UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-00203
MASSACHUSETTS INVESTORS TRUST
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agents for service)
Registrant’s telephone number, including area code: (617) 954-5000
Date of fiscal year end: December 31
Date of reporting period: December 31, 2020
| ITEM 1. |
REPORTS TO STOCKHOLDERS. |
Item 1(a):
Annual Report
December 31, 2020
Massachusetts
Investors Trust
Investors Trust
MIT-ANN
Massachusetts
Investors Trust
Investors Trust
CONTENTS
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back cover |
The 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.
NOT FDIC INSURED • MAY LOSE VALUE
• NO BANK GUARANTEE
LETTER FROM THE CEO
Dear Shareholders:
Markets experienced dramatic swings this year as the
coronavirus pandemic brought the global economy to a standstill for several months early in the year. The speedy development of vaccines and therapeutics later brightened the economic and market outlook, but a great deal of uncertainty remains as
case counts remain high, new variants of the virus are appearing and questions persist over how fast the vaccine can be made widely available. In the United States, political uncertainty eased after former Vice President Joe Biden won the
presidential election and the Democrats gained control of a closely divided Senate.
Global central banks have taken aggressive
steps to cushion the economic and market fallout related to the virus, and governments are deploying unprecedented levels of fiscal support. Additional U.S. stimulus is anticipated with the Democrats in the White House and in control of both houses
of Congress. The measures already put in place have helped build a supportive environment and are encouraging economic recovery; however, if markets disconnect from fundamentals, they can sow the seeds of instability. As such, dramatic increases in
speculative retail trading bear watching.
In the
aftermath of the crisis, we could see societal changes as households, businesses, and governments adjust to a new reality, and any such alterations could affect the investment landscape. For investors, events such as the COVID-19 outbreak
demonstrate the importance of having a deep understanding of company fundamentals, and we have built our global research platform to do just that.
At MFS®, we put our clients’ assets to work responsibly by carefully navigating the increasing complexity of our global markets and economies. Guided by
our long-term philosophy and adhering to our commitment to sustainable investing, we tune out the noise and aim to uncover what we believe are the best, most durable investment opportunities in the market. Our unique global investment platform
combines collective expertise, long-term discipline and thoughtful risk management to create sustainable value for investors.
Respectfully,
Michael W.
Roberge
Chief Executive Officer
MFS Investment Management
February 16, 2021
The opinions expressed in this letter are subject to change
and may not be relied upon for investment advice. No forecasts can be guaranteed.
1
Portfolio Composition
Portfolio structure
Top ten
holdings
| Microsoft Corp. | 5.0% |
| Alphabet, Inc., “A” | 4.1% |
| Apple, Inc. | 2.5% |
| JPMorgan Chase & Co. | 2.5% |
| Johnson & Johnson | 2.4% |
| Visa, Inc., “A” | 2.4% |
| Medtronic PLC | 2.3% |
| Mastercard, Inc., “A” | 2.2% |
| Honeywell International, Inc. | 2.2% |
| Comcast Corp., “A” | 2.1% |
GICS equity sectors (g)
| Information Technology | 24.4% |
| Health Care | 18.1% |
| Communication Services | 11.7% |
| Financials | 11.2% |
| Consumer Discretionary | 9.1% |
| Consumer Staples | 8.3% |
| Industrials | 6.8% |
| Materials | 4.5% |
| Real Estate | 3.1% |
| Energy | 1.6% |
| Utilities | 0.6% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash,
investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and
liabilities.
Percentages are based on net
assets as of December 31, 2020.
The portfolio
is actively managed and current holdings may be different.
2
Management Review
Summary of Results
For the twelve months ended December 31, 2020, Class A shares
of the Massachusetts Investors Trust (fund) provided a total return of 14.12%, at net asset value. This compares with a return of 18.40% for the fund’s benchmark, the Standard & Poor’s 500 Stock Index (S&P 500 Index).
Market Environment
Markets experienced an extraordinarily sharp selloff early in
the period and, in many cases, an unusually rapid recovery later. Central banks and fiscal authorities undertook astonishing levels of stimulus to offset the economic effects of government-imposed social-distancing measures implemented to slow the
spread of the COVID-19 virus. At this point, the global economy looks to have experienced the shortest — albeit the deepest and steepest — recession in the postwar period. However, the recovery remains subject to more than the usual
number of uncertainties due to questions about the evolution of the virus, what its continued impact will be and how quickly vaccines to guard against it can be manufactured and distributed at scale. There are also worries over the public's
willingness to be inoculated.
Around the world, central
banks responded quickly and massively to the crisis with programs to improve liquidity and support markets. These programs proved largely successful in helping to restore market function, ease volatility and stimulate a continued market rebound.
Late in the period, the US Federal Reserve adopted a new, flexible, average-inflation-targeting framework, which is expected to result in the federal funds rate remaining at low levels longer than under its previous model. In developed countries,
monetary easing measures were complemented by unusually large fiscal stimulus initiatives. Due to relatively manageable external liabilities and balances of payments in many countries and persistently low inflation, even emerging market countries
were able to implement countercyclical policies — a departure from the usual market-dictated response to risk-off crises.
Compounding market uncertainty earlier in the pandemic was a
crash in the price of crude oil due to a sharp drop in global demand and a disagreement between Saudi Arabia and Russia over production cuts, which resulted in an oil price war. The subsequent decline in prices undercut oil exporters, many of which
are in emerging markets, as well as a large segment of the high-yield credit market. The OPEC+ group later agreed on output cuts, with shale oil producers in the US also decreasing production, which, along with the gradual reopening of some major
economies and the resultant boost in demand, helped stabilize the price of crude oil.
In the immediate aftermath of the market disruption that
accompanied the initial phases of the pandemic, many companies that had added significant leverage to their balance sheets in recent years by borrowing to fund dividend payments and stock buybacks halted those activities, and some companies were
forced to recapitalize. As markets and the economy stabilized later in the period, in many cases dividend payments and buybacks resumed. Conversely, some companies found themselves flush with liquidity, having borrowed preemptively during the worst
of the crisis only to end up with excess cash on their balance sheets.
3
Management Review -
continued
Detractors from Performance
Security selection in the
information technology sector detracted from performance relative to the S&P 500 Index. Within this sector, the fund's underweight position in computer and personal electronics maker Apple, and not holding
shares of computer graphics processor maker NVIDIA and digital payment technology developer PayPal, hurt relative returns. Despite headwinds related to COVID-19, the share price of Apple appreciated as product demand recovered more rapidly than
expected and the shift toward work-from-home and remote learning supported strong iPhone and iPad sales. Additionally, shares of Apple reacted positively to the announcement of a new line of its flagship iPhone product with 5G compatibility.
Stock selection and, to a lesser extent, an underweight
position in the consumer discretionary sector also weakened relative returns over the reporting period. Here, not holding shares of strong-performing internet retailer Amazon.com hindered relative results as
Amazon's share price rose over the reporting period, driven by increased demand for cloud-computing services and at-home retail demand.
Stocks in other sectors that were among the fund's top relative
detractors included holding shares of natural gas and petrochemical products manufacturer Enterprise Products Partners(b) and food processing company
Danone(b) (France), as well as the timing of the fund's overweight positions in oil field services company Schlumberger(h) and energy exploration and production company EOG
Resources(h). Lastly, the fund's overweight positions in both medical technology company Becton, Dickinson & Co. and financial services firm Bank of
America also held back relative returns.
Contributors to
Performance
Stock selection in both the financials and communication services sectors benefited performance relative to the benchmark over the reporting period. Within the
financials sector, not holding shares of diversified financial services firm Wells Fargo supported relative results. The stock price of Wells Fargo declined early in the reporting period, along with many other
financial services stocks, as bond yields collapsed, notably on US 10-year Treasury bonds, and concerns about increased potential loan losses arose as global economic activity ground to a halt in efforts to stem the spread of the COVID-19 virus.
Within the communication services sector, not holding shares of telecommunication services provider AT&T contributed to relative returns as the company's stock price declined with broader equity markets in
the spring, but never recovered, as lower advertising revenue and foreign exchange headwinds weighed on the company's earnings results.
An underweight position in the weak-performing utilities sector also lifted relative performance. However, there were no individual stocks within this sector, either in the fund or in the benchmark, that were among the fund's top relative contributors over the
reporting period.
Elsewhere, not holding shares of
integrated oil and gas company Exxon Mobil, energy company Chevron and aerospace company Boeing added to relative results. Overweight positions in specialty rural lifestyle retailer Tractor Supply Company, life sciences supply company Thermo Fisher
Scientific, healthcare equipment manufacturer Danaher, retail giant Target and software company Adobe Systems further contributed to relative performance.
4
Management Review -
continued
During the reporting period, the fund's relative currency
exposure, resulting primarily from differences between the fund's and the benchmark's exposures to holdings of securities denominated in foreign currencies, was a contributor to relative performance. All of MFS' investment decisions are driven by
the fundamentals of each individual opportunity and as such, it is common for our portfolios to have different currency exposure than the benchmark.
Respectfully,
Portfolio Manager(s)
Kevin Beatty, Alison O’Neill Mackey, and Ted
Maloney
Note to Shareholders: Effective September 30,
2021, Kevin Beatty will no longer be a Portfolio Manager of the fund.
| (b) | Security is not a benchmark constituent. |
| (h) | Security was not held in the portfolio at period end. |
The
views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are
subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio.
References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.
5
Performance Summary THROUGH
12/31/20
The following chart illustrates a
representative class of the fund’s historical performance in comparison to its benchmark(s). Performance results include the deduction of the maximum applicable sales charge and reflect the percentage change in net asset value, including
reinvestment of dividends and capital gains distributions. The performance of other share classes will be greater than or less than that of the class depicted below. Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do
not reflect sales charges, commissions or expenses. (See Notes to Performance Summary.)
Performance data shown represents past performance and is no
guarantee of future results. Investment return and principal value fluctuate so your shares, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect
the deduction of taxes, if any, that a shareholder would pay on fund distributions or the redemption of fund shares.
Growth of a Hypothetical $10,000 Investment
6
Performance Summary -
continued
Total Returns through 12/31/20
Average annual without sales charge
Comparative benchmark(s)
| Standard & Poor’s 500 Stock Index (f) | 18.40% | 15.22% | 13.88% | N/A |
Average annual with sales
charge
CDSC – Contingent Deferred
Sales Charge.
Class I, R1, R2, R3, R4, and R6 shares do
not have a sales charge.
| (f) | Source: FactSet Research Systems Inc. |
| (t) | For the period from the class inception date through the stated period end (for those share classes with less than 10 years of performance history). No comparative benchmark performance information is provided for “life” periods. (See Notes to Performance Summary.) |
| (v) | Assuming redemption at the end of the applicable period. |
7
Performance Summary -
continued
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.
It is not possible to invest directly in an index.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
Notes to Performance
Summary
Class 529 shares are only available in
conjunction with qualified tuition programs, such as the MFS 529 Savings Plan. There also is an additional fee, which is detailed in the program description, on qualified tuition programs. If this fee was reflected, the performance for Class 529
shares would have been lower. This annual fee is waived for Oregon residents and for those accounts with assets of $25,000 or more.
Average annual total return represents the average annual
change in value for each share class for the periods presented. Life returns are presented where the share class has less than 10 years of performance history and represent the average annual total return from the class inception date to the stated
period end date. As the fund's share classes may have different inception dates, the life returns may represent different time periods and may not be comparable. As a result, no comparative benchmark performance information is provided for life
periods.
Performance results reflect any applicable
expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund's performance results would be less favorable. Please see the prospectus and financial statements for complete details.
Performance results do not include adjustments made for
financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.
From time to time the fund may receive proceeds from litigation
settlements, without which performance would be lower.
8
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2020 through December 31, 2020
July 1, 2020 through December 31, 2020
As a
shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchase or redemption payments, and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and
other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
Actual Expenses
The first line for each share class in the following table
provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during
this period.
Hypothetical Example for Comparison
Purposes
The second line for each share class in the
following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual
return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
9
Expense Table -
continued
|
Share
Class |
Annualized
Expense Ratio |
Beginning
Account Value 7/01/20 |
Ending
Account Value 12/31/20 |
Expenses
Paid During Period (p) 7/01/20-12/31/20 |
|
| A | Actual | 0.70% | $1,000.00 | $1,200.69 | $3.87 |
| Hypothetical (h) | 0.70% | $1,000.00 | $1,021.62 | $3.56 | |
| B | Actual | 1.45% | $1,000.00 | $1,196.23 | $8.00 |
| Hypothetical (h) | 1.45% | $1,000.00 | $1,017.85 | $7.35 | |
| C | Actual | 1.45% | $1,000.00 | $1,196.13 | $8.00 |
| Hypothetical (h) | 1.45% | $1,000.00 | $1,017.85 | $7.35 | |
| I | Actual | 0.45% | $1,000.00 | $1,201.75 | $2.49 |
| Hypothetical (h) | 0.45% | $1,000.00 | $1,022.87 | $2.29 | |
| R1 | Actual | 1.45% | $1,000.00 | $1,196.02 | $8.00 |
| Hypothetical (h) | 1.45% | $1,000.00 | $1,017.85 | $7.35 | |
| R2 | Actual | 0.95% | $1,000.00 | $1,198.69 | $5.25 |
| Hypothetical (h) | 0.95% | $1,000.00 | $1,020.36 | $4.82 | |
| R3 | Actual | 0.70% | $1,000.00 | $1,200.45 | $3.87 |
| Hypothetical (h) | 0.70% | $1,000.00 | $1,021.62 | $3.56 | |
| R4 | Actual | 0.45% | $1,000.00 | $1,202.11 | $2.49 |
| Hypothetical (h) | 0.45% | $1,000.00 | $1,022.87 | $2.29 | |
| R6 | Actual | 0.37% | $1,000.00 | $1,202.30 | $2.05 |
| Hypothetical (h) | 0.37% | $1,000.00 | $1,023.28 | $1.88 | |
| 529A | Actual | 0.74% | $1,000.00 | $1,200.12 | $4.09 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.42 | $3.76 | |
| 529B | Actual | 0.74% | $1,000.00 | $1,200.06 | $4.09 |
| Hypothetical (h) | 0.74% | $1,000.00 | $1,021.42 | $3.76 | |
| 529C | Actual | 1.50% | $1,000.00 | $1,195.60 | $8.28 |
| Hypothetical (h) | 1.50% | $1,000.00 | $1,017.60 | $7.61 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). Expenses paid do not include any applicable sales charges (loads). If these transaction costs had been included, your costs would have been higher. |
Notes to Expense Table
For the period from July 1, 2020 through December 31, 2020, the
distribution fee for Class 529B was not imposed. Had the distribution fee been imposed throughout the entire six month period, the annualized expense ratio, the actual expenses paid during the period, and the hypothetical expenses paid during the
period would have been approximately 1.49%, $8.24, and $7.56 for Class 529B. See Note 3 in the Notes to Financial Statements for additional information.
Each class with a Rule 12b-1 service fee is subject to a rebate
of a portion of such fee. Such rebates are included in the expense ratios above. For Class 529A and Class 529B shares, this
10
Expense Table -
continued
rebate reduced the expense ratios above by 0.01%. See Note 3 in the Notes to
Financial Statements for additional information.
11
Portfolio of
Investments
12/31/20
The Portfolio of Investments is a complete list of all
securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – 99.4% | ||||
| Aerospace – 2.8% | ||||
| Honeywell International, Inc. | 658,636 | $ 140,091,877 | ||
| Raytheon Technologies Corp. | 594,687 | 42,526,068 | ||
| $182,617,945 | ||||
| Alcoholic Beverages – 2.4% | ||||
| Diageo PLC | 2,092,823 | $ 82,710,678 | ||
| Pernod Ricard S.A. | 390,326 | 74,768,793 | ||
| $157,479,471 | ||||
| Apparel Manufacturers – 2.5% | ||||
| LVMH Moet Hennessy Louis Vuitton SE | 155,550 | $ 97,085,137 | ||
| NIKE, Inc., “B” | 464,223 | 65,673,628 | ||
| $162,758,765 | ||||
| Biotechnology – 1.3% | ||||
| Illumina, Inc. (a) | 145,073 | $ 53,677,010 | ||
| Vertex Pharmaceuticals, Inc. (a) | 139,092 | 32,873,003 | ||
| $86,550,013 | ||||
| Brokerage & Asset Managers – 2.9% | ||||
| Blackstone Group, Inc. | 739,138 | $ 47,903,534 | ||
| Charles Schwab Corp. | 795,651 | 42,201,329 | ||
| NASDAQ, Inc. | 741,455 | 98,420,737 | ||
| $188,525,600 | ||||
| Business Services – 4.5% | ||||
| Accenture PLC, “A” | 344,493 | $ 89,985,016 | ||
| Amdocs Ltd. | 1,064,770 | 75,524,136 | ||
| Fidelity National Information Services, Inc. | 888,980 | 125,755,111 | ||
| $291,264,263 | ||||
| Cable TV – 2.5% | ||||
| Cable One, Inc. | 9,413 | $ 20,969,529 | ||
| Comcast Corp., “A” | 2,620,213 | 137,299,161 | ||
| $158,268,690 | ||||
| Chemicals – 0.9% | ||||
| PPG Industries, Inc. | 379,166 | $ 54,683,321 | ||
12
Portfolio of
Investments – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Computer Software – 8.1% | ||||
| Adobe Systems, Inc. (a) | 232,903 | $ 116,479,448 | ||
| Microsoft Corp. | 1,461,976 | 325,172,702 | ||
| salesforce.com, inc. (a) | 371,048 | 82,569,312 | ||
| $524,221,462 | ||||
| Computer Software - Systems – 2.6% | ||||
| Apple, Inc. | 1,239,773 | $ 164,505,479 | ||
| Construction – 1.3% | ||||
| Sherwin-Williams Co. | 115,738 | $ 85,057,014 | ||
| Consumer Products – 2.6% | ||||
| Colgate-Palmolive Co. | 889,102 | $ 76,027,112 | ||
| Estee Lauder Cos., Inc., “A” | 140,237 | 37,329,687 | ||
| Kimberly-Clark Corp. | 412,089 | 55,561,960 | ||
| $168,918,759 | ||||
| Containers – 1.4% | ||||
| Crown Holdings, Inc. (a) | 870,704 | $ 87,244,541 | ||
| Electrical Equipment – 3.3% | ||||
| AMETEK, Inc. | 669,755 | $ 81,000,170 | ||
| Fortive Corp. | 974,952 | 69,046,100 | ||
| TE Connectivity Ltd. | 542,083 | 65,629,989 | ||
| $215,676,259 | ||||
| Electronics – 3.6% | ||||
| Analog Devices, Inc. | 471,994 | $ 69,727,674 | ||
| Applied Materials, Inc. | 557,084 | 48,076,349 | ||
| Texas Instruments, Inc. | 697,952 | 114,554,862 | ||
| $232,358,885 | ||||
| Energy - Independent – 0.6% | ||||
| ConocoPhillips | 881,269 | $ 35,241,947 | ||
| Food & Beverages – 2.1% | ||||
| Danone S.A. | 1,142,437 | $ 75,030,588 | ||
| Mondelez International, Inc. | 973,146 | 56,899,846 | ||
| $131,930,434 | ||||
| General Merchandise – 1.3% | ||||
| Dollar General Corp. | 381,989 | $ 80,332,287 | ||
| Health Maintenance Organizations – 1.0% | ||||
| Cigna Corp. | 308,745 | $ 64,274,534 | ||
13
Portfolio of
Investments – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Insurance – 1.0% | ||||
| Chubb Ltd. | 421,276 | $ 64,842,802 | ||
| Internet – 7.5% | ||||
| Alphabet, Inc., “A” (a) | 149,259 | $ 261,597,294 | ||
| Alphabet, Inc., “C” (a) | 55,456 | 97,152,257 | ||
| Facebook, Inc., “A” (a) | 467,983 | 127,834,236 | ||
| $486,583,787 | ||||
| Leisure & Toys – 1.7% | ||||
| Electronic Arts, Inc. | 774,153 | $ 111,168,371 | ||
| Major Banks – 6.2% | ||||
| Bank of America Corp. | 4,360,382 | $ 132,163,178 | ||
| Goldman Sachs Group, Inc. | 404,022 | 106,544,642 | ||
| JPMorgan Chase & Co. | 1,260,733 | 160,201,342 | ||
| $398,909,162 | ||||
| Medical & Health Technology & Services – 1.8% | ||||
| ICON PLC (a) | 196,907 | $ 38,392,927 | ||
| PRA Health Sciences, Inc. (a) | 640,810 | 80,383,206 | ||
| $118,776,133 | ||||
| Medical Equipment – 7.5% | ||||
| Becton, Dickinson and Co. | 487,982 | $ 122,102,856 | ||
| Danaher Corp. | 417,300 | 92,699,022 | ||
| Medtronic PLC | 1,267,923 | 148,524,500 | ||
| Thermo Fisher Scientific, Inc. | 259,273 | 120,764,178 | ||
| $484,090,556 | ||||
| Natural Gas - Pipeline – 1.1% | ||||
| Enterprise Products Partners LP | 3,577,256 | $ 70,078,445 | ||
| Network & Telecom – 1.2% | ||||
| Equinix, Inc., REIT | 111,805 | $ 79,848,895 | ||
| Other Banks & Diversified Financials – 5.7% | ||||
| Mastercard, Inc., “A” | 401,509 | $ 143,314,622 | ||
| Truist Financial Corp. | 1,486,075 | 71,227,575 | ||
| Visa, Inc., “A” | 704,893 | 154,181,246 | ||
| $368,723,443 | ||||
| Pharmaceuticals – 6.4% | ||||
| Eli Lilly & Co. | 591,881 | $ 99,933,188 | ||
| Johnson & Johnson | 998,034 | 157,070,591 | ||
| Merck & Co., Inc. | 1,161,935 | 95,046,283 | ||
14
Portfolio of
Investments – continued
| Issuer | Shares/Par | Value ($) | ||
| Common Stocks – continued | ||||
| Pharmaceuticals – continued | ||||
| Zoetis, Inc. | 380,159 | $ 62,916,314 | ||
| $414,966,376 | ||||
| Railroad & Shipping – 1.5% | ||||
| Canadian National Railway Co. | 880,297 | $ 96,700,625 | ||
| Restaurants – 0.9% | ||||
| Starbucks Corp. | 519,887 | $ 55,617,511 | ||
| Specialty Chemicals – 0.9% | ||||
| DuPont de Nemours, Inc. | 845,665 | $ 60,135,238 | ||
| Specialty Stores – 5.7% | ||||
| Costco Wholesale Corp. | 200,081 | $ 75,386,519 | ||
| Home Depot, Inc. | 378,479 | 100,531,592 | ||
| Target Corp. | 574,472 | 101,411,542 | ||
| Tractor Supply Co. | 636,308 | 89,452,179 | ||
| $366,781,832 | ||||
| Telecommunications - Wireless – 1.8% | ||||
| American Tower Corp., REIT | 526,818 | $ 118,249,568 | ||
| Trucking – 0.2% | ||||
| Old Dominion Freight Line, Inc. | 55,966 | $ 10,923,444 | ||
| Utilities - Electric Power – 0.6% | ||||
| American Electric Power Co., Inc. | 482,024 | $ 40,138,139 | ||
| Total Common Stocks (Identified Cost, $3,019,048,584) | $6,418,443,996 | |||
| Investment Companies (h) – 0.7% | ||||
| Money Market Funds – 0.7% | ||||
| MFS Institutional Money Market Portfolio, 0.1% (v) (Identified Cost, $41,984,616) | 41,984,616 | $ 41,984,616 | ||
| Other Assets, Less Liabilities – (0.1)% | (3,238,907) | |||
| Net Assets – 100.0% | $6,457,189,705 | |||
| (a) | Non-income producing security. | |||
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $41,984,616 and $6,418,443,996, respectively. | |||
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. |
15
Portfolio of
Investments – continued
| The following abbreviations are used in this report and are defined: | |
| REIT | Real Estate Investment Trust |
See Notes to
Financial Statements
16
Financial Statements
Statement of Assets and Liabilities
At 12/31/20
This statement represents your fund’s balance sheet,
which details the assets and liabilities comprising the total value of the fund.
17
Statement of Assets and
Liabilities – continued
| Net assets |
Shares
outstanding |
Net
asset value
per share (a) |
|
| Class A | $3,780,213,272 | 105,605,934 | $35.80 |
| Class B | 42,213,298 | 1,226,885 | 34.41 |
| Class C | 121,289,107 | 3,613,418 | 33.57 |
| Class I | 901,661,643 | 26,094,521 | 34.55 |
| Class R1 | 14,029,610 | 422,278 | 33.22 |
| Class R2 | 97,451,630 | 2,888,895 | 33.73 |
| Class R3 | 268,506,082 | 7,584,068 | 35.40 |
| Class R4 | 72,573,555 | 2,005,462 | 36.19 |
| Class R6 | 1,135,316,377 | 32,861,749 | 34.55 |
| Class 529A | 20,630,593 | 595,005 | 34.67 |
| Class 529B | 364,033 | 11,302 | 32.21 |
| Class 529C | 2,940,505 | 93,144 | 31.57 |
| (a) | Maximum offering price per share was equal to the net asset value per share for all share classes, except for Classes A and 529A, for which the maximum offering prices per share were $37.98 [100 / 94.25 x $35.80] and $36.79 [100 / 94.25 x $34.67], respectively. On sales of $50,000 or more, the maximum offering prices of Class A and Class 529A shares are reduced. A contingent deferred sales charge may be imposed on redemptions of Class A, Class B, Class C, Class 529B, and Class 529C shares. Redemption price per share was equal to the net asset value per share for Classes I, R1, R2, R3, R4, R6, and 529A. |
See Notes to Financial Statements
18
Financial Statements
Statement of Operations
Year ended 12/31/20
This statement describes how much your fund earned in
investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.
| Net investment income (loss) | |
| Income | |
| Dividends | $91,736,515 |
| Dividends from affiliated issuers | 329,223 |
| Other | 214,394 |
| Income on securities loaned | 170,492 |
| Foreign taxes withheld | (893,053) |
| Total investment income | $91,557,571 |
| Expenses | |
| Management fee | $19,202,700 |
| Distribution and service fees | 12,165,640 |
| Shareholder servicing costs | 5,283,412 |
| Program manager fees | 10,249 |
| Administrative services fee | 571,864 |
| Independent Trustees' compensation | 80,466 |
| Custodian fee | 169,703 |
| Shareholder communications | 249,885 |
| Audit and tax fees | 63,942 |
| Legal fees | 43,776 |
| Miscellaneous | 320,579 |
| Total expenses | $38,162,216 |
| Reduction of expenses by distributor | (453,507) |
| Net expenses | $37,708,709 |
| Net investment income (loss) | $53,848,862 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $296,526,137 |
| Affiliated issuers | (15,243) |
| Foreign currency | (85,842) |
| Net realized gain (loss) | $296,425,052 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $449,174,943 |
| Net realized and unrealized gain (loss) | $745,599,995 |
| Change in net assets from operations | $799,448,857 |
See Notes to Financial
Statements
19
Financial Statements
Statements of Changes in Net Assets
These statements describe the increases and/or decreases in
net assets resulting from operations, any distributions, and any shareholder transactions.
| Year ended | ||
| 12/31/20 | 12/31/19 | |
| Change in net assets | ||
| From operations | ||
| Net investment income (loss) | $53,848,862 | $53,170,822 |
| Net realized gain (loss) | 296,425,052 | 393,166,742 |
| Net unrealized gain (loss) | 449,174,943 | 1,118,546,292 |
| Change in net assets from operations | $799,448,857 | $1,564,883,856 |
| Total distributions to shareholders | $(281,119,270) | $(447,821,510) |
| Change in net assets from fund share transactions | $(196,747,184) | $(96,063,566) |
| Total change in net assets | $321,582,403 | $1,020,998,780 |
| Net assets | ||
| At beginning of period | 6,135,607,302 | 5,114,608,522 |
| At end of period | $6,457,189,705 | $6,135,607,302 |
See Notes to Financial
Statements
20
Financial
Statements
Financial Highlights
The financial highlights table is intended to help you
understand the fund's financial performance for the past 5 years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment
in the fund share class (assuming reinvestment of all distributions) held for the entire period.
| Class A | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $32.79 | $26.79 | $32.15 | $27.94 | $27.26 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.28 | $0.28 | $0.32 | $0.27 | $0.27(c) |
| Net realized and unrealized gain (loss) | 4.29 | 8.20 | (1.98) | 6.28 | 2.12 |
| Total from investment operations | $4.57 | $8.48 | $(1.66) | $6.55 | $2.39 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.26) | $(0.21) | $(0.29) | $(0.31) | $(0.26) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.56) | $(2.48) | $(3.70) | $(2.34) | $(1.71) |
| Net asset value, end of period (x) | $35.80 | $32.79 | $26.79 | $32.15 | $27.94 |
| Total return (%) (r)(s)(t)(x) | 14.12 | 31.91 | (5.31) | 23.56 | 8.77(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.71 | 0.71 | 0.71 | 0.72 | 0.72(c) |
| Expenses after expense reductions (f) | 0.70 | 0.69 | 0.69 | 0.70 | 0.71(c) |
| Net investment income (loss) | 0.88 | 0.90 | 0.97 | 0.88 | 0.97(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $3,780,213 | $3,893,021 | $3,150,030 | $3,543,029 | $3,272,859 |
See Notes to Financial
Statements
21
Financial
Highlights – continued
| Class B | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $31.63 | $25.95 | $31.24 | $27.20 | $26.58 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.04 | $0.04 | $0.06 | $0.03 | $0.06(c) |
| Net realized and unrealized gain (loss) | 4.11 | 7.93 | (1.91) | 6.09 | 2.06 |
| Total from investment operations | $4.15 | $7.97 | $(1.85) | $6.12 | $2.12 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.07) | $(0.02) | $(0.03) | $(0.05) | $(0.05) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.37) | $(2.29) | $(3.44) | $(2.08) | $(1.50) |
| Net asset value, end of period (x) | $34.41 | $31.63 | $25.95 | $31.24 | $27.20 |
| Total return (%) (r)(s)(t)(x) | 13.26 | 30.94 | (6.06) | 22.61 | 7.95(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 1.46 | 1.46 | 1.46 | 1.47 | 1.47(c) |
| Expenses after expense reductions (f) | 1.46 | 1.46 | 1.46 | 1.47 | 1.47(c) |
| Net investment income (loss) | 0.11 | 0.13 | 0.19 | 0.12 | 0.21(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $42,213 | $52,057 | $53,035 | $71,698 | $75,916 |
| Class C | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $30.89 | $25.40 | $30.65 | $26.73 | $26.15 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.03 | $0.04 | $0.05 | $0.03 | $0.06(c) |
| Net realized and unrealized gain (loss) | 4.02 | 7.75 | (1.86) | 5.99 | 2.03 |
| Total from investment operations | $4.05 | $7.79 | $(1.81) | $6.02 | $2.09 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.07) | $(0.03) | $(0.03) | $(0.07) | $(0.06) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.37) | $(2.30) | $(3.44) | $(2.10) | $(1.51) |
| Net asset value, end of period (x) | $33.57 | $30.89 | $25.40 | $30.65 | $26.73 |
| Total return (%) (r)(s)(t)(x) | 13.28 | 30.88 | (6.04) | 22.62 | 7.97(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 1.46 | 1.46 | 1.46 | 1.47 | 1.47(c) |
| Expenses after expense reductions (f) | 1.46 | 1.46 | 1.46 | 1.47 | 1.47(c) |
| Net investment income (loss) | 0.12 | 0.13 | 0.16 | 0.12 | 0.21(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $121,289 | $174,905 | $162,991 | $307,349 | $295,541 |
See Notes to Financial
Statements
22
Financial
Highlights – continued
| Class I | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $31.70 | $25.96 | $31.26 | $27.23 | $26.59 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.35 | $0.34 | $0.37 | $0.34 | $0.32(c) |
| Net realized and unrealized gain (loss) | 4.14 | 7.96 | (1.91) | 6.10 | 2.09 |
| Total from investment operations | $4.49 | $8.30 | $(1.54) | $6.44 | $2.41 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.34) | $(0.29) | $(0.35) | $(0.38) | $(0.32) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.64) | $(2.56) | $(3.76) | $(2.41) | $(1.77) |
| Net asset value, end of period (x) | $34.55 | $31.70 | $25.96 | $31.26 | $27.23 |
| Total return (%) (r)(s)(t)(x) | 14.39 | 32.23 | (5.08) | 23.79 | 9.08(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.46 | 0.46 | 0.46 | 0.47 | 0.48(c) |
| Expenses after expense reductions (f) | N/A | N/A | N/A | N/A | 0.48(c) |
| Net investment income (loss) | 1.10 | 1.13 | 1.15 | 1.14 | 1.21(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $901,662 | $470,991 | $377,000 | $1,271,676 | $1,525,636 |
See Notes to Financial
Statements
23
Financial
Highlights – continued
| Class R1 | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $30.59 | $25.24 | $30.47 | $26.59 | $26.01 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.03 | $0.02 | $0.06 | $0.03 | $0.05(c) |
| Net realized and unrealized gain (loss) | 3.97 | 7.72 | (1.85) | 5.94 | 2.03 |
| Total from investment operations | $4.00 | $7.74 | $(1.79) | $5.97 | $2.08 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.07) | $(0.12) | $(0.03) | $(0.06) | $(0.05) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.37) | $(2.39) | $(3.44) | $(2.09) | $(1.50) |
| Net asset value, end of period (x) | $33.22 | $30.59 | $25.24 | $30.47 | $26.59 |
| Total return (%) (r)(s)(t)(x) | 13.23 | 30.89 | (6.03) | 22.58 | 7.98(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 1.46 | 1.46 | 1.46 | 1.47 | 1.48(c) |
| Expenses after expense reductions (f) | N/A | N/A | N/A | N/A | 1.48(c) |
| Net investment income (loss) | 0.11 | 0.08 | 0.18 | 0.11 | 0.21(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $14,030 | $16,036 | $5,066 | $7,058 | $7,879 |
| Class R2 | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $30.98 | $25.42 | $30.69 | $26.77 | $26.17 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.18 | $0.19 | $0.22 | $0.18 | $0.19(c) |
| Net realized and unrealized gain (loss) | 4.04 | 7.77 | (1.88) | 5.99 | 2.05 |
| Total from investment operations | $4.22 | $7.96 | $(1.66) | $6.17 | $2.24 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.17) | $(0.13) | $(0.20) | $(0.22) | $(0.19) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.47) | $(2.40) | $(3.61) | $(2.25) | $(1.64) |
| Net asset value, end of period (x) | $33.73 | $30.98 | $25.42 | $30.69 | $26.77 |
| Total return (%) (r)(s)(t)(x) | 13.81 | 31.55 | (5.56) | 23.19 | 8.54(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.96 | 0.96 | 0.96 | 0.97 | 0.97(c) |
| Expenses after expense reductions (f) | N/A | N/A | N/A | N/A | 0.97(c) |
| Net investment income (loss) | 0.61 | 0.63 | 0.69 | 0.61 | 0.71(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $97,452 | $126,846 | $122,858 | $155,976 | $153,518 |
See Notes to Financial
Statements
24
Financial
Highlights – continued
| Class R3 | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $32.44 | $26.52 | $31.87 | $27.72 | $27.05 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.27 | $0.27 | $0.31 | $0.27 | $0.26(c) |
| Net realized and unrealized gain (loss) | 4.24 | 8.12 | (1.97) | 6.21 | 2.12 |
| Total from investment operations | $4.51 | $8.39 | $(1.66) | $6.48 | $2.38 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.25) | $(0.20) | $(0.28) | $(0.30) | $(0.26) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.55) | $(2.47) | $(3.69) | $(2.33) | $(1.71) |
| Net asset value, end of period (x) | $35.40 | $32.44 | $26.52 | $31.87 | $27.72 |
| Total return (%) (r)(s)(t)(x) | 14.09 | 31.91 | (5.36) | 23.50 | 8.78(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.71 | 0.71 | 0.71 | 0.72 | 0.72(c) |
| Expenses after expense reductions (f) | N/A | N/A | 0.71 | 0.72 | 0.72(c) |
| Net investment income (loss) | 0.86 | 0.87 | 0.94 | 0.86 | 0.96(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $268,506 | $298,778 | $261,258 | $318,535 | $313,515 |
| Class R4 | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $33.13 | $27.04 | $32.42 | $28.16 | $27.45 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.36 | $0.36 | $0.39 | $0.35 | $0.33(c) |
| Net realized and unrealized gain (loss) | 4.34 | 8.28 | (1.99) | 6.32 | 2.16 |
| Total from investment operations | $4.70 | $8.64 | $(1.60) | $6.67 | $2.49 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.34) | $(0.28) | $(0.37) | $(0.38) | $(0.33) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.64) | $(2.55) | $(3.78) | $(2.41) | $(1.78) |
| Net asset value, end of period (x) | $36.19 | $33.13 | $27.04 | $32.42 | $28.16 |
| Total return (%) (r)(s)(t)(x) | 14.38 | 32.23 | (5.10) | 23.84 | 9.06(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.46 | 0.46 | 0.46 | 0.47 | 0.47(c) |
| Expenses after expense reductions (f) | N/A | N/A | N/A | N/A | 0.47(c) |
| Net investment income (loss) | 1.11 | 1.13 | 1.19 | 1.11 | 1.20(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $72,574 | $75,864 | $60,904 | $69,546 | $54,737 |
See Notes to Financial
Statements
25
Financial
Highlights – continued
| Class R6 | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $31.69 | $25.95 | $31.28 | $27.24 | $26.61 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.37 | $0.37 | $0.41 | $0.35 | $0.35(c) |
| Net realized and unrealized gain (loss) | 4.15 | 7.95 | (1.93) | 6.13 | 2.08 |
| Total from investment operations | $4.52 | $8.32 | $(1.52) | $6.48 | $2.43 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.36) | $(0.31) | $(0.40) | $(0.41) | $(0.35) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.66) | $(2.58) | $(3.81) | $(2.44) | $(1.80) |
| Net asset value, end of period (x) | $34.55 | $31.69 | $25.95 | $31.28 | $27.24 |
| Total return (%) (r)(s)(t)(x) | 14.50 | 32.34 | (5.03) | 23.93 | 9.15(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.38 | 0.38 | 0.38 | 0.39 | 0.39(c) |
| Expenses after expense reductions (f) | N/A | N/A | N/A | N/A | 0.39(c) |
| Net investment income (loss) | 1.19 | 1.21 | 1.28 | 1.12 | 1.30(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $1,135,316 | $1,006,215 | $905,246 | $814,161 | $114,700 |
See Notes to Financial
Statements
26
Financial
Highlights – continued
| Class 529B | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $29.64 | $24.43 | $29.68 | $25.95 | $25.44 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.29 | $0.10 | $0.24 | $0.02 | $0.12(c) |
| Net realized and unrealized gain (loss) | 3.88 | 7.45 | (1.81) | 5.81 | 1.98 |
| Total from investment operations | $4.17 | $7.55 | $(1.57) | $5.83 | $2.10 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.30) | $(0.07) | $(0.27) | $(0.07) | $(0.14) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.60) | $(2.34) | $(3.68) | $(2.10) | $(1.59) |
| Net asset value, end of period (x) | $32.21 | $29.64 | $24.43 | $29.68 | $25.95 |
| Total return (%) (r)(s)(t)(x) | 14.29 | 31.15 | (5.45) | 22.57 | 8.26(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 0.57 | 1.25 | 0.86 | 1.57 | 1.27(c) |
| Expenses after expense reductions (f) | 0.57 | 1.24 | 0.84 | 1.51 | 1.20(c) |
| Net investment income (loss) | 0.99 | 0.35 | 0.80 | 0.08 | 0.48(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $364 | $444 | $358 | $464 | $475 |
See Notes to Financial
Statements
27
Financial
Highlights – continued
| Class 529C | Year ended | ||||
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16 | |
| Net asset value, beginning of period | $29.15 | $24.08 | $29.28 | $25.65 | $25.16 |
| Income (loss) from investment operations | |||||
| Net investment income (loss) (d) | $0.02 | $0.02 | $0.04 | $0.02 | $0.04(c) |
| Net realized and unrealized gain (loss) | 3.78 | 7.35 | (1.77) | 5.73 | 1.95 |
| Total from investment operations | $3.80 | $7.37 | $(1.73) | $5.75 | $1.99 |
| Less distributions declared to shareholders | |||||
| From net investment income | $(0.08) | $(0.03) | $(0.06) | $(0.09) | $(0.05) |
| From net realized gain | (1.30) | (2.27) | (3.41) | (2.03) | (1.45) |
| Total distributions declared to shareholders | $(1.38) | $(2.30) | $(3.47) | $(2.12) | $(1.50) |
| Net asset value, end of period (x) | $31.57 | $29.15 | $24.08 | $29.28 | $25.65 |
| Total return (%) (r)(s)(t)(x) | 13.20 | 30.84 | (6.08) | 22.54 | 7.91(c) |
|
Ratios
(%) (to average net assets)
and Supplemental data: |
|||||
| Expenses before expense reductions (f) | 1.51 | 1.51 | 1.51 | 1.57 | 1.57(c) |
| Expenses after expense reductions (f) | 1.51 | 1.51 | 1.51 | 1.52 | 1.52(c) |
| Net investment income (loss) | 0.07 | 0.08 | 0.14 | 0.07 | 0.16(c) |
| Portfolio turnover | 16 | 16 | 13 | 12 | 12 |
| Net assets at end of period (000 omitted) | $2,941 | $3,775 | $3,117 | $3,787 | $2,870 |
| (c) | Amount reflects a one-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher. |
| (d) | Per share data is based on average shares outstanding. |
| (f) | Ratios do not reflect reductions from fees paid indirectly, if applicable. |
| (r) | Certain expenses have been reduced without which performance would have been lower. |
| (s) | From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. |
| (t) | Total returns do not include any applicable sales charges. |
| (x) | The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes. |
See Notes to Financial Statements
28
Notes to Financial
Statements
(1) Business and Organization
Massachusetts Investors Trust (the fund) is organized as a
Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company.
The fund is an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation
of financial statements in conformity with U.S. 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these
financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
In March 2020, the FASB issued Accounting Standards Update
2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of
contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU 2020-04 is effective
for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund's investments, derivatives, debt and other contracts
that will undergo reference rate-related modifications as a result of the reference rate reform.
Balance Sheet Offsetting
— The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or
similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to
setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the
fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations
— Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which
there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days
or less may be
29
Notes to Financial
Statements - continued
valued at amortized cost, which approximates market value. Open-end
investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. In
determining values, third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign
securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.
The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market
quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and
procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from
third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the
investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the
exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s
net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on
the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance
that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's
assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar
30
Notes to Financial
Statements - continued
securities, interest rates, prepayment speed, and credit risk). Level 3
includes unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. The following is a summary of the levels used as of December 31, 2020 in valuing the fund's assets or liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | ||||
| United States | $5,953,755,248 | $— | $— | $5,953,755,248 |
| France | 246,884,518 | — | — | 246,884,518 |
| Canada | 96,700,625 | — | — | 96,700,625 |
| United Kingdom | — | 82,710,678 | — | 82,710,678 |
| Ireland | 38,392,927 | — | — | 38,392,927 |
| Mutual Funds | 41,984,616 | — | — | 41,984,616 |
| Total | $6,377,717,934 | $82,710,678 | $— | $6,460,428,612 |
For further information regarding
security characteristics, see the Portfolio of Investments.
Foreign Currency Translation
— Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated
receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign
exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that
results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans — Under
its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can
be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are
collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund.
The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against
Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the
loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the
extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. A portion of the income generated upon investment of the collateral is remitted to the
Borrowers, and the remainder is allocated between the fund and the lending agent. On loans
31
Notes to Financial
Statements - continued
collateralized by U.S. Treasury and/or federal agency obligations, a fee is
received from the Borrower, and is allocated between the fund and the lending agent. Income from securities lending is separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted
for in the same manner as other dividend and interest income. At December 31, 2020, there were no securities on loan or collateral outstanding.
Indemnifications — Under
the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters
into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet
occurred.
Investment Transactions and Income — Investment transactions are recorded on the trade date. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed
of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any
proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund.
Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Tax Matters and Distributions
— The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal
income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state
tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in
accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be
subject to capital gains tax imposed by those countries.
Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in
different periods for financial statement and tax purposes will reverse at some time in the future.
32
Notes to Financial
Statements - continued
Book/tax differences primarily relate to wash sale loss
deferrals, treating a portion of the proceeds from redemptions as a distribution for tax purposes, and partnership adjustments.
The tax character of distributions declared to shareholders for
the last two fiscal years is as follows:
|
Year
ended
12/31/20 |
Year
ended
12/31/19 |
|
| Ordinary income (including any short-term capital gains) | $50,476,025 | $40,404,040 |
| Long-term capital gains | 230,643,245 | 407,417,470 |
| Total distributions | $281,119,270 | $447,821,510 |
The federal tax cost and the tax
basis components of distributable earnings were as follows:
| As of 12/31/20 | |
| Cost of investments | $3,084,434,432 |
| Gross appreciation | 3,403,176,009 |
| Gross depreciation | (27,181,829) |
| Net unrealized appreciation (depreciation) | $3,375,994,180 |
| Undistributed ordinary income | 15,326,565 |
| Undistributed long-term capital gain | 55,099,041 |
| Other temporary differences | 26,944,141 |
Multiple Classes of Shares of
Beneficial Interest — The fund offers multiple classes of shares, which differ in their respective distribution, service, and program manager fees. The fund's income, realized and unrealized gain (loss), and
common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. Class B
and Class 529B shares will convert to Class A and Class 529A shares, respectively, approximately eight years after purchase. In addition, Class C and Class 529C shares will convert to Class A and Class
33
Notes to Financial
Statements - continued
529A shares, respectively, approximately eight years after purchase. The
fund’s distributions declared to shareholders as reported in the Statements of Changes in Net Assets are presented by class as follows:
|
Year
ended 12/31/20 |
Year
ended 12/31/19 |
||
| Class A | $160,862,321 | $280,490,764 | |
| Class B | 1,672,009 | 3,677,635 | |
| Class C | 6,066,380 | 12,468,674 | |
| Class I | 39,242,506 | 36,170,739 | |
| Class R1 | 562,619 | 922,996 | |
| Class R2 | 4,273,636 | 9,472,723 | |
| Class R3 | 11,655,412 | 22,054,334 | |
| Class R4 | 3,213,366 | 5,515,752 | |
| Class R6 | 52,560,085 | 75,528,058 | |
| Class 529A | 835,969 | 1,207,219 | |
| Class 529B | 14,774 | 35,152 | |
| Class 529C | 160,193 | 277,464 | |
| Total | $281,119,270 | $447,821,510 |
(3) Transactions with
Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid
monthly at an annual rate of 0.33% of the fund’s average daily net assets.
Distributor — MFS Fund
Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, as distributor, received $398,075 and $8,053 for the year ended December 31, 2020, as its portion of the initial sales charge on sales of Class A and Class 529A shares of the fund,
respectively.
The Board of Trustees has adopted a
distribution plan for certain share classes pursuant to Rule 12b-1 of the Investment Company Act of 1940.
The fund's distribution plan provides that the fund will pay
MFD for services provided by MFD and financial intermediaries in connection with the distribution and servicing of certain share classes. One component of the plan is a distribution fee paid to MFD and another component of the plan is a service fee
paid to MFD. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.
34
Notes to Financial
Statements - continued
Distribution Plan Fee Table:
|
Distribution
Fee Rate (d) |
Service
Fee Rate (d) |
Total
Distribution Plan (d) |
Annual
Effective Rate (e) |
Distribution
and Service Fee |
|
| Class A | — | 0.25% | 0.25% | 0.24% | $ 8,878,874 |
| Class B | 0.75% | 0.25% | 1.00% | 1.00% | 431,134 |
| Class C | 0.75% | 0.25% | 1.00% | 1.00% | 1,494,126 |
| Class R1 | 0.75% | 0.25% | 1.00% | 1.00% | 132,148 |
| Class R2 | 0.25% | 0.25% | 0.50% | 0.50% | 494,916 |
| Class R3 | — | 0.25% | 0.25% | 0.25% | 657,464 |
| Class 529A | — | 0.25% | 0.25% | 0.24% | 41,631 |
| Class 529B | 0.75% | 0.25% | 1.00% | 0.06% | 214 |
| Class 529C | 0.75% | 0.25% | 1.00% | 1.00% | 35,133 |
| Total Distribution and Service Fees | $12,165,640 |
| (d) | In accordance with the distribution plan for certain classes, the fund pays distribution and/or service fees equal to these annual percentage rates of each class’s average daily net assets. The distribution and service fee rates disclosed by class represent the current rates in effect at the end of the reporting period. Any rate changes, if applicable, are detailed below. |
| (e) | The annual effective rates represent actual fees incurred under the distribution plan for the year ended December 31, 2020 based on each class's average daily net assets.MFD has voluntarily agreed to rebate a portion of each class's 0.25% service fee attributable to accounts for which there is no financial intermediary specified on the account except for accounts attributable to MFS or its affiliates' seed money. For the year ended December 31, 2020, this rebate amounted to $449,408, $1,283, $1,102, $1,669, $27, and $18 for Class A, Class B, Class C, Class 529A, Class 529B, and Class 529C, respectively, and is included in the reduction of total expenses in the Statement of Operations. For the year ended December 31, 2020, the 0.75% distribution fee was not imposed for Class 529B shares due to the sales charge limitations contained in Financial Industry Regulatory Authority (“FINRA”) Rule 2341. |
Certain Class A shares are subject to a contingent deferred
sales charge (CDSC) in the event of a shareholder redemption within 18 months of purchase. Class B and Class 529B shares are subject to a CDSC in the event of a shareholder redemption within six years of purchase. Class C and Class 529C shares are
subject to a CDSC in the event of a shareholder redemption within 12 months of purchase. All contingent deferred sales charges are paid to MFD and during the year ended December 31, 2020, were as follows:
| Amount | |
| Class A | $18,367 |
| Class B | 31,343 |
| Class C | 7,555 |
| Class 529B | — |
| Class 529C | 163 |
During the year ended December 31,
2020, to meet the requirements of FINRA Rule 2341, MFD returned $614 of the CDSC collected in the fiscal year for Class 529B which had the effect of further reducing the annual effective distribution fee rate for this class by 0.19%.
35
Notes to Financial
Statements - continued
The fund has entered into and may from time to time enter into
contracts with program managers and other parties which administer the tuition programs through which an investment in the fund’s 529 share classes is made. The fund has entered into an agreement with MFD pursuant to which MFD receives an
annual fee of up to 0.05% of the average daily net assets attributable to each 529 share class. The services provided by MFD, or a third party with which MFD contracts, include recordkeeping and tax reporting and account services, as well as
services designed to maintain the program’s compliance with the Internal Revenue Code and other regulatory requirements. Program manager fees for the year ended December 31, 2020, were as follows:
Shareholder Servicing Agent — MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent calculated as a percentage of the average daily net assets of the
fund as determined periodically under the supervision of the fund's Board of Trustees. For the year ended December 31, 2020, the fee was $857,558, which equated to 0.0147% annually of the fund's average daily net assets. MFSC also receives
reimbursement from the fund for out-of-pocket expenses, sub-accounting and other shareholder servicing costs which may be paid to affiliated and unaffiliated service providers. Class R6 shares do not incur sub-accounting fees. For the year ended
December 31, 2020, these out-of-pocket expenses, sub-accounting and other shareholder servicing costs amounted to $4,425,854.
Administrator — MFS
provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund reimburses MFS the costs incurred to provide these services. The fund is
charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the year ended December 31, 2020 was equivalent to an annual effective rate of 0.0098% of the fund's average daily
net assets.
Trustees’ and Officers’
Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation
directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD,
and MFSC.
Prior to December 31, 2001, the fund had
an unfunded defined benefit plan (“DB plan”) for independent Trustees. As of December 31, 2001, the Board took action to terminate the DB plan with respect to then-current and any future independent Trustees, such that the DB plan covers
only certain of those former independent Trustees who retired on or before December 31, 2001. The DB plan resulted in a pension expense of $157 and is included in “Independent Trustees’ compensation” in the Statement of Operations
for the year ended December 31, 2020. The liability for
36
Notes to Financial
Statements - continued
deferred retirement benefits payable to those former independent Trustees
under the DB plan amounted to $5,860 at December 31, 2020, and is included in “Payable for independent Trustees’ compensation” in the Statement of Assets and Liabilities.
Other — The fund invests
in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS but does incur investment and
operating costs.
The fund is permitted to engage
in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that
cross-trades conducted by the fund comply with Rule 17a-7 under the Investment Company Act of 1940. During the year ended December 31, 2020, the fund engaged in purchase transactions pursuant to this policy, which amounted to $1,417,926.
The adviser has voluntarily undertaken to reimburse the fund
from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the year ended December 31, 2020, this reimbursement
amounted to $182,438, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2020, purchases and sales of
investments, other than short-term obligations, aggregated $911,207,396 and $1,315,779,672, respectively.
(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. Transactions in fund shares were as follows:
37
Notes to Financial
Statements - continued
|
Year
ended
12/31/20 |
Year
ended
12/31/19 |
||||
| Shares | Amount | Shares | Amount | ||
|
Shares
issued to shareholders
in reinvestment of distributions |
|||||
| Class A | 4,222,075 | $145,617,983 | 7,821,831 | $252,684,192 | |
| Class B | 49,183 | 1,638,379 | 115,469 | 3,600,057 | |
| Class C | 182,859 | 5,942,224 | 381,080 | 11,609,473 | |
| Class I | 1,052,270 | 35,301,287 | 1,053,505 | 32,911,301 | |
| Class R1 | 17,472 | 562,418 | 30,572 | 922,996 | |
| Class R2 | 130,101 | 4,232,757 | 303,899 | 9,280,983 | |
| Class R3 | 341,521 | 11,653,085 | 689,920 | 22,054,334 | |
| Class R4 | 92,270 | 3,213,014 | 169,024 | 5,515,401 | |
| Class R6 | 1,492,984 | 49,736,204 | 2,296,313 | 71,720,611 | |
| Class 529A | 24,564 | 821,996 | 38,501 | 1,207,219 | |
| Class 529B | 475 | 14,774 | 1,203 | 35,152 | |
| Class 529C | 5,129 | 156,759 | 9,646 | 277,464 | |
| 7,610,903 | $258,890,880 | 12,910,963 | $411,819,183 | ||
| Shares reacquired | |||||
| Class A | (25,732,630) | $(821,036,635) | (14,277,247) | $(451,456,443) | |
| Class B | (475,457) | (14,412,553) | (564,870) | (17,094,240) | |
| Class C | (2,677,821) | (82,377,596) | (1,593,901) | (47,457,274) | |
| Class I | (4,445,874) | (135,218,670) | (3,770,687) | (114,947,736) | |
| Class R1 | (181,121) | (5,293,897) | (65,971) | (1,967,949) | |
| Class R2 | (1,665,176) | (50,428,670) | (1,438,686) | (42,417,849) | |
| Class R3 | (3,452,884) | (109,514,668) | (2,855,266) | (88,410,401) | |
| Class R4 | (766,509) | (24,955,753) | (500,594) | (16,131,997) | |
| Class R6 | (7,963,431) | (244,075,628) | (13,631,022) | (410,216,499) | |
| Class 529A | (74,103) | (2,301,580) | (63,428) | (1,931,615) | |
| Class 529B | (6,460) | (184,943) | (3,692) | (107,472) | |
| Class 529C | (61,868) | (1,808,624) | (24,940) | (699,632) | |
| (47,503,334) | $(1,491,609,217) | (38,790,304) | $(1,192,839,107) | ||
38
Notes to Financial
Statements - continued
|
Year
ended
12/31/20 |
Year
ended
12/31/19 |
||||
| Shares | Amount | Shares | Amount | ||
| Net change | |||||
| Class A | (13,128,270) | $(411,158,921) | 1,137,811 | $41,201,962 | |
| Class B | (418,963) | (12,549,567) | (397,502) | (11,978,463) | |
| Class C | (2,047,905) | (63,391,485) | (756,062) | (22,227,667) | |
| Class I | 11,238,068 | 353,437,240 | 335,771 | 11,577,992 | |
| Class R1 | (101,950) | (2,902,944) | 323,483 | 10,265,765 | |
| Class R2 | (1,205,483) | (36,521,474) | (738,922) | (21,310,880) | |
| Class R3 | (1,625,401) | (51,111,876) | (640,048) | (18,422,883) | |
| Class R4 | (284,677) | (9,130,499) | 37,627 | 1,125,004 | |
| Class R6 | 1,114,017 | 35,463,750 | (3,131,202) | (87,415,382) | |
| Class 529A | 70,808 | 2,283,632 | 34,952 | 1,099,289 | |
| Class 529B | (3,682) | (97,399) | 321 | 10,194 | |
| Class 529C | (36,350) | (1,067,641) | 52 | 11,503 | |
| (6,429,788) | $(196,747,184) | (3,793,719) | $(96,063,566) | ||
Effective June 1, 2019, purchases of
the fund’s Class B and Class 529B shares are closed to new and existing investors subject to certain exceptions. Please see the fund’s prospectus for details.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in
a $1.25 billion unsecured committed line of credit of which $1 billion is reserved for use by the fund and certain other U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for
temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, plus an agreed upon spread. A
commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing
arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2020, the fund’s
commitment fee and interest expense were $27,780 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
39
Notes to Financial
Statements - continued
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund
owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers |
Beginning
Value |
Purchases |
Sales
Proceeds |
Realized
Gain (Loss) |
Change
in
Unrealized Appreciation or Depreciation |
Ending
Value |
| MFS Institutional Money Market Portfolio | $58,192,065 | $511,381,608 | $527,573,814 | $(15,243) | $— | $41,984,616 |
| Affiliated Issuers |
Dividend
Income |
Capital
Gain
Distributions |
| MFS Institutional Money Market Portfolio | $329,223 | $— |
(8) Impacts of COVID-19
The pandemic related to the global spread of novel coronavirus
disease (COVID-19), which was first detected in December 2019, has resulted in significant disruptions to global business activity and the global economy, as well as the economies of individual countries, the financial performance of individual
companies and sectors, and the securities and commodities markets in general. This pandemic, the full effects of which are still unknown, has resulted in substantial market volatility and may have adversely impacted the prices and liquidity of the
fund's investments and the fund's performance.
40
Report of Independent
Registered Public Accounting Firm
To the Board of
Trustees and the Shareholders of Massachusetts Investors Trust:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statement of
assets and liabilities of Massachusetts Investors Trust (the “Fund”), including the portfolio of investments, as of December 31, 2020, the related statement of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all
material respects, the financial position of the Fund as of December 31, 2020, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. 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, whether due to error or fraud. The
Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
41
Report of Independent
Registered Public Accounting Firm – continued
evaluating the overall presentation of the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of December 31, 2020, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 16, 2021
February 16, 2021
We have served as the auditor of one or more of the MFS
investment companies since 1924.
42
Trustees and
Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1,
2021, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts
02199-7618.
| Name, Age | Position(s) Held with Fund | Trustee/Officer Since(h) | Number of MFS Funds overseen by the Trustee |
Principal
Occupations During
the Past Five Years |
Other
Directorships During
the Past Five Years (j) |
|||||
| INTERESTED TRUSTEES | ||||||||||
|
Robert
J. Manning (k)
(age 57) |
Trustee | February 2004 | 134 | Massachusetts Financial Services Company, Non-Executive Chairman (since January 2021); Director; Chairman of the Board; Executive Chairman (January 2017-2020); Co-Chief Executive Officer (2015-2016) | N/A | |||||
|
Michael
W. Roberge (k)
(age 54) |
Trustee | January 2021 | 134 | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; President (until December 2018); Chief Investment Officer (until December 2018); Co-Chief Executive Officer (until December 2016) | N/A | |||||
| INDEPENDENT TRUSTEES | ||||||||||
|
John
P. Kavanaugh
(age 66) |
Trustee and Chair of Trustees | January 2009 | 134 | Private investor | N/A | |||||
|
Steven
E. Buller
(age 69) |
Trustee | February 2014 | 134 | Private investor | N/A | |||||
|
John
A. Caroselli
(age 66) |
Trustee | March 2017 | 134 | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | N/A | |||||
|
Maureen
R. Goldfarb
(age 65) |
Trustee | January 2009 | 134 | Private investor | N/A | |||||
|
Peter
D. Jones
(age 65) |
Trustee | January 2019 | 134 | Private investor | N/A | |||||
43
Trustees and Officers -
continued
| Name, Age | Position(s) Held with Fund | Trustee/Officer Since(h) | Number of MFS Funds overseen by the Trustee |
Principal
Occupations During
the Past Five Years |
Other
Directorships During
the Past Five Years (j) |
|||||
|
James
W. Kilman, Jr.
(age 59) |
Trustee | January 2019 | 134 | Burford Capital Limited (finance and investment management), Chief Financial Officer (since 2019); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking, Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016) | Alpha-En Corporation, Director (2016-2019) | |||||
|
Clarence
Otis, Jr.
(age 64) |
Trustee | March 2017 | 134 | Private investor | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director | |||||
|
Maryanne
L. Roepke
(age 64) |
Trustee | May 2014 | 134 | Private investor | N/A | |||||
|
Laurie
J. Thomsen
(age 63) |
Trustee | March 2005 | 134 | Private investor | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| Name, Age |
Position(s)
Held with
Fund |
Trustee/Officer Since(h) | Number of MFS Funds for which the Person is an Officer |
Principal
Occupations During
the Past Five Years |
||||
| OFFICERS | ||||||||
|
Christopher
R. Bohane (k)
(age 47) |
Assistant Secretary and Assistant Clerk | July 2005 | 134 | Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel | ||||
|
Kino
Clark (k)
(age 52) |
Assistant Treasurer | January 2012 | 134 | Massachusetts Financial Services Company, Vice President |
44
Trustees and Officers -
continued
| Name, Age |
Position(s)
Held with
Fund |
Trustee/Officer Since(h) | Number of MFS Funds for which the Person is an Officer |
Principal
Occupations During
the Past Five Years |
||||
|
John
W. Clark, Jr. (k)
(age 53) |
Assistant Treasurer | April 2017 | 134 | Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head - Treasurer's Office (until February 2017) | ||||
|
Thomas
H. Connors (k)
(age 61) |
Assistant Secretary and Assistant Clerk | September 2012 | 134 | Massachusetts Financial Services Company, Vice President and Senior Counsel | ||||
|
David
L. DiLorenzo (k)
(age 52) |
President | July 2005 | 134 | Massachusetts Financial Services Company, Senior Vice President | ||||
|
Heidi
W. Hardin (k)
(age 53) |
Secretary and Clerk | April 2017 | 134 | Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (until January 2017) | ||||
|
Brian
E. Langenfeld (k)
(age 47) |
Assistant Secretary and Assistant Clerk | June 2006 | 134 | Massachusetts Financial Services Company, Vice President and Senior Counsel | ||||
|
Amanda
S. Mooradian (k)
(age 41) |
Assistant Secretary and Assistant Clerk | September 2018 | 134 | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel | ||||
|
Susan
A. Pereira (k)
(age 50) |
Assistant Secretary and Assistant Clerk | July 2005 | 134 | Massachusetts Financial Services Company, Vice President and Assistant General Counsel | ||||
|
Kasey
L. Phillips (k)
(age 50) |
Assistant Treasurer | September 2012 | 134 | Massachusetts Financial Services Company, Vice President | ||||
|
Matthew
A. Stowe (k)
(age 46) |
Assistant Secretary and Assistant Clerk | October 2014 | 134 | Massachusetts Financial Services Company, Vice President and Assistant General Counsel | ||||
|
Martin
J. Wolin (k)
(age 53) |
Chief Compliance Officer | July 2015 | 134 | Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer |
45
Trustees and Officers -
continued
| Name, Age |
Position(s)
Held with
Fund |
Trustee/Officer Since(h) | Number of MFS Funds for which the Person is an Officer |
Principal
Occupations During
the Past Five Years |
||||
|
James
O. Yost (k)
(age 60) |
Treasurer | September 1990 | 134 | Massachusetts Financial Services Company, Senior Vice President |
| (h) | Date first appointed to serve as Trustee/officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. For the period from December 15, 2004 until February 22, 2005, Mr. Manning served as Advisory Trustee. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively. |
| (j) | Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”). |
| (k) | “Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618. |
Each Trustee (other than Messrs. Jones, Kilman and Roberge) has
been elected by shareholders and each Trustee and Officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. Mr. Roberge became a Trustee of the Funds on January 1,
2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board's retirement
policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015,
20 years of service on the Board).
Messrs. Buller, Kilman
and Otis and Ms. Roepke are members of the Trust’s Audit Committee.
Each of the Interested Trustees and certain Officers hold
comparable officer positions with certain affiliates of MFS.
46
Trustees and Officers -
continued
The Statement of Additional Information for a Fund includes
further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
|
Massachusetts
Financial Services Company
111 Huntington Avenue Boston, MA 02199-7618 |
State
Street Bank and Trust Company
1 Lincoln Street Boston, MA 02111-2900 |
| Distributor | Independent Registered Public Accounting Firm |
|
MFS Fund
Distributors, Inc.
111 Huntington Avenue Boston, MA 02199-7618 |
Deloitte
& Touche LLP
200 Berkeley Street Boston, MA 02116 |
| Portfolio Manager(s) | |
|
Kevin
Beatty
Alison O’Neill Mackey Ted Maloney |
47
Board Review of Investment
Advisory Agreement
Massachusetts Investors Trust
The Investment Company Act of 1940 requires that both the full
Board of Trustees and a majority of the non-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on
the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times by videoconference (in accordance with Securities
and Exchange Commission relief) over the course of three months beginning in May and ending in July, 2020 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory
agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal
counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by an independent consultant who was retained by
and reported to the independent Trustees.
In connection
with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and
their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the
Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.
In connection with their contract review meetings, the Trustees
received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time
periods ended December 31, 2019 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the
Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge as well as all other funds in the same investment classification/category (the “Broadridge expense group and
universe”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense
waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability
from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii)
descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii)
48
Board Review of Investment
Advisory Agreement - continued
information regarding the overall organization of MFS, including information
about MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge
was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.
The Trustees’ conclusion as to the continuation of the
investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are
described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other
MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be
based, in part, on their consideration of these same arrangements during the course of the year and in prior years.
Based on information provided by Broadridge and MFS, the
Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Class A
shares in comparison to the performance of funds in its Broadridge performance universe over the five-year period ended December 31, 2019, which the Trustees believed was a long enough period to reflect differing market conditions. The total return
performance of the Fund’s Class A shares was in the 2nd quintile relative to the other funds in the universe for this five-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total
return performance of the Fund’s Class A shares was in the 2nd quintile for the one-year period and the 1st quintile for the three-year period ended December 31, 2019 relative to the Broadridge performance universe. Because of the passage of
time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report. In addition, the Trustees reviewed the Fund’s Class I total return performance relative to the
Fund’s benchmark performance for the ten-, five-, three- and one-year periods ended December 31, 2019.
In the course of their deliberations, the Trustees took into
account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance.
After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment
performance.
In assessing the reasonableness of the
Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Class A shares as a percentage of average daily net assets and the advisory fee and total
expense ratios of the Broadridge expense group based on information provided by Broadridge. The Trustees considered that, according to the data provided
49
Board Review of Investment
Advisory Agreement - continued
by Broadridge (which takes into account any fee reductions or expense
limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each lower than the Broadridge expense group median.
The Trustees also considered the advisory fees charged by MFS
to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund,
if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in
comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cash in-flows and out-flows of the Fund in comparison
to separate accounts.
The Trustees also considered
whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund. They noted that the Fund’s advisory fee rate schedule is not subject to any breakpoints. Taking into account
that the Fund’s effective advisory fee rate was lower than the Broadridge expense group median described above, the Trustees determined not to recommend any advisory fee breakpoints for the Fund at this time.
The Trustees also considered information prepared by MFS
relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the
MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.
After reviewing these and other factors described herein, the
Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the
Fund.
In addition, the Trustees considered MFS’
resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and
well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial
resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.
The Trustees also considered the nature, quality, cost, and
extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any 12b-1 fees the Fund pays to MFS Fund
Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense
payment programs, class action recovery programs,
50
Board Review of Investment
Advisory Agreement - continued
and MFS’ interaction with third-party service providers, principally
custodians and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-called “fall-out
benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that MFS discontinued its historic practice of obtaining investment research from portfolio brokerage
commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Based on their evaluation of factors that they deemed to be
material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additional one-year period, commencing
August 1, 2020.
51
Proxy
Voting Policies and Information
MFS votes proxies on
behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s
Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Quarterly Portfolio Disclosure
The fund files a complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's Web site at http://www.sec.gov. A
shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/openendfunds by choosing the fund's name and then scrolling to the
“Resources” section and clicking on the “Prospectus and Reports” tab.
Further Information
From time to time, MFS may post important information about the
fund or the MFS funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at
mfs.com/openendfunds by choosing the fund’s name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an
investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended
beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either
directly or on behalf of the fund.
Under the
Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of
Massachusetts.
Federal Tax Information (unaudited)
The
fund will notify shareholders of amounts for use in preparing 2020 income tax forms in January 2021. The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund designates the maximum amount allowable as qualified
dividend income eligible to be taxed at the same rate as long-term capital gain.
The fund designates $272,971,000 as capital gain dividends paid
during the fiscal year.
For corporate shareholders, 100%
of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
52
The fund
designates the maximum amount allowable as Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
53
rev. 3/16
| FACTS | WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
| • Social Security number and account balances | |
| • Account transactions and transaction history | |
| • Checking account information and wire transfer instructions | |
| When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
|
Reasons
we can share your
personal information |
Does MFS share? |
Can
you limit
this sharing? |
|
For
our everyday business purposes –
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus |
Yes | No |
|
For
our marketing purposes –
to offer our products and services to you |
No | We don't share |
|
For
joint marketing with other
financial companies |
No | We don't share |
|
For
our affiliates' everyday business purposes –
information about your transactions and experiences |
No | We don't share |
|
For
our affiliates' everyday business purposes –
information about your creditworthiness |
No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
54
Page 2
| Who we are | |
| Who is providing this notice? | MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., and MFS Heritage Trust Company. |
| Definitions | |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice. | |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| • MFS does not share with nonaffiliates so they can market to you. | |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
| • MFS doesn't jointly market. | |
| Other important information |
| If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours. |
55
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CONTACT
WEB SITE
mfs.com
MFS TALK
1-800-637-8255
24 hours a day
ACCOUNT SERVICE AND LITERATURE
Shareholders
1-800-225-2606
Financial advisors
1-800-343-2829
Retirement plan services
1-800-637-1255
MAILING ADDRESS
MFS Service Center, Inc.
P.O. Box 219341
Kansas City, MO 64121-9341
OVERNIGHT MAIL
MFS Service Center, Inc.
Suite 219341
430 W 7th Street
Kansas City, MO 64105-1407
Item 1(b):
Not applicable.
| ITEM 2. |
CODE OF ETHICS. |
The Registrant has adopted a Code of Ethics (the “Code”) pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in Form N-CSR that applies to the Registrant’s principal executive officer and principal financial and accounting officer. During the period covered by this report, the Registrant has not amended any provision in the Code that relates to an element of the Code’s definition enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.
A copy of the Code is filed as an exhibit to this Form N-CSR.
| ITEM 3. |
AUDIT COMMITTEE FINANCIAL EXPERT. |
Messrs. Steven E. Buller, James Kilman, and Clarence Otis, Jr. and Ms. Maryanne L. Roepke, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of “audit committee financial expert” as such term is defined in Form N-CSR. In addition, Messrs. Buller, Kilman, and Otis and Ms. Roepke are “independent” members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the Form N-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.
| ITEM 4. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Items 4(a) through 4(d) and 4(g):
The Board of Trustees has appointed Deloitte & Touche LLP (“Deloitte”) to serve as independent accountants to the series of the Registrant (the series referred to as the “Fund”). The tables below set forth the audit fees billed to the Fund as well as fees for non-audit services provided to the Fund and/or to the Fund’s investment adviser, Massachusetts Financial Services Company (“MFS”), and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Fund (“MFS Related Entities”).
For the fiscal years ended December 31, 2020 and 2019, audit fees billed to the Fund by Deloitte were as follows:
| Audit Fees | ||||||||
| 2020 | 2019 | |||||||
|
Fees billed by Deloitte: |
||||||||
|
Massachusetts Investors Trust |
51,409 | 50,563 | ||||||
For the fiscal years ended December 31, 2020 and 2019, fees billed by Deloitte for audit-related, tax and other services provided to the Fund and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:
| Audit-Related Fees1 | Tax Fees2 | All Other Fees3 | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
|
Fees billed by Deloitte: |
||||||||||||||||||||||||
|
To Massachusetts Investors Trust |
0 | 0 | 7,909 | 7,138 | 0 | 0 | ||||||||||||||||||
| Audit-Related Fees1 | Tax Fees2 | All Other Fees3 | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
|
Fees billed by Deloitte: |
||||||||||||||||||||||||
|
To MFS and MFS Related Entities of Massachusetts Investors Trust* |
0 | 0 | 0 | 0 | 5,390 | 3,790 | ||||||||||||||||||
|
Aggregate Fees for Non-audit
Services |
||||||||
| 2020 | 2019 | |||||||
|
Fees billed by Deloitte: |
||||||||
|
To Massachusetts Investors Trust, MFS and MFS Related Entities# |
557,049 | 360,928 | ||||||
| * |
This amount reflects the fees billed to MFS and MFS Related Entities for non-audit services relating directly to the operations and financial reporting of the Fund (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex). |
| # |
This amount reflects the aggregate fees billed by Deloitte for non-audit services rendered to the Fund and for non-audit services rendered to MFS and the MFS Related Entities. |
| 1 |
The fees included under “Audit-Related Fees” are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under ‘‘Audit Fees,’’ including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters and internal control reviews. |
| 2 |
The fees included under “Tax Fees” are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis. |
| 3 |
The fees included under “All Other Fees” are fees for products and services provided by Deloitte other than those reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees”. |
Item 4(e)(1):
Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to the pre-approval of audit and non-audit related services:
To the extent required by applicable law, pre-approval by the Audit Committee of the Board is needed for all audit and permissible non-audit services rendered to the Fund and all permissible non-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant. Pre-approval is currently on an engagement-by-engagement basis. In the event pre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-approval at the next regular meeting of the Audit Committee, pre-approval of such services may be referred to the Chair of the Audit Committee for approval; provided that the Chair may not pre-approve any individual engagement for such
services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 between such regular meetings of the Audit Committee. Any engagement pre-approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting.
Item 4(e)(2):
None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee approval after the start of the engagement with respect to services other than audit, review or attest services, if certain conditions are satisfied).
Item 4(f):
Not applicable.
Item 4(h):
The Registrant’s Audit Committee has considered whether the provision by a Registrant’s independent registered public accounting firm of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiring pre-approval or because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant’s principal auditors.
| ITEM 5. |
AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable to the Registrant.
| ITEM 6. |
INVESTMENTS |
A schedule of investments of the Registrant is included as part of the report to shareholders of such series under Item 1(a) of this Form N-CSR.
| ITEM 7. |
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 8. |
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 9. |
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable to the Registrant.
| ITEM 10. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.
| ITEM 11. |
CONTROLS AND PROCEDURES. |
| (a) |
Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
| (b) |
There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| ITEM 12. |
DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable to the Registrant.
| ITEM 13. |
EXHIBITS. |
| (a) (1) |
Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto as EX-99.COE. |
| (2) |
A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT. |
| (3) |
Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. |
| (4) |
Change in the registrant’s independent public accountant. Not applicable. |
| (b) |
If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Attached hereto as EX-99.906CERT. |
Notice
A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MASSACHUSETTS INVESTORS TRUST
| By (Signature and Title)* | /S/ DAVID L. DILORENZO | |
| David L. DiLorenzo, President |
Date: February 16, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | /S/ DAVID L. DILORENZO | |
|
David L. DiLorenzo, President (Principal Executive Officer) |
Date: February 16, 2021
| By (Signature and Title)* | /S/ JAMES O. YOST | |
|
James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer) |
Date: February 16, 2021
| * |
Print name and title of each signing officer under his or her signature. |
