retain MFS as
your Fund's investment adviser.
Your Board is very pleased that MFS -- America's oldest mutual fund organization
- -- is now the Fund's investment adviser, subject to your Approval. THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THE INVESTMENT ADVISORY AGREEMENT WITH
MFS AS SET FORTH IN ITEM 1 OF THE PROXY STATEMENT. The Board also is very
pleased that MFS has agreed to a substantial reduction in the investment
advisory fee and administrative fee paid by the Fund to MFS (as compared to the
fee rates previously paid to NMI) if you approve Item 1 at your Special Meeting.
Your Board's decision to take an action to replace your Fund's former investment
adviser with MFS is not a common occurrence in the mutual fund industry. Mindful
of the public attention and shareholder reaction that this decision would
engender, your Board nevertheless believed that the duties and obligations
placed upon it by the Investment Company Act of 1940 required that the previous
arrangements with NMI could not be renewed. Throughout its deliberations, the
members of your Board who were not affiliated with NMI were advised by their own
counsel and communicated their concerns and issues with the staff of the
Securities and Exchange Commission.
Your Trustees' recommendation is now subject to review by you and your fellow
shareholders at the Special Meeting. Even if you cannot attend the Special
Meeting, it is very important that you complete, sign, and return the enclosed
white proxy card. Your prompt response will help save your Fund the expense of
additional solicitation.
Should you have any questions, we invite you to call our solicitor, Georgeson &
Company, Inc., toll free, 1-800-223-2064 between 8 a.m. and 8 p.m. Eastern
Standard Time.
Very truly yours,
/s/ Donald A. Simon
Donald A. Simon
Chairman of the Board
<PAGE> 3
MFS AGGRESSIVE SMALL CAP EQUITY FUND
500 Boylston Street, Boston, Massachusetts 02116
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 1997
A Special Meeting of Shareholders of MFS Aggressive Small Cap Equity Fund (the
"Fund") will be held at 500 Boylston Street, Boston, Massachusetts, on Friday,
May 23, 1997 at 9:30 a.m. for the following purposes:
ITEM 1. To approve or disapprove an Investment Advisory Agreement between
Massachusetts Financial Services Company ("MFS") and the Fund.
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 on April 16, 1997 will be entitled to vote at the
Special Meeting of Shareholders and at any adjournments thereof.
STEPHEN E. CAVAN, SECRETARY
May 2, 1997
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY, WHICH WILL HELP SAVE THE FUND THE
NECESSARY AND ADDITIONAL EXPENSE OF A SECOND SOLICITATION. THE ENCLOSED
ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE> 4
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 The MFS
Series Trust (the "Trust") on behalf of MFS Aggressive Small Cap Equity 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 May 23,
1997, 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 May 2, 1997, or as soon
as practicable thereafter. All properly executed proxies received in time for
the Special Meeting will be voted as specified in 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 on April 16, 1997 ("Record
Date") will be entitled to one vote for each share held. There were 5,269,046
shares of the Fund outstanding on the Record Date.
FOR A FREE COPY OF THE FUND'S ANNUAL REPORT FOR ITS MOST RECENTLY COMPLETED
FISCAL YEAR ENDED DECEMBER 31, 1996, WRITE OR CALL MFS SERVICE CENTER, INC., 500
BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116 OR 1-800-225-2606.
ITEM 1 -- TO APPROVE THE INVESTMENT ADVISORY AGREEMENT BETWEEN MASSACHUSETTS
FINANCIAL SERVICES COMPANY AND THE FUND
BACKGROUND
At the Special Meeting, shareholders of the Fund will be asked to approve the
Investment Advisory Agreement dated March 16, 1997 between Massachusetts
Financial Services Company, a Delaware corporation ("MFS" or the "Adviser"), and
the Fund (the "Agreement"). MFS acts as the investment adviser to the Fund
pursuant to the Agreement.
Pursuant to the Agreement MFS provides the Fund with overall investment advisory
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
Agreement, computed and paid monthly, in an amount equal to 1.25% of the average
daily net assets of the Fund on an annualized basis.
If the Agreement is approved by shareholders at the Special Meeting, MFS has
agreed that the investment management fee paid by the Fund to MFS under the
Agreement would be reduced from 1.25% to 0.75% of the Fund's average daily net
assets on an annualized basis. This reduction of 0.50% constitutes a 40%
reduction in the investment advisory fee rate. In addition, if the Agreement is
approved by shareholders at the Special Meeting, MFS has also agreed that the
fee paid by the Fund to MFS under the terms of an Administrative Services
Agreement would be reduced from 0.25% to 0.015% of the Fund's average daily net
assets on an annualized basis. This reduction of 0.235% constitutes a 94%
reduction in the administrative fee rate. See the information below under
"Effect of Reduction in Management Fee." A description of the Agreement and the
services provided by MFS thereunder is set forth below.
In approving the 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 AGREEMENT WITH MFS.
The 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 March 13, 1997. On this date, MFS was retained by
the Fund to serve as its investment adviser under the Agreement and pursuant to
Rule 15a-4 under the 1940 Act following the Board of Trustees' decision not to
renew the Fund's investment advisory agreement and other arrangements with
Navellier Management, Inc. ("NMI") and its affiliates. NMI had served as the
Fund's adviser and administrator, and an affiliate of NMI served as the Fund's
principal underwriter, from the Fund's inception through March 15, 1997.
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<PAGE> 5
Rule 15a-4 is designed to permit funds to secure the services of an investment
adviser, like MFS, under certain extraordinary circumstances, subject to certain
conditions. Rule 15a-4 allows new investment advisers to be retained in the
event that the agreement between the fund's former investment adviser and the
fund has been terminated by generally unforeseen events or by the failure to
renew this agreement. Under this rule, the new investment adviser to a fund is
permitted to serve the fund under an investment advisory agreement that has not
yet been approved by shareholders if (i) the agreement has been approved by the
funds' governing board as specified in the 1940 Act, (ii) the compensation to be
received by the new investment adviser does not exceed the compensation paid to
the former investment adviser, and (iii) the agreement is approved by
shareholders within the 120 day period following the termination of the prior
agreement. MFS has been retained as the Fund's investment adviser in accordance
with Rule 15a-4 and the purpose of this Special Meeting is to ask shareholders
to approve the Agreement.
On March 13, 1997, MFS also was retained to serve as the Fund's administrator
under an agreement having the same terms, provisions and fees as the agreement
under which NMI previously had acted as the Fund's administrator. The
administrative agreement with MFS, like the prior agreement with NMI, provides
for a fee paid by the Fund to MFS equal to 0.25% per annum of the Fund's average
daily net assets. MFS has informed the Fund that it will reduce the fee for
providing administrative services to the Fund from 0.25% per annum to 0.015% per
annum if shareholders approve the Agreement at the Special Meeting. This
reduction of 0.235% constitutes a 94% reduction in the administrative fee rate.
On March 13, 1997, a subsidiary of MFS, MFS Fund Distributors, Inc. ("MFD"), was
also retained as the Fund's principal underwriter under a Distribution Agreement
with the Fund.
EFFECT OF REDUCTION IN MANAGEMENT FEE
The effect of MFS' proposal to reduce its management fee under the Agreement
from 1.25% to 0.75%, and its administrative fee from 0.25% to 0.015%, per annum
of the Fund's average daily net assets if the Agreement is approved by
shareholders at the Special Meeting is set forth below. The information set
forth below shows what the Fund's management, administrative fee, other expense
and total operating expense ratios would have been for the most recent fiscal
year if these proposed reduced fees being offered by MFS had been in effect,
based on the Fund's assets as of April 16, 1997 of this Proxy Statement of
approximately $80,000,000.
12 MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
% OF AVERAGE % CHANGE
DAILY NET ASSETS AMOUNT OF FEE (REDUCTION)
---------------- ------------- -----------
<S> <C> <C> <C>
MANAGEMENT FEE
Present Fee 1.25% $ 1,000,000
Proposed Fee 0.75% 600,000
---------------- -------------
Difference (0.50%) $ (400,000) (40.00%)
ADMINISTRATIVE FEE
Present Fee 0.25% $ 200,000
Proposed Fee 0.015% 12,000
---------------- -------------
Difference (0.235%) $ (188,000) (94.00%)
</TABLE>
Shown below is a comparison between all expenses and fees the Fund incurred
during its fiscal year ended December 31, 1996, and the fees and expenses the
Fund would have incurred if the proposed reduced management and administrative
fees being offered by MFS if the Agreement is approved at the Special Meeting
had been in effect.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of 3%
offering price)
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
</TABLE>
2
<PAGE> 6
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
CURRENT PROPOSED
-------- ---------
<S> <C> <C>
Management Fee 1.25% 0.750%
Other Expenses
Administrative Fee 0.25% 0.015%
Other (after expense limitation) 0.25%(1) 0.605%
TOTAL FUND OPERATING EXPENSES (after expense limitation) 1.75%(1) 1.370%
</TABLE>
- ---------------
(1) MFS has agreed to bear the Fund's normal operating expenses which accrue on
and after March 16, 1997, subject to reimbursement by the Fund, such that
"Total Fund Operating Expenses" do not exceed 1.75% per annum of the Fund's
average daily net assets during the current fiscal year. If this arrangement
had not been in place for the Fund's fiscal year ended December 31, 1996,
the Fund's "Other Expenses," excluding the "Administrative Fee," and "Total
Fund Operating Expenses" are estimated to be 0.605% and 2.105% per annum,
respectively, based upon the Fund's assets of approximately $80 million on
April 16, 1997.
EXAMPLES: The following example indicates both for the current fee schedule and
the proposed fee schedule, the direct and indirect expenses an investor could
expect to incur in a one-year, three-year, five-year and ten-year period,
respectively:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
<S> <C> <C> <C> <C>
Current $47 $83 $ 122 $230
Proposed $44 $72 $ 103 $190
</TABLE>
The foregoing example is for illustration only and assumes: (a) that an investor
maintains an average of $1,000 invested in the Fund; (b) payment of the maximum
3% sales load; (c) a 5% annual return; (d) percentage amounts listed above for
Annual Fund Operating Expenses remain constant (for all periods shown above);
and (e) reinvestment of all dividends and distributions. ACTUAL EXPENSES MAY BE
MORE OR LESS THAN SHOWN.
FEES OF SIMILAR MFS FUNDS
MFS also acts as the investment adviser to several registered investment
companies having similar investment objectives and/or policies to those of the
Fund.
The following table sets forth the name of each investment company having
similar investment objectives and/or policies to the Fund, 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 as of December 31, 1996.
<TABLE>
<CAPTION>
ANNUAL FEES
NAME INVESTMENT RATE OF WAIVED OR
OF FUND OBJECTIVE NET ASSETS COMPENSATION REDUCED
- ---------------------------- --------------------- -------------- ------------- ---------
<S> <C> <C> <C> <C>
MFS Capital Growth Fund Capital Growth $ 581,529,676 0.75% NO
MFS Emerging Growth Fund Capital Growth $6,119,734,374 0.75% first NO
$2.5 billion
0.70% over
$2.5 billion
MFS Strategic Growth Fund Capital Appreciation $ 12,070,633 0.75% NO
MFS OTC Fund Capital Growth $ 120,766,345 0.75% NO
MFS Institutional Emerging
Equities Fund Capital Growth $ 306,574,929 0.75% NO
</TABLE>
MFS provides administrative services to these funds under the terms of
administrative services agreements providing for a maximum fee equal to 0.015%.
3
<PAGE> 7
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 $52.1 billion on behalf of over 2.2 million investor accounts as
of December 31, 1996. MFS is a subsidiary of Sun Life Assurance Company of
Canada (U.S.) ("Sun Life of Canada (U.S.)") which in turn is a 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,
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 and James O. Yost,
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.
MFS has established a strategic alliance with Foreign & Colonial Management Ltd.
("Foreign & Colonial"). Foreign & Colonial is a subsidiary of two of the world's
oldest financial services institutions, the London-based Foreign & Colonial
Investment Trust PLC, which pioneered the idea of investment management in 1868,
and HYPO-BANK (Bayerische Hypotheken-und Wechsel-Bank AG), the oldest publicly
listed bank in Germany, founded in 1835. As part of this alliance, the portfolio
managers and investment analysts of MFS and Foreign & Colonial share their views
on a variety of investment related issues, such as the economy, securities
markets, portfolio securities and their issuers, investment recommendations,
strategies and techniques, risk analysis, trading strategies and other portfolio
management matters. MFS has access to the extensive international equity
investment expertise of Foreign & Colonial, and Foreign & Colonial has access to
the extensive U.S. equity investment expertise of MFS.
In certain instances there may be securities which are suitable for the Fund's
portfolio as well as for portfolio's of other clients of MFS or clients of
Foreign & Colonial. Some simultaneous transactions are inevitable when several
clients receive investment advice from MFS and Foreign & Colonial, 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 MFD is 500 Boylston Street, Boston, Massachusetts 02116.
REVIEW PROCESS OF THE BOARD OF TRUSTEES
The Board of Trustees approved the Agreement at a meeting held on March 13,
1997. In evaluating the Agreement, the Board of Trustees reviewed materials
furnished by MFS. At the Board of Trustees meeting, representatives of MFS
discussed MFS' philosophy of management, performance expectations and methods of
operation insofar as they related to the Fund.
In approving the Agreement and recommending its approval by shareholders, the
Trustees, considering the best interests of the shareholders of the Fund, took
into account all such factors as they deemed relevant, but gave no greater
weight to any of the following factors. Among such factors were the nature,
quality and extent of the services furnished by MFS to the Fund; the
4
<PAGE> 8
advantages and possible disadvantages to the Fund of having a manager which also
serves other investment companies and private accounts; the investment record of
MFS; possible economies of scale; comparative data as to advisory fees; the
risks assumed by MFS; possible benefits to MFS from serving as manager to, and
of an affiliate of MFS serving as principal underwriter of, the Fund; current
and developing conditions in the financial services industry, including the
entry into the industry of large and highly capitalized companies which spend,
and appear to be prepared to continue to spend, substantial sums to engage
personnel and to provide services to competing investment companies; the
financial resources of MFS; and the importance of obtaining high quality
professional services for the Fund.
In addition, in a press release and a communication sent to Fund shareholders on
March 13, 1997, the Independent Trustees stated that their decision to replace
NMI and its affiliates with MFS and its affiliates was based on the totality of
the facts and circumstances. They also stated that they had determined that MFS
and MFD would be able to provide superior levels of support and service to the
Fund and its shareholders and that they were particularly impressed with MFS'
professionalism and its demonstrated record of strong performance, investor
service and management.
The Board of Trustees also considered the background and experience of
representatives of MFS who were elected as officers of the Trust on March 13,
1997, as well as of John W. Ballen, the Fund's portfolio manager.
The Independent Trustees' decision not to renew the investment advisory
agreement and other arrangements with NMI and its affiliates was based primarily
upon: (i) NMI's repeated failure to provide the Independent Trustees with
information that (1) the Independent Trustees had requested as required under
applicable federal securities laws and state business trust and other laws and
(2) was reasonably necessary to evaluate (a) the continuation of the existing
investment advisory, administrative services and distribution agreements with
NMI and its affiliates, and (b) a proposal by NMI to cause the assets of the
Fund to be reorganized into another fund managed by NMI; and (ii) the
Independent Trustees' lack of confidence, ultimately, in the operation of the
Fund by NMI.
In connection with its decision not to renew the Fund's prior investment
advisory agreement and other arrangements with NMI and its affiliates, and to
retain MFS and its affiliates to act as the Fund's investment adviser,
administrator and principal underwriter, the Independent Trustees, who
constitute a majority of the Board of Trustees as required by the 1940 Act, have
indicated their intention not to remain as trustees indefinitely. Independent
Trustees currently expect to resign as Trustees of the Trust no later than
eighteen months following the Special Meeting. In the case of such resignations,
it currently is expected that certain members of the various boards of trustees
who oversee the various MFS Funds would be considered to fill the vacancies
created by the resignations of the current Independent Trustees. The Fund would
be required to hold a meeting of shareholders to elect these new trustees.
Based on its review, the Board of Trustees, including all of the Independent
Trustees, approved the Agreement with MFS. The Board at that time was comprised
of five individuals, the three Independent Trustees and two representatives of
NMI. The two representatives of NMI did not choose to participate in the votes
taken by the Board to not renew the Fund's prior investment advisory agreement
and other arrangements with NMI and its affiliates and to retain MFS and its
affiliates to act as the Fund's investment adviser, administrator and principal
underwriter. At a meeting held on April 10, 1997, the Board elected an MFS
representative as a Trustee and removed the two NMI representatives as Trustees.
At a subsequent Board meeting, the Board unanimously approved this Proxy
Statement and unanimously stated its recommendation that shareholders of the
Fund approve the Agreement with MFS.
DESCRIPTION OF THE INVESTMENT ADVISORY AGREEMENT
Under the Agreement, MFS provides portfolio management services for the Fund,
including investment research, advice and supervision. For its services, the
Fund currently pays MFS a management fee computed and paid monthly, in an amount
equal to 1.25% per annum of the average daily net asset value of the Fund. If
shareholders approve the Agreement at the Special Meeting, MFS will immediately
reduce the investment advisory fee from 1.25% to 0.75% per annum of the Fund's
average daily net assets.
5
<PAGE> 9
The Fund pays its expenses (other than those assumed by MFS or MFS Fund
Distributors, Inc., the Fund's principal underwriter ("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, requires MFD 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 administrative services, including office space,
equipment, clerical personnel, investment advisory facilities, and all executive
and supervisory personnel necessary for managing the Fund's investments,
effecting its portfolio securities, and, in general, administering its affairs.
The 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 Agreement will remain in effect pursuant to its terms in accordance with
Rule 15a-4 under the 1940 Act until July 14, 1997; if approved by shareholders,
the Agreement will then remain in effect pursuant to its terms, except to
reflect that MFS will reduce its management fee to 0.75% from 1.25%, until March
14, 1999, and thereafter with respect to the Fund for successive 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 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 Agreement terminates automatically in the event of
its assignment (as defined in the 1940 Act).
The description of the Agreement is qualified in its entirety by reference to
the Agreement which is attached as Appendix A in this proxy statement.
REQUIRED VOTE
Approval of the Agreement requires a Majority Vote of the Fund's shareholders
(as defined above).
If for any reason the Agreement between MFS and the Fund is not approved at the
Special Meeting, MFS has informed the Board of Trustees that MFS will not
continue to serve as the Fund's investment adviser after July 14, 1997. In such
event, the Board of Trustees will consider such other arrangements for the
management of the Fund as they consider to be in the best interests of the
shareholders of the Fund.
The Board of Trustees unanimously recommends that the shareholders vote FOR
approval of the Agreement with MFS.
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.
Broker-dealer firms holding Fund shares in "street name" for the benefit of
their customers and clients will request the instructions of such customers and
clients on how to vote their shares on Item 1 before the Special Meeting.
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.
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<PAGE> 10
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 Delaware 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.
ADDITIONAL INFORMATION
The information contained in this proxy statement relating to MFS has been
furnished by MFS.
To obtain the necessary representation at the Special Meeting, solicitations may
be made by mail, telephone, or interview by Georgeson & Company, Inc.
("Georgeson") or its agents as well as by officers of the Fund, employees of MFS
and securities dealers by whom shares of the Fund have been sold. It is
anticipated that the total cost of any such solicitations, if made by Georgeson
or its agents, would be approximately $20,000 plus out-of-pocket expenses, and
if made by any other party, would be nominal.
In the event that sufficient votes in favor of the proposal set forth in the
Notice of Special Meeting are not received by May 23, 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 the Fund.
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 the Fund.
The Fund 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
May 2, 1997 MFS Aggressive Small Cap Equity Fund
7
<PAGE> 11
APPENDIX A
NOTE: BRACKETED MATERIAL IN ARTICLE 3 REFLECTS THE REDUCED INVESTMENT ADVISORY
FEE UNDER WHICH MFS HAS AGREED TO SERVE IF THE AGREEMENT IS APPROVED BY
SHAREHOLDERS AT THE SPECIAL MEETING.
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 16th day of March, 1997, by and
between THE MFS SERIES TRUST, a business trust organized under the laws of the
State of Delaware (the "Trust"), on behalf of the MFS AGGRESSIVE SMALL CAP
EQUITY FUND (the "Fund"), a series of the Trust, 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, 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 Declaration of Trust of
the Trust 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 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.
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
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<PAGE> 12
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 on behalf of the Fund 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 to be provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at an annual rate of 1.25% [0.75%] 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 Section 3,
the compensation (including the expense reimbursement) payable to the Adviser
with respect to the Fund 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 principal
underwriter, 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 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 for 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 Fund, 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 after July 16, 1997, only if approved prior to that date by "vote of a
majority of outstanding voting securities" of the Fund, in which event it shall
remain in force until March 16, 1999, on which date it will terminate unless its
continuance after March 16, 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 agreement is approved by "vote of a
majority of the outstanding voting securities" of the Fund.
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
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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.
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 and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust, individually, but bind only the trust estate
applicable to the Fund.
THE MFS SERIES TRUST, on
behalf of the MFS
AGGRESSIVE SMALL CAP
EQUITY FUND
By: /s/ Stephen E. Cavan
----------------------------------
Stephen E. Cavan, as
Secretary and not
individually
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By: /s/ A. Keith Brodkin
----------------------------------
A. Keith Brodkin
Chairman
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THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF TRUSTEES OF
MFS(R) AGGRESSIVE SMALL CAP EQUITY FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS, MAY 23, 1997.
The undersigned hereby appoints JAMES R. BORDEWICK, JR., STEPHEN E. CAVAN, W.
THOMAS LONDON, AND 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 AGGRESSIVE SMALL CAP EQUITY FUND, to be held at 500 Boylston
Street, Boston, Massachusetts, on Friday, May 23, 1997, 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. ALL PROPOSALS (SET FORTH ON THE REVERSE OF THIS
PROXY CARD) HAVE BEEN PROPOSED BY THE BOARD OF TRUSTEES. IF NO DIRECTION IS
GIVEN ON THESE PROPOSALS, 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 ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
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Please sign this proxy exactly as your name appears on the reverse side of this
card. 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.
<TABLE>
<S> <C>
X PLEASE MARK VOTES
- --- AS IN THIS EXAMPLE
1.) APPROVAL OF INVESTMENT For Against Abstain
ADVISORY AGREEMENT WITH MFS
--- ------- -------
Please be sure to sign and date this Proxy. Date:
------------------------
Shareholder sign here Co-owner sign here
-------------------------------------- -------------------------------
Mark Box at right if comments or address change
have been noted on the reverse side of this card.
-----------
</TABLE>
