<PAGE>
As filed with the Securities and Exchange Commission on September 17, 1998
1933 Act File No. 2-60491
1940 Act File No. 811-2794
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 27
AND REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 29
MFS SERIES TRUST III
(Exact name of Registrant as Specified in Charter)
500 Boylston Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 954-5000
Stephen E. Cavan, Massachusetts Financial Services Company
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b)
|X| on September 17, 1998 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on [date] pursuant to paragraph (a)(i)
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on [date] pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
================================================================================
<PAGE>
The Prospectus dated June 1, 1998 of MFS Municipal High Income Fund is
incorporated in this Post-Effective Amendment No. 27 by reference to the
Prospectus of MFS Municipal High Income Fund filed by the Registrant pursuant to
rule 497(j) under the Securities Act of 1933, as amended (File No. 2-60491),
with the Securities and Exchange Commission on June 1, 1998.
<PAGE>
The Statement of Additional Information dated June 1, 1998 of MFS Municipal High
Income Fund is incorporated in this Post-Effective Amendment No. 27 by reference
to the Statement of Additional Information of MFS Municipal High Income Fund
filed by the Registrant pursuant to rule 497(j) under the Securities Act of
1933, as amended (File No. 2-60491), with the Securities and Exchange Commission
on June 1, 1998.
<PAGE>
MFS MUNICIPAL HIGH INCOME FUND
SUPPLEMENT TO THE JUNE 1, 1998 PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
The following information should be read in conjunction with the Prospectus
and Statement of Additional Information dated June 1, 1998 for the MFS
Municipal High Income Fund (the "Fund") and contains a description of Class C
shares.
<TABLE>
<CAPTION>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES: CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on Purchases
of Fund Shares (as a percentage of offering price) ...................... 4.75% 0.00% 0.00%
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) .................... See Below(1) 4.00% 1.00%
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
Management Fees ............................................................ 0.65% 0.65% 0.65%
Rule 12b-1 Fees ............................................................ 0.00% 0.91%(2) 1.00%(2)
Other Expenses(3) .......................................................... 0.22% 0.22% 0.22%(4)
----- ----- -----
Total Operating Expenses ................................................... 0.87% 1.78% 1.87%
</TABLE>
- ----------
(1) Purchases of $1 million or more and certain purchases by retirement plans
are not subject to an initial sales charge; however, a contingent deferred
sales charge (a "CDSC") of 1.00% will be imposed on such purchases in the
event of certain redemption transactions within 12 months following such
purchases (see "Information Concerning Shares of the Fund -- Purchases"
below).
(2) The Fund has adopted a distribution plan for its Class B shares and Class
C shares, in accordance with Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "1940 Act") (the "Distribution Plan"), which
provides that it will pay distribution/service fees aggregating up to (but
not necessarily all of) 1.00% per annum of the average daily net assets
attributable to the Class B and Class C shares, respectively. Except in
the case of the 0.25% per annum Class B service fee paid by the Fund upon
the sale of Class B shares, payment of the Class B service fee will be
suspended until such date as the Trustees of the Trust may determine.
Distribution expenses paid under the Plan with respect to Class B or Class
C shares, together with any CDSC, may cause long-term shareholders to pay
more than the maximum sales charge that would have been permissible if
imposed entirely as an initial sales charge. See "Information Concerning
Shares of the Fund -- Distribution Plan" below.
(3) The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have
the effect of reducing the Fund's expenses). Any such fee reductions are
not reflected under "Other Expenses."
(4) Based on expenses of the other classes incurred during the Fund's last
fiscal year.
<PAGE>
EXAMPLE OF EXPENSES
-------------------
An investor would pay the following dollar amounts of expenses on a $1,000
investment in the Fund, assuming (a) a 5% annual return and (b) redemption at
the end of each of the time periods indicated (unless otherwise noted):
<TABLE>
<CAPTION>
PERIOD CLASS A CLASS B CLASS C
- ------ ------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
(1) (1)
1 year ............... $ 56 $ 58 $ 18 $ 29 $ 19
3 years .............. 74 86 56 59 59
5 years .............. 93 116 96 101 101
10 years .............. 150 185(2) 185(2) 219 219
</TABLE>
- ----------
(1) Assumes no redemption.
(2) Class B shares convert to Class A shares approximately eight years after
purchase; therefore, years nine and ten reflect Class A expenses.
The purpose of the expense table above is to assist investors in understanding
the various costs and expenses that a shareholder of the Fund will bear
directly or indirectly. More complete descriptions of the following expenses
of the Fund are set forth in the following sections of the Prospectus: (i)
varying sales charges on share purchases -- "Purchases"; (ii) varying CDSCs --
"Purchases"; (iii) management fees -- "Investment Adviser"; and (iv) Rule
12b-1 (i.e., distribution plan) fees -- "Distribution Plan."
THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF THE FUND; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following information has been audited for at least the latest five fiscal
years (except where noted) and should be read in conjunction with the
financial statements included in the Fund's Annual Report to shareholders and
subsequent Semiannual Report which are incorporated by reference into the
Statement of Additional Information. The financial statements for all but the
most recent six months are included in reliance upon the report of the Fund's
independent auditors, given upon their authority as experts in accounting and
auditing. The Fund's independent auditors are Ernst & Young LLP.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 1998 ------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------- ---------- -------- ---------- -------- --------
CLASS A
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
Net asset value - beginning of period ........... $ 9.07 $ 8.73 $ 9.12 $ 8.60 $ 9.38 $ 9.26
---------- ---------- -------- ---------- -------- --------
Income from investment operations# -
Net investment income ......................... $ 0.26 $ 0.57 $ 0.61 $ 0.61 $ 0.64 $ 0.77
Net realized and unrealized gain
(loss) on investments ....................... (0.08) 0.34 (0.36) 0.59 (0.75) 0.05
---------- ---------- -------- ---------- -------- --------
Total from investment operations .......... $ 0.18 $ 0.91 $ 0.25 $ 1.20 $ (0.11) $ 0.82
---------- ---------- -------- ---------- -------- --------
Less distributions declared to
shareholders from net investment income ....... $ (0.26) $ (0.57) $ (0.64) $ (0.68) $ (0.67) $ (0.70)
Net asset value - end of period ................. $ 8.99 $ 9.07 $ 8.73 $ 9.12 $ 8.60 $ 9.38
========== ========== ======== ========== ======== ========
Total return(+) ................................. 2.06%++ 10.81% 2.87% 13.92% (1.04)% 9.19%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses## .................................... 0.84%+ 0.89% 0.93% 0.93% 1.04% 1.10%
Net investment income ......................... 5.92%+ 6.42% 6.96% 6.83% 7.27% 7.15%
PORTFOLIO TURNOVER .............................. 4% 19% 17% 20% 32% 18%
NET ASSETS AT END OF PERIOD(000 OMITTED) ........ $1,134,168 $1,107,181 $988,178 $1,009,031 $920,043 $809,957
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to January 31, 1995, are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS -- CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------------------------------------------------------
1993 1992 1991 1990 1989
CLASS A
------------------------------------------------------------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period . $ 9.22 $ 9.09 $ 9.45 $ 9.55 $ 9.68
------ ------ ------ ------ ------
Income from investment operations -
Net investment income ............... $ 0.73 $ 0.73 $ 0.74 $ 0.85 $ 0.88
Net realized and unrealized gain
(loss) on investments ............. 0.06 0.17 (0.32) (0.09) (0.12)
------ ------ ------ ------ ------
Total from investment operations $ 0.79 $ 0.90 $ 0.42 $ 0.76 $ 0.76
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income .......... $(0.75) $(0.77) $(0.78) $(0.81) $(0.82)
From net realized gain on investments -- -- -- (0.04) (0.07)
From paid-in capital ................ -- -- -- (0.01) --
------ ------ ------ ------ ------
Total distributions declared to
shareholders .................. $(0.75) $(0.77) $(0.78) $(0.86) $(0.89)
------ ------ ------ ------ ------
Net asset value - end of period ....... $ 9.26 $ 9.22 $ 9.09 $ 9.45 $ 9.55
====== ====== ====== ====== ======
Total return(+) ....................... 9.02% 10.34% 4.65% 8.24% 8.32%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses ............................ 1.00% 1.03% 1.05% 1.02% 0.65%
Net investment income ............... 7.95% 7.96% 8.17% 8.90% 9.27%
PORTFOLIO TURNOVER .................... 10% 21% 41% 21% 23%
NET ASSETS AT END OF PERIOD (000 OMITTED) $731,968 $648,043 $638,185 $485,037 $325,044
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results would
have been lower.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- CONTINUED
SIX MONTHS ENDED YEAR ENDED JANUARY 31,
JULY 31, 1998 --------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994**
-------- -------- -------- -------- -------- --------
CLASS B
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
Net asset value - beginning of period ........... $ 9.08 $ 8.74 $ 9.12 $ 8.60 $ 9.38 $ 9.40
-------- -------- -------- -------- -------- --------
Income from investment operations# -
Net investment income(S) ...................... $ 0.22 $ 0.49 $ 0.52 $ 0.52 $ 0.57 $ 0.32
Net realized and unrealized gain
(loss) on investments ....................... (0.09) 0.34 (0.35) 0.59 (0.78) (0.14)
-------- -------- -------- -------- -------- --------
Total from investment operations .......... $ 0.13 $ 0.83 $ 0.17 $ 1.11 $ (0.21) $ 0.18
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders
from net investment income .................... $ (0.22) $ (0.49) $ (0.55) $ (0.59) $ (0.57) $ (0.20)
-------- -------- -------- -------- -------- --------
Net asset value - end of period ................. $ 8.99 $ 9.08 $ 8.74 $ 9.12 $ 8.60 $ 9.38
======== ======== ======== ======== ======== ========
Total return .................................... 1.50%++ 9.87% 1.96% 12.78% (2.13)% 1.89%+
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA(S):
Expenses## .................................... 1.72%+ 1.73% 1.86% 1.91% 2.10% 2.04%+
Net investment income ......................... 5.04%+ 5.50% 6.00% 5.84% 6.32% 5.43%+
PORTFOLIO TURNOVER .............................. 4% 19% 17% 20% 32% 18%
NET ASSETS AT END OF PERIOD(000 OMITTED) ........ $313,475 $264,575 $125,971 $ 77,808 $ 55,675 $ 1
** For the period from the inception of Class B, September 7, 1993, through January 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to January 31, 1995, are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
(S) The distributor voluntarily waived a portion of its distribution fee for the period indicated. If this fee had been incurred by
the Fund, the net investment income per share and the ratios would have been:
Net investment income ........................... -- $ 0.49 -- -- -- --
RATIOS (TO AVERAGE NET ASSETS):
Expenses## .................................... -- 1.80% -- -- -- --
Net investment income ......................... -- 5.43% -- -- -- --
</TABLE>
<PAGE>
THE FUND
The Fund is a non-diversified series of MFS Series Trust III (the "Trust"), an
open-end management investment company which was organized as a business trust
under the laws of The Commonwealth of Massachusetts in 1977. The Trust
presently consists of three series, each of which represents a portfolio with
separate investment policies. Three classes of shares of the Fund currently
are offered for sale to the general public. Class A shares are offered at net
asset value plus an initial sales charge up to a maximum of 4.75% of the
offering price (or a CDSC of 1.00% upon redemption during the first year in
the case of purchases of $1 million or more and certain purchases by
retirement plans). Class B shares are offered at net asset value without an
initial sales charge but are subject to a CDSC upon redemption (declining from
4.00% during the first year to 0% after six years) and an annual distribution
fee and service fee up to a maximum of 1.00% per annum. Class B shares will
convert to Class A shares approximately eight years after purchase. Class C
shares are offered at net asset value without an initial sales charge but are
subject to a CDSC of 1.00% upon redemption during the first year and an annual
distribution and service fee up to a maximum of 1.00% per annum. Class C
shares do not convert to any other class of shares of the Fund. The Fund buys
securities (primarily municipal bonds and notes that may be in the medium or
lower rating categories or may be unrated, the interest on which is exempt
from federal income tax) for its portfolio.
INFORMATION CONCERNING SHARES OF THE FUND
PURCHASES
The Fund offers three classes of shares to the general public which bear sales
charges and distribution fees in different forms and amounts. Class A and
Class B shares are described in the Prospectus and SAI and Class C shares are
described below.
CLASS C SHARES: Class C shares are offered at net asset value without an
initial sales charge but are subject to a CDSC of 1.00% upon redemption during
the first year. Class C shares do not convert to any other class of shares of
the Fund. The maximum investment in Class C shares that may be made is up to
$1,000,000 per transaction.
The CDSC imposed is assessed against the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. No CDSC is assessed against shares acquired
through the automatic reinvestment of dividend or capital gain distributions.
See "Redemptions and Repurchases -- Contingent Deferred Sales Charge" below
for further discussion of the CDSC.
MFS Fund Distributors ("MFD") will pay dealers 1.00% of the purchase price of
Class C shares purchased through dealers and, as compensation therefor, MFD
will retain the 1.00% per annum distribution and service fee paid under the
Fund's Distribution Plan to MFD for the first year after purchase (see
"Distribution Plan" below).
Class C shares are not currently available for purchase by any retirement plan
qualified under Sections 401(a) or 403(b) of the Internal Revenue Code of
1986, as amended (the "Code") if the retirement plan and/or the sponsoring
organization subscribe to the MFS FUNDamental 401(k) Plan or another similar
recordkeeping program made available by the Shareholder Servicing Agent.
WAIVERS OF CDSC. In certain circumstances, the CDSC imposed upon redemption of
Class C shares is waived. Where these circumstances are described in Appendix
A in the Prospectus as applicable to "Class B shares" or "all shares," they
also apply to Class C shares.
EXCHANGES
Some or all of the Class C shares in an account with the Fund for which
payment has been received by the Fund (i.e., an established account) may be
exchanged for Class C shares of any of the other funds in the MFS Family of
Funds ("MFS Funds") at net asset value (if available for sale). No CDSC will
be imposed in connection with an exchange from Class C shares of the Fund to
any other MFS Fund; however, the holding period for purposes of calculating
the CDSC will carry over to the acquired shares.
REDEMPTIONS AND REPURCHASES
CONTINGENT DEFERRED SALES CHARGE: Investments in Class C shares ("Direct
Purchases") will be subject to a 1.00% CDSC upon redemption for a period of 12
months. Purchases of Class C shares made during a calendar month, regardless
of when during the month the investment occurred, will age one year at the
close of business on the last day of such month in the following calendar year
and each subsequent year.
At the time of a redemption, the amount by which the value of a shareholder's
account represented by Direct Purchases exceeds the sum of 12 months of Direct
Purchases may be redeemed without charge ("Free Amount"). Moreover, no CDSC is
ever assessed on additional shares acquired through the automatic reinvestment
of dividend or capital gain distributions ("Reinvested Shares"). Therefore, at
the time of redemption of Class C shares, (i) any Free Amount is not subject
to the CDSC and (ii) the amount of the redemption equal to the then-current
value of Reinvested Shares is not subject to the CDSC, but (iii) any amount of
the redemption in excess of the aggregate of the then-current value of
Reinvested Shares and the Free Amount is subject to a CDSC. The CDSC will
first be applied against the amount of Direct Purchases made which will result
in any such charge being imposed at the lowest possible rate.
The applicability of a CDSC for Class C shares will be unaffected by exchanges
or transfers of registration, except as described in the Prospectus for Class
B shares.
REINSTATEMENT PRIVILEGE: Class C shareholders of the Fund who have redeemed
their shares have a one-time right to reinvest the redemption proceeds in the
same class of shares of any of the MFS Funds (if shares of such Fund are
available for sale) at net asset value (with a credit for any CDSC paid)
within 90 days of the redemption pursuant to the Reinstatement Privilege. If
the Class C shares credited for any CDSC paid are then redeemed within 12
months of the initial purchase, a CDSC will be imposed upon redemption. Such
purchases under the Reinstatement Privilege are subject to all limitations in
the Statement of Additional Information regarding the privilege.
DISTRIBUTION PLAN
The Trustees have adopted a Distribution Plan for Class B and Class C shares
pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Distribution Plan"), after having concluded that there is reasonable
likelihood that the Distribution Plan would benefit the Fund and its
shareholders. The features common to each Class of shares are described in the
Prospectus and apply to Class C shares.
FEATURES UNIQUE TO EACH CLASS OF SHARES: There are certain features of the
Distribution Plan that are unique to Class C shares, as described below.
CLASS C SHARES. Class C shares are offered at net asset value without an
initial sales charge but subject to a CDSC. See "Purchases -- Class C shares"
above. MFD will pay a commission to dealers of 1.00% of the purchase price of
Class C shares purchased through dealers at the time of purchase. In
compensation for this 1.00% commission paid by MFD to dealers, MFD will retain
the 1.00% per annum Class C distribution and service fees paid by the Fund
with respect to such shares for the first year after purchase, and dealers
will become eligible to receive from MFD the ongoing 1.00% per annum
distribution and service fees paid by the Fund to MFD with respect to such
shares commencing in the thirteenth month following purchase.
This ongoing 1.00% fee is comprised of the 0.25% per annum service fee paid to
MFD under the Distribution Plan (which MFD in turn pays to dealers), as
discussed above, and a distribution fee paid to MFD (which MFD also in turn
pays to dealers) under the Distribution Plan equal, on an annual basis, to
0.75% of the Fund's average daily net assets attributable to Class C shares.
CURRENT LEVEL OF DISTRIBUTION AND SERVICE FEES: The Fund's Class C
distribution/service fee for its current fiscal year is equal to 1.00% per
annum of the average daily net assets attributable to the Fund's Class C
shares.
DISTRIBUTIONS
Distributions paid by the Fund with respect to Class A shares will generally
be greater than those paid with respect to Class B and Class C shares because
expenses attributable to Class B and Class C shares will generally be higher.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund has three classes of shares which it offers to the general public
entitled Class A, Class B and Class C Shares of Beneficial Interest (without
par value).
PERFORMANCE INFORMATION
Total rate of return quotations for Class C shares, if quoted for periods of
one year or less, will give effect to the imposition of the 1.00% CDSC
assessed upon redemption of Class C shares during the first year. Such total
rate of return quotations may be accompanied by quotations which do not
reflect the deduction of the CDSC, and will thus be higher. Yield and
distribution rate calculations for Class C shares assume no CDSC is paid.
SHAREHOLDER SERVICES
LETTER OF INTENT: Purchases of Class C shares will apply toward the
completion of the requirements under a Letter of Intent with respect to the
purchase of Class A shares. See the Prospectus for further information on the
Letter of Intent.
RIGHT OF ACCUMULATION: The current offering price value of an investor's
holdings of Class C shares will apply toward cumulative quantity discounts on
purchases of Class A shares. See the Prospectus for further information on the
Right of Accumulation.
SYSTEMATIC WITHDRAWAL PLAN: The aggregate withdrawals of Class C shares in
any year pursuant to a Systematic Withdrawal Plan ("SWP") will not be subject
to a CDSC and generally are limited to 10% of the value of the account at the
time of establishment of the SWP.
<PAGE>
INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
Ernst & Young LLP are the Fund's independent auditors providing audit
services, tax services, and assistance and consultation with respect to the
preparation of filings with the SEC.
The Portfolio of Investments and the Statement of Assets and Liabilities at
January 31, 1998, the Statement of Operations for the year ended January 31,
1998, the Statement of Changes in Net Assets for each of the two years in the
period ended January 31, 1998, the Notes to Financial Statements and the
Independent Auditors' Report, each of which is included in the Annual Report
to shareholders of the Fund, are incorporated by reference into this SAI in
reliance upon the report of Ernst & Young LLP, independent auditors, given
upon their authority as experts in accounting and auditing.
The Portfolio of Investments (unaudited) at July 31, 1998, the Statement of
Assets and Liabilities (unaudited) at July 31, 1998, the Statement of
Operations (unaudited) for the six months ended July 31, 1998, the Statement
of Changes in Net Assets (unaudited) for the six months ended July 31, 1998
and the Notes to Financial Statements (unaudited), which are included in the
Semiannual Report to shareholders of the Fund, are incorporated by reference
into the Fund's SAI.
A copy of the Semiannual Report and the Annual Report accompany the Fund's
SAI.
THE DATE OF THIS SUPPLEMENT IS SEPTEMBER 17, 1998
<PAGE>
The financial statements contained in the Annual Report dated January 31, 1998
of MFS Municipal High Income Fund (File No. 811-2794) are incorporated in this
Post-Effective Amendment No. 27 by reference to the Post-Effective Amendment No.
26 to the Registrant Statement (File No. 2-60491) of MFS Municipal High Income
Fund filed by the Registrant with the Securities and Exchange Commission on May
28, 1998.
<PAGE>
The financial statements as contained in the Semi-Annual Report
dated July 31, 1998 of MFS Municipal High Income Fund
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) - July 31, 1998
<TABLE>
Municipal Bonds - 98.5%
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Obligation - 3.3%
Chicago, IL, FGIC, 5.125s, 2025 $ 5,000 $ 4,904,700
District of Columbia, 6s, 2026 5,000 5,247,250
Markham, IL, 9s, 2012 2,670 2,710,050
New York City, NY, 6.875s, 2003 120 131,136
New York City, NY, 7.1s, 2011 120 130,940
New York City, NY, 5.875s, 2024 7,000 7,394,800
New York City, NY, 6.125s, 2025 3,675 3,944,966
New York City, NY, 6.125s, 2025 8,000 8,638,160
New York City, NY, 5.5s, 2037 5,000 5,064,650
New York City, NY, FSA, 7s, 2022 70 76,681
Orleans Parish, LA, School Board, FGIC, 0s, 2015 9,860 4,176,301
Texas Veteran Housing Assistance Program, 7s, 2025 1,330 1,440,310
Ukiah, CA, Unified School District, FGIC, 0s, 2017 4,795 1,789,638
Ukiah, CA, Unified School District, FGIC, 0s, 2018 4,085 1,447,520
West Warwick, RI, 7.3s, 2008 200 220,120
West Warwick, RI, 7.45s, 2013 570 638,571
--------------
$ 47,955,793
- --------------------------------------------------------------------------------------------------------
State and Local Appropriation - 0.5%
District of Columbia, Certificates of Participation, 7.3s, 2013 $ 2,500 $ 2,807,325
New York Dormitory Authority Rev. (St. Clare's Hospital), 5.3s, 2019 2,000 1,987,560
New York Dormitory Authority Rev. (Wyckoff Heights Medical Center),
5.3s, 2021 1,000 993,460
South Tucson, AZ, Municipal Property Corp., 8.75s, 2010 865 920,680
--------------
$ 6,709,025
- --------------------------------------------------------------------------------------------------------
Refunded and Special Obligations - 20.6%
Arapahoe County, CO, Capital Improvement, Highway Rev., 0s, 2015 $ 76,375 $ 27,105,487
Arapahoe County, CO, Capital Improvement, Highway Rev., 0s, 2026 69,000 10,508,010
Austin, TX, Utilities System Rev., 10.75s, 2000 1,780 1,988,865
Clermont County, OH, Hospital Facilities Rev. (Mercy
Health Systems), AMBAC, MVRICs, 9.441s, 2021(++) 1,300 1,541,618
Colorado Health Facilities Authority, Retirement
Facilities Rev. (Liberty Heights), 0s, 2022 6,850 1,881,695
Colorado Health Facilities Authority, Retirement
Facilities Rev. (Liberty Heights), 0s, 2024 29,295 7,223,268
Colquitt County, GA, Development Authority Rev.,"A", 0s, 2021 7,270 1,995,906
Colquitt County, GA, Development Authority Rev.,"C", 0s, 2021 4,250 1,166,795
Daphne, AL, Special Care Facilities Financing
Authority (1st Mortgage Rev.), 0s, 2008 89,975 56,745,433
Daphne, AL, Special Care Facilities Financing
Authority (2nd Mortgage Rev.), 0s, 2008 4,500 2,838,060
Daphne, AL, Special Care Facilities Financing
Authority (Presbyterian), 0s, 2008 48,475 8,676,055
Denver, CO, City & County Airport Rev., 8.875s, 2012 1,325 1,538,034
Denver, CO, City & County Airport Rev., 7.75s, 2021 425 478,826
Denver, CO, City & County Airport Rev., 8.5s, 2023 255 284,378
Denver, CO, City & County Airport Rev., 8.75s, 2023 1,530 1,770,195
Denver, CO, City & County Airport Rev., 8s, 2025 100 110,443
Desert Hospital District, CA, Hospital Rev. (Desert
Hospital Corp.), 8.914s, 2020(++) 4,000 4,767,480
District of Columbia, Hospital Rev. (Washington
Hospital), 7.125s, 2019 1,750 1,962,573
Doylestown, PA, Hospital Authority (Doylestown Hospital), 7.2s, 2023 2,200 2,525,600
Fairfax County, VA, Redevelopment & Housing Authority
(Little River Glen), 8.95s, 2020 1,990 2,113,121
Hannibal, MO, Industrial Development Authority
(Hannibal Regional Healthcare), 9.5s, 2022+ 3,000 3,554,250
Illinois Development Finance Authority, Retirement
Housing Rev., 0s, 2023 30,000 7,508,700
Illinois Development Finance Authority, Retirement
Housing Rev. (Regency Park), ETM, 0s, 2025 8,050 1,714,730
Illinois Health Facilities Rev. (Memorial Hospital-
Woodstock), 7.25s, 2022 1,500 1,685,100
Jefferson County, OH, 7.125s, 2019 8,660 10,308,951
Jenks Township, PA, Municipal Authority Rev., 8s, 2018 4,650 5,466,400
Maine Health & Higher Education Facilities Authority
(St. Mary's General Hospital), 8.625s, 1999 5,140 5,464,899
Massachusetts Health & Education Facilities Authority
(Fairview Extended Care Facility), 10.25s, 2021 3,000 3,503,760
Massachusetts Industrial Finance Agency (Glenmeadow
Retirement Community), 8.375s, 2018 2,300 2,913,571
Massachusetts Industrial Finance Agency (Glenmeadow
Retirement Community), 8.625s, 2026 3,520 4,514,893
Massachusetts Industrial Finance Agency, Tunnel Rev
(Mass. Turnpike), 9s, 2020 10,895 12,220,486
Mesa County, CO, Residual Rev., 0s, 2003 25,125 8,869,125
Mississippi Hospital Equipment & Facilities Authority
Rev. (Rush Medical Foundation), 8.75s, 2001 2,800 3,152,884
New Lenox, IL, Community Park Development Authority, 8.25s, 2004 4,205 5,138,931
New York City, NY, 6.875s, 2003 880 970,086
New York City, NY, 7.1s, 2011 880 976,457
New York City, NY, 6.125s, 2025 1,325 1,483,814
New York City, NY, FSA, 7s, 2022 1,630 1,806,236
New York Local Government Assistance Corp., 7s, 2001 800 875,304
Prince William County, VA, Industrial Development
Authority, Residential Care Facility (Westminster
at Lake Ridge), 10s, 2022 3,500 4,204,620
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., 0s, 2005 1,500 1,138,605
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., 0s, 2007 4,000 2,751,720
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., 0s, 2008 5,400 3,536,838
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., 0s, 2011 13,400 7,351,106
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., 0s, 2028 13,450 2,930,217
South Carolina Public Service Authority (Santee
Coop), 7.1s, 2001 2,000 2,204,020
Spirit Lake, IA, Industrial Development Rev. (Crystal
Tips, Inc.), 0s, 2008 4,583 6,284,755
Telluride, CO, Gondola Transit Co., 11.5s, 2012 5,025 8,066,884
Texas Turnpike Authority (Houston Ship Channel
Bridge), 12.625s, 2002 21,090 27,767,516
Virgin Islands Public Financing Authority, 7.25s, 2018 2,000 2,278,700
Walton, GA, Industrial Development Rev. (Ultima
Rubber Products), 10s, 2010 4,075 4,572,069
Washington Public Power Supply System Rev. (Nuclear
Project#1), 14.375s, 2001 600 693,234
Washington, GA, Wilkes Payroll Development Authority
Rev., 0s, 2021 8,000 2,196,320
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 1999 80 82,248
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2000 85 90,236
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2001 95 103,536
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2002 115 128,415
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2003 130 148,548
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2004 150 173,871
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2005 165 191,258
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2010 235 272,398
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2011 250 289,785
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2013 290 336,151
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2015 335 388,312
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2016 360 417,290
Williamsburg County, SC, School District, Public
Facilities Rev., 7.5s, 2017 390 452,064
--------------
$ 298,401,135
- --------------------------------------------------------------------------------------------------------
Airport and Port Revenue - 7.9%
California Statewide Community Development Authority
Lease Rev. (United Airlines), 5.7s, 2033 $ 5,000 $ 5,088,400
Charlotte, NC, Special Facilities Rev. (Charlotte
Douglas International Airport), 5.6s, 2027 5,000 4,944,750
Chicago, IL, O'Hare International Airport, Special
Facilities Rev. (United Airlines), 8.4s, 2018 2,575 2,718,119
Chicago, IL, O'Hare International Airport, Special
Facilites Rev. (United Airlines), 8.5s, 2018 4,500 4,866,390
Chicago, IL, O'Hare International Airport, Special
Facilities Rev. (United Airlines), 8.85s, 2018 5,730 6,386,543
Cleveland, OH, Airport Special Facilities Rev
(Continental Airlines), 9s, 2019 9,120 9,886,171
Dallas-Fort Worth, TX, International Airport Facility
Improvement Corp. (Delta), 7.625s, 2021 4,500 4,963,815
Denver, CO, City & County Airport Rev., 8.875s, 2012 3,675 4,209,639
Denver, CO, City & County Airport Rev., 7.75s, 2021 1,625 1,802,710
Denver, CO, City & County Airport Rev., 8.5s, 2023 2,695 2,966,872
Denver, CO, City & County Airport Rev., 8.75s, 2023 4,240 4,839,493
Denver, CO, City & County Airport Rev., 8s, 2025 1,040 1,133,798
Denver, CO, City & County Airport Rev., 6.875s, 2032 7,130 7,726,995
Fulton County, GA, Development Authority (Development
Authority), 5.3s, 2013 1,000 999,520
Hillsborough County, FL, Aviation Authority Rev. (US Air), 8.6s, 2022 4,275 4,834,170
Kenton County, KY, Airport Board Special Facilities
(Delta Airlines), 7.5s, 2020 16,570 18,238,433
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., MBIA, 0s, 2025 4,045 1,019,138
Port Authority, NY (JFK International Air Terminal), MBIA, 5.75s, 2022 7,000 7,335,300
Tulsa, OK, Municipal Airport Trust Rev. (American
Airlines), 7.375s, 2020 4,000 4,310,680
Tulsa, OK, Municipal Airport Trust Rev. (American
Airlines), 7.6s, 2030 14,210 15,562,934
--------------
$ 113,833,870
- --------------------------------------------------------------------------------------------------------
Electric and Gas Utility Revenue - 9.4%
Alaska Industrial Development & Export Authority,
Power Rev. (Upper Lynn Canal Regional Power), 5.875s, 2032 $ 1,800 $ 1,791,090
Clark County, NV, Industrial Development Rev. (Nevada
Power Co.), 5.6s, 2030 10,000 9,957,000
Clark County, NV, Industrial Development Rev. (Nevada
Power Co.), 5.9s, 2032 9,000 9,118,890
Clark County, NV, Industrial Development Rev. (Nevada
Power Co.), FGIC, 6.7s, 2022 4,000 4,347,920
Farmington, NM, Pollution Control Rev. (Tucson
Electric Power Co.), 6.95s, 2020 3,000 3,356,820
Long Island, NY, Power Authority Rev., FSA, 5.125s, 2022 3,000 2,952,930
Midland, MI, Environmental Development Authority,
Pollution Control Rev. (Midland Cogeneration), 9.5s, 2009 4,500 4,917,285
Municipal Electric Authority, GA, Project#1, AMBAC, 7.882s, 2022(++) 9,900 11,204,325
New Hampshire Business Finance Authority, Pollution
Control Rev. (United Illuminating Co.), 5.875s, 2033 2,985 3,034,133
New Jersey Economic Development Authority (Vineland
Cogeneration), 7.875s, 2019 7,550 8,320,855
New York City, NY, Industrial Development Rev
(Brooklyn Navy Yard Cogeneration Partners), 5.65s, 2028 7,000 7,070,420
New York Research and Development Authority,
Electrical Facilities Rev. (Consolidated Edison),
AMBAC, 7.5s, 2026 4,750 5,004,933
New York Research and Development Authority, Electrical Facilities
Rev. (Long Island Lighting), 7.15s, 2019 1,650 1,800,464
New York Research and Development Authority,
Electrical Facilities Rev. (Long Island Lighting), 7.15s, 2022 6,050 6,601,699
Ohio Water Development, Pollution Control Rev
(Cleveland Electric), 8s, 2023 4,700 5,361,572
Pennsylvania Economic Development Financing
Authority, Resources Recovery Rev., 6.5s, 2013 2,300 2,439,633
Pennsylvania Economic Development Financing
Authority, Resources Recovery Rev., 6.6s, 2019 5,000 5,308,650
Pima County, AZ, Industrial Development Authority
(Tuscon Electric Power Co.), 6s, 2029 16,000 16,120,960
Pittsylvania County, VA, Industrial Development
Authority, 7.55s, 2019 10,000 11,015,400
Southern California Public Power Authority,
Transmission Project Rev., RIBS, 7.893s, 2012(++) 7,850 8,897,818
West Feliciana Parish, LA, Pollution Control Rev
(Gulf States Utilities Co.), 5.8s, 2015 1,000 1,011,560
West Feliciana Parish, LA, Pollution Control Rev
(Gulf States Utilities Co.), 9s, 2015 2,500 2,743,675
West Feliciana Parish, LA, Pollution Control Rev
(Gulf States Utilities Co.), 8s, 2024 4,000 4,249,560
--------------
$ 136,627,592
- --------------------------------------------------------------------------------------------------------
Health Care Revenue - 16.6%
Arkansas Development Finance Authority, Economic
Development Rev. (Southwest Homes), 10.8s, 2018 $ 945 $ 974,342
Baltimore County, MD, Nursing Facility Mortgage Rev
(Eastpoint Rehabilation & Nursing Center), 6.75s, 2028 1,250 1,234,388
Bell County, TX, Health Facilities Development Corp.
(Advanced Living Technology), 7.25s, 2001 215 212,214
Bell County, TX, Health Facilities Development Corp.
(Advanced Living Technology), 7.75s, 2006 395 383,577
Bell County, TX, Health Facilities Development Corp.
(Advanced Living Technology), 8.125s, 2016 1,420 1,355,745
Bell County, TX, Health Facilities Development Corp.
(Advanced Living Technology), 8.5s, 2026 3,150 2,999,461
Bell County, TX, Health Facilities Development Corp.
(Kings Daughters Hospital), 9.25s, 2008 1,075 1,145,799
Berlin, MD, Hospital Rev. (Atlantic General Hospital), 8.375s, 2022 1,327 1,427,359
Brevard County, FL, Health Facilites Authority
(Beverly Enterprises), 10s, 2010 1,245 1,366,051
Cambria County, PA, Industrial Development Authority
(Beverly Enterprises), 10s, 2012 1,020 1,341,453
Cheneyville, LA, Westside Habilitation Center, 8.375s, 2013 5,900 6,489,292
Chester County, PA, Health & Education Facilities
Authority (Jefferson Health Systems), 5.375s, 2027 5,000 5,008,450
Chester County, PA, Industrial Development Authority
(RHA/PA Nursing Home), 10.125s, 2019 1,908 1,755,360
Colorado Health Facilities Authority Rev. (Gericare/
Denver), 10.5s, 2019** 5,000 3,443,750
Connecticut Health & Educational Facilities (Johnson
Evergreen), 8.5s, 2014 1,350 1,475,024
Denver, CO, Health & Hospital Rev., 5.375s, 2018 3,700 3,670,178
Denver, CO, Health & Hospital Rev., 5.375s, 2028 5,000 4,916,100
District of Columbia, Hospital Rev. (Hospital for
Sick Children), 8.875s, 2021 945 1,028,869
Fairfax, Fauquier & Loudoun Counties, VA, Health
Center Commission, Nursing Home Rev., 9s, 2020 1,840 1,996,547
Grand Junction, CO, Hospital Rev. (Community Hospital), 6.9s, 2017 2,900 3,032,327
Hobbs County, NM, Health Facilities Rev. (Nemecal
Associates), 9.625s, 2014 1,640 1,739,925
Illinois Health Facilities Authority Rev. (Centegra
Health Systems), 5.25s, 2018 1,500 1,477,920
Iowa Finance Authority, Health Care Facilities Rev
(Care Initiatives), 5.75s, 2018 1,200 1,198,968
Jacksonville, FL, Health Facilities Authority
(National Benevolent), 7s, 2022 1,000 1,101,970
Jacksonville, FL, Industrial Development Rev
(Beverly Enterprises), 9.75s, 2011 910 975,675
Jefferson County, KY, Health Facilities Rev. (Beverly
Enterprises), 10.125s, 2008 2,045 2,166,984
Kansas City, MO, Industrial Development Authority
(Bishop Spencer Place, Inc.), 8s, 2024 7,720 8,476,251
Kansas City, MO, Industrial Development Authority
(Kingswood), 9s, 2013 5,250 6,000,645
Lee County, FL, Industrial Development Authority
(Beverly Enterprises), 10s, 2010 870 969,624
Louisiana Public Facilities Authority (Southwest
Medical Center), 11s, 2006 1,300 349,248
Lufkin, TX, Health Facilities Development Corp.
(Memorial Health System of East Texas), 5.7s, 2028 2,800 2,803,472
Luzerne County, PA, Industrial Development Authority
(Beverly Enterprises), 10.125s, 2008 1,225 1,320,391
Martin County, FL, Industrial Development Authority
(Beverly Enterprises), 9.8s, 2010 2,650 2,846,232
Massachusetts Health & Education Facilities Authority
(St. Memorial Medical Center), 6s, 2023 13,530 13,533,788
Massachusetts Health & Education Facilities Authority Rev
(St. Anne's Hospital), 9.375s, 2014 5,000 4,974,400
Massachusetts Industrial Finance Agency, 9.25s, 2009 3,745 3,859,410
Massachusetts Industrial Finance Agency (GF Revere), 8.875s, 2025 7,710 8,920,855
Massachusetts Industrial Finance Agency (Martha's
Vineyard Long-Term Care Facility), 9.25s, 2022**(+) 3,410 900,240
Massachusetts Industrial Finance Agency (Metropolitan
Health Foundation, Inc.), 6.75s, 2027 5,830 6,072,819
Michigan Hospital Finance Authority Rev. (Genesys
Regional Medical), 5.375s, 2013 1,350 1,352,133
Michigan Hospital Finance Authority Rev. (Genesys
Regional Medical), 5.5s, 2018 9,000 8,984,700
Michigan Hospital Finance Authority Rev. (Genesys
Regional Medical), 5.5s, 2027 4,000 3,961,920
Michigan Strategic Fund Ltd., Obligation Rev. (River
Valley Recovery Center), 12.875s, 2015 1,007 1,027,184
Millbrae, CA, Residential Facility (Magnolia Of Millbrae),
7.375s, 2027 3,000 3,115,200
Montgomery County, PA, Higher Education & Health
Authority Rev. (AHF/Montgomery), 10.5s, 2020 2,460 2,611,536
Nebraska Investment Finance Authority (Centennial
Park), 10.5s, 2016 2,200 2,239,248
New Hampshire Higher Educational & Health Facilities
Authority Rev. (Littleton Hospital Assn.), 5.9s, 2018 1,500 1,517,655
New Hampshire Industrial Development Authority (Tall
Pines), 11.25s, 2016 2,200 2,311,628
New Jersey Economic Development Authority (Burnt
Tavern Convalescent Center), 9s, 2013 1,700 1,883,889
New Jersey Economic Development Authority (Courthouse
Convalescent Center), 8.7s, 2014 1,350 1,450,211
New Jersey Economic Development Authority (Geriatric
& Medical Services), 9.625s, 2004 380 419,368
New Jersey Economic Development Authority (Geriatric
& Medical Services), 9.625s, 2022 1,350 1,483,907
New Jersey Economic Development Authority (Gerimed), 10.5s, 2020 3,000 3,173,880
New Jersey Economic Development Authority (Greenwood
Health Care), 9.75s, 2011 2,935 3,113,213
New Jersey Economic Development Authority (Wanaque
Convalescent Center), 8.5s, 2009 700 771,820
New Jersey Economic Development Authority (Wanaque
Convalescent Center), 8.6s, 2011 1,000 1,105,980
New Jersey Health Care Facilities Financing Authority
(Cherry Hill), 8s, 2027 4,000 4,381,440
North Carolina Medical Care Commission, Hospital Rev
(Duke University Hospital), 5.25s, 2026 5,000 4,986,050
North Carolina Medical Care Commission, Hospital Rev
(Valdese General), 8.75s, 2016 1,865 2,094,451
North Central, TX, Health Facilities Development
Corp. (Baylor University Medical Center), 9.867s, 2016(++) 4,300 5,095,801
Ohio County, WV County Commission Health System (Ohio
Valley Medical Center), 5.75s, 2013 5,000 4,969,750
Okaloosa County, FL, Retirement Rental Housing Rev
(Beverly Enterprises), 10.75s, 2003 2,530 2,598,943
Osceola County, FL, Industrial Development Rev.,
Community Provider Pooled Loan, 7.75s, 2017 2,700 2,858,247
Portsmouth, VA, Industrial Development Authority
(Beverly Enterprises), 10s, 2011 1,875 2,108,081
Reedley, CA, Certificates of Participation (Mennonite
Home), 7.5s, 2026 5,500 5,802,170
Rochester, MN, Health Care Facilities Rev. (Mayo
Medical Foundation), 7.999s, 2021(++) 2,000 2,146,520
San Francisco, CA, City & County (Coventry Park), 8.5s, 2026 9,435 10,362,460
Santa Fe, NM, Industrial Development Rev. (Casa Real
Nursing Home), 9.75s, 2013 1,825 1,985,892
Seminole County, FL, Industrial Development Authority
(Friendly Village), 10s, 2011 830 840,981
Sierra View, CA, Local Health Care District, 5.4s, 2022 4,000 3,899,480
Springfield, TN, Health & Educational Facilities
(Northcrest Medical Center), 5.25s, 2018 5,000 4,866,900
Springfield, TN, Health & Educational Facilities
(Northcrest Medical Center), 5.375s, 2024 5,000 4,901,000
St. Charles County, MO, Industrial Development
Authority (Garden View Care Center), 10s, 2016 1,710 1,736,762
St. Petersburg, FL, Health Facilities Rev. (Swanholm
Nursing), 10s, 2022 1,450 1,305,000
Suffolk County, NY, Industrial Development Agency
(APPLE), 9.75s, 2015** 3,680 1,656,000
Vincennes, IN, Economic Development Authority (Lodge
of the Wabash), 12.5s, 2015 1,980 1,940,400
Waterford Township, MI, Economic Development Rev
(Canterbury Health Care), 8.375s, 2023 3,100 2,945,000
Westerville, OH, Industrial Development Rev. (1st
Mortgage Health Care), 10s, 2008 495 500,999
Wilkins Area, PA, Industrial Development Authority
(Beverly Enterprises), 10s, 2011 1,000 1,129,790
Wilkinsburg, PA, Municipal Authority Health
(Monroeville Christian), 8.25s, 2027 7,100 7,730,764
Yonkers, NY, Industrial Development Agency (St
Joseph Hospital), 6.15s, 2015 2,000 2,002,100
--------------
$ 240,313,556
- --------------------------------------------------------------------------------------------------------
Industrial Revenue (Corporate Guarantee) - 14.6%
Baltimore County, MD, Pollution Control (Bethelehem
Steel), 7.55s, 2017 $ 1,850 $ 2,072,703
Burns Habor, IN, Solid Waste Disposal Facilities Rev
(Bethlehem Steel), 8s, 2024 10,455 11,804,427
Butler, AL, Industrial Developement Board, Solid
Waste Rev. (James River), 8s, 2028 4,500 5,170,185
Cambria County, PA, Industrial Development Authority
(Beverly Enterprises), 7.5s, 2015 4,390 4,858,720
Courtland, AL, Industrial Development Board, Solid
Waste Disposal Rev. (Champion International Corp.),
6.375s, 2029 2,500 2,668,175
Dayton, OH, Special Facilities Rev. (Emery Air Freight), 12.5s, 2009 950 991,107
DeQueen, AR, Industrial Development Board
(Weyerhaeuser Co.), 9s, 2006 1,000 1,003,800
Eastern Band of Cherokee Indian Community, NC
(Carolina Mirror Co.), 10.25s, 2009+ 2,885 2,903,204
Eastern Band of Cherokee Indian Community, NC
(Carolina Mirror Co.), 11s, 2012+ 950 955,947
Florence County, SC, Industrial Development Rev
(Stone Container Corp.), 7.375s, 2007 3,315 3,592,267
Gulf Coast Waste Disposal Authority, TX (USX Corp.), 5.5s, 2017 3,000 3,024,240
Gulf Coast Waste Disposal Authority, TX (Valero
Energy Corp.), 5.6s, 2032 2,000 1,991,300
Hardeman County, TN (Correctional Facilities Corp.), 7.75s, 2017 6,500 7,249,905
Hernando County, FL, Water & Sewer Rev. (Florida
Crushed Stone), 8.5s, 2014 8,555 9,925,853
Hodge Village, LA, Utilities Rev. (Stone Container), 9s, 2010 6,800 7,293,136
Illinois Development Finance Authority, Economic
Development Rev. (Latin School of Chicago), 5.6s, 2018 850 849,958
Illinois Development Finance Authority, Economic
Development Rev. (Latin School of Chicago), 5.65s, 2028 1,730 1,729,913
Indiana Development Finance Authority, 7.25s, 2011 10,000 11,065,700
Indiana Development Finance Authority Rev. (Inland
Steel), 5.75s, 2011 3,000 3,081,660
Lawrenceburg, TN, Industrial Development Board
(Tridon, Inc.), 9.875s, 2006 2,300 2,436,643
Maine Finance Authority (Bowater), 7.75s, 2022 8,500 9,480,730
Massachusetts Port Authority Rev., Special Facilities
(Bosfuel), MBIA, 5.75s, 2039 5,000 5,190,600
Mesa County, CO (Joy Technologies), 8.5s, 2006 1,350 1,519,641
New Hampshire Business Authority, Sewer & Solid Waste
Disposal (Crown Paper), 7.875s, 2026 5,000 5,794,750
New Jersey Economic Development Authority (Holt
Hauling & Warehousing), 8.4s, 2015 4,000 4,325,920
New Jersey Economic Development Authority (Holt
Hauling & Warehousing), 8.6s, 2017 8,000 8,700,480
Ohio Solid Waste Rev. (CSC Limited), 8.5s, 2022 4,500 4,735,305
Ohio Solid Waste Rev. (Republic Engineered Steels), 8.25s, 2014 7,000 7,511,910
Owyhee County, ID, Industrial Development Rev., 8.25s, 2002 4,000 4,272,520
Perry County, KY, Solid Waste Disposal Resources (TJ
International), 7s, 2024 11,000 11,967,230
Phenix City, AL, Industrial Development Board,
Environmental Improvement Rev. (Mead Coated Board), 5.3s, 2027 5,000 4,892,300
Philadelphia, PA, Industrial Development Authority Rev., 7.75s, 2017 2,000 2,229,960
Port Corpus Christi, TX, Industrial Development Corp.
Rev. (Valero Energy Corp.), 5.4s, 2018 2,400 2,396,808
Port of New Orleans, LA (Avondale Industries), 8.5s, 2014 22,440 25,808,917
Port of New Orleans, LA (Continental Grain Co.), 7.5s, 2013 2,000 2,206,360
Power County, ID, Pollution Control Rev. (FMC Corp.), 5.625s, 2014 1,000 1,024,930
Riverdale, IL, Enviromental Improvement Rev. (Acme
Metals), 7.9s, 2024 2,500 2,680,250
Savannah, GA, Economic Development Authority,
Industrial Development Rev. ( Hershey Foods Corp.), 7.4s, 2026 7,500 8,345,175
Spokane County, WA, Industrial Development Corp.
(Kaiser Aluminum & Chemical Corp.), 7.6s, 2027 3,700 4,199,611
Sweetwater County, WY, Solid Waste Disposal Rev., 6.9s, 2024 3,000 3,291,120
Tooele County, UT, Pollution Control Rev., 7.55s, 2027 5,000 5,582,200
--------------
$ 210,825,560
- --------------------------------------------------------------------------------------------------------
Insured Health Care Revenue - 1.9%
Chester County, PA, Health & Education Facilities
Authority (Jefferson Health Systems), AMBAC, 5.25, 2022 $ 5,000 $ 4,993,300
Illinois Health Facilities Authority Rev. (Sisters of
Mercy), MBIA, 9.417s, 2015(++) 5,200 6,201,832
Montana Health Facility Authority (Deaconess
Hospital), AMBAC, RIBS, 9.246s, 2016(++) 4,000 4,542,120
North Central, TX, Health Facilities Development
Corp. (Presbyterian Hospital), MBIA, 9.395s, 2021 (++) 4,000 4,671,280
Philadelphia, PA, Hospital & Higher Education
Facilities Authority Rev., FGIC, 6.449s, 2012(++) 2,000 2,070,260
Salt Lake City, UT, Hospital Rev. (Intermountain
Health Care), AMBAC, 9.566s, 2020(++) 1,250 1,445,150
Tyler, TX, Health Facilities Development Corp. (East
Texas Medical Center), MBIA, 5.6s, 2027 3,000 3,107,490
--------------
$ 27,031,432
- --------------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 2.0%
Alexandria, VA, Redevelopment & Housing Finance
Authority (Jefferson Village Apartments), 9s, 2018 $ 2,000 $ 2,074,600
Austin, TX, Housing Finance Corp. (Woodland Heights
Apartments), 7.25s, 2027 4,000 4,599,840
California Statewide Community, Development Authority
(Irvine Apartments), 5.25s, 2025 3,500 3,522,050
Dallas, TX, Housing Finance Corp., 8.5s, 2011 3,130 3,295,452
Florida Multi-Family Housing Finance Agency Rev
(Center Court Apartments), 8.5s, 2018 1,775 1,856,224
Maplewood, RI, Housing Development Corp. (Terrace
Apartments), 6.9s, 2025 4,005 4,256,314
Maryland Community Development Administration, 0s, 2032 11,550 871,447
Memphis, TN, Health, Education & Housing Facilities
Board (Wesley Highland Terrace), 8.25s, 2015++ 6,300 5,355,000
Texas Housing & Community Board (Harbors & Plumtree), 10s, 2026 1,765 1,813,838
Virginia Housing & Development Authority, 0s, 2017 6,530 1,188,525
--------------
$ 28,833,290
- --------------------------------------------------------------------------------------------------------
Sales and Excise Tax Revenue - 0.5%
Black Hawk, CO, Device Tax Rev., 5.625s, 2021 $ 1,250 $ 1,223,987
Denver, CO, Urban Renewal Tax (Downtown Denver), 8.5s, 2013 1,340 1,394,967
Denver, CO, Urban Renewal Tax (Downtown Denver), 7.25s, 2017 1,250 1,348,600
Denver, CO, Urban Renewal Tax (Musicland), 8.5s, 2017 950 988,969
Virgin Islands Public Finance Authority, 6s, 2006 500 525,305
Virgin Islands Public Finance Authority, 5.875s, 2018 1,500 1,550,070
--------------
$ 7,031,898
- --------------------------------------------------------------------------------------------------------
Single Family Housing Revenue - 6.2%
Arkansas Housing Development Agency, Residential
Mortgage Rev., 0s, 2015 $ 5,525 $ 921,460
California Housing Finance Authority Rev., 7.4s, 2026 6,940 7,403,523
California Housing Finance Authority Rev., FHA, 0s, 2023 6,400 943,360
California Rural Home Mortgage Finance Authority, 5.75s, 2029 1,500 1,637,325
Chicago, IL, Capital Appreciation, Single Family
Mortgage Rev., FGIC, 0s, 2017 6,830 865,634
Colorado Housing Finance Authority, 8s, 2016 3,000 3,002,610
Colorado Housing Finance Authority, 6.55s, 2025 1,000 1,101,020
Connecticut Housing Finance Authority, 5.85s, 2028 4,125 4,241,408
Cook County, IL (Markham), 0s, 2015 2,245 358,571
Corpus Christi, TX, Housing Finance Corp., MBIA, 0s, 2011 3,395 964,825
Delaware Single Family Housing Authority Rev., 6.75s, 2024 2,660 2,856,095
Denver, CO, City & County Single Family Mortgage Rev., 0s, 2015 445 68,130
East Baton Rouge, LA, Capital Appreciation Rev., MBIA, 0s, 2010 8,715 2,349,477
El Paso, TX, Housing Finance Corp., Single Family
Mortgage Rev., 8.75s, 2011 665 716,338
Florida Housing Finance Agency Rev., 0s, 2016 8,825 1,473,157
Georgia Housing & Finance Authority Rev., FHA, 0s, 2031 69,410 6,303,816
Harris County, TX, Housing Finance Corp., 9.875s, 2014 555 557,392
Hawaii Housing Finance & Development Corp., 5.75s, 2030 5,000 5,113,450
Jefferson County, CO, Single Family Mortgage Rev.,
MBIA, 8.875s, 2013 255 271,455
Jefferson County, TX, Housing Finance Corp., Single
Family Mortgage Rev., MBIA, 0s, 2015 3,480 551,197
Maryland Community Development Administration, 6s, 2039 3,500 3,656,520
Mississippi Home Corp., Single Family Senior Housing
Rev., FGIC, 9.25s, 2012 182 194,234
Nebraska Investment Finance Authority Housing Rev., 6.3s, 2028 2,485 2,647,121
Nevada Housing Division, Single Family Mortgage Rev., 0s, 2015 1,065 197,180
New Castle County, DE, Single Family Mortgage Rev., FGIC, 0s, 2016 845 138,867
New Mexico Mortgage Finance Authority, Single Family
Mortgage Rev., 6.9s, 2024 2,735 2,905,035
North Carolina Housing Finance Agency, 5.85s, 2028 9,110 9,391,499
North Dakota Housing Finance Agency, Single Family
Mortgage Rev., 8.3s, 2012 330 343,084
North Dakota Housing Finance Agency, Single Family
Mortgage Rev., 6.8s, 2023 895 948,369
North Dakota Housing Finance Agency, Single Family
Mortgage Rev., 5.9s, 2029 2,295 2,374,017
Ohio Housing Finance Agency, Single Family Mortgage
Rev., GNMA, RIBS, 9.821s, 2031(++) 1,350 1,521,666
Oklahoma Housing Finance Agency, 5.375s, 2020 2,000 2,000,000
Reno County, KS, Single Family Mortgage Rev., AMBAC, 0s, 2014 3,075 498,765
Sedgwick & Shawnee Counties, KS, 5.5s, 2022 5,000 5,441,250
South Dakota Housing Development Authority, 5.8s, 2028 5,000 5,152,500
Texas Housing & Development Agency, Residential
Mortgage Rev., 8.4s, 2020 1,585 1,657,118
Vermont Housing Finance Agency, 8.1s, 2022 1,510 1,561,793
Wisconsin Housing & Economic Development Authority, 0s, 2016 1,655 275,442
Wisconsin Housing & Economic Development Authority,
RIBS, 10.077s, 2022(++) 1,770 1,989,232
Wyoming Community Development Authority, 5.85s, 2028 4,980 5,143,045
--------------
$ 89,736,980
- --------------------------------------------------------------------------------------------------------
Solid Waste Revenue - 0.3%
Effingham County, GA, Development Authority (Fort
James), 5.625s, 2018 $ 5,000 $ 5,000,000
- --------------------------------------------------------------------------------------------------------
Special Assessment District - 0.1%
Indianapolis, IN, Public Improvement Bond Rev., 6.5s, 2022 $ 2,000 $ 2,004,320
- --------------------------------------------------------------------------------------------------------
Student Loan Revenue - 1.0%
Arizona Student Loan Acquisition Authority,"C", 7.625s, 2010 $ 4,610 $ 5,147,711
Arizona Student Loan Acquisition Authority,"D", 7.25s, 2010 2,970 3,163,822
Education Loans, Inc., SD, 5.6s, 2020 2,700 2,698,677
Pennsylvania Higher Education Assistance Agency,
AMBAC, 8.346s, 2022(++) 2,700 3,057,993
--------------
$ 14,068,203
- --------------------------------------------------------------------------------------------------------
Turnpike Revenue - 8.5%
Florida Mid-Bay Bridge Authority Rev., 8.5s, 2022 $ 2,500 $ 2,825,850
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s to 2005, 7.15s to 2013 5,000 3,914,900
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2018 44,190 15,627,793
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2021 25,000 7,446,500
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2022 30,835 8,700,712
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2023 5,765 1,541,042
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2024 72,045 18,243,235
Foothill/Eastern Transportation Corridor Agency, CA,
Toll Road Rev., 0s, 2030 22,935 4,195,729
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., MBIA, 0s, 2021 9,500 2,969,415
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., MBIA, 0s, 2024 19,500 5,176,665
Massachusetts Turnpike Authority, Metropolitan
Highway System Rev., MBIA, 5s, 2027 10,000 9,663,000
Metropolitan Transportation Authority, NY,
Transportation Facility Rev., 5.25s, 2017 5,000 4,969,750
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2011 2,700 1,281,825
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2012 2,100 965,076
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2012 1,700 788,766
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2013 7,000 3,021,340
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2014 6,600 2,672,934
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2015 7,250 2,729,480
Pocahontas Parkway Assn., VA, Toll Road Rev., 0s, 2016 2,000 704,760
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., MBIA, 5.25s, 2030 15,200 15,192,552
San Joaquin Hills, CA, Transportation Corridor
Agency, Toll Road Rev., MBIA, 0s, 2031 24,000 4,380,720
Telluride, CO, Gondola Transit Co., 11.5s, 2012 975 1,551,157
Telluride, CO, Gondola Transit Co., 9s, 2016 2,465 2,892,406
West Virginia Parkways, Economic Development &
Tourism Authority, FGIC, RIBS, 7.577s, 2019(++) 1,200 1,324,236
--------------
$ 122,779,843
- --------------------------------------------------------------------------------------------------------
Universities - 1.5%
Islip, NY, Community Development Agency Rev. (New
York Institute of Technology), 7.5s, 2026 $ 6,000 $ 6,594,840
Massachusetts Industrial Finance Agency (Curry College), 8s, 2014 1,420 1,532,265
Massachusetts Industrial Finance Agency (Emerson
College), 8.9s, 2018 3,000 3,280,710
New Hampshire Higher Educational & Health Facilities
(Franklin Pierce Law Center), 5.5s, 2018 1,200 1,192,740
New York Dormitory Authority Rev. (City University), 5s, 2018 10,000 9,632,600
--------------
$ 22,233,155
- --------------------------------------------------------------------------------------------------------
Water and Sewer Utility Revenue - 1.1%
Detroit, MI, Sewage Disposal Rev., FGIC, 7.618s, 2023(++) $ 2,000 $ 2,149,380
Harrisburg, PA, Authority Water Rev., FGIC, 7.72s, 2015(++) 2,000 2,255,980
New York City, NY, Municipal Water Finance Authority, 5.75s, 2029 8,590 9,068,549
New York City, NY, Municipal Water Finance Authority,
FSA, 5.375s, 2026 2,500 2,520,375
--------------
$ 15,994,284
- --------------------------------------------------------------------------------------------------------
Other - 2.5%
Brush, CO, Industrial Development Rev. (Training
Centers International), 9.5s, 2015** $ 8,822 $ 6,792,940
Colorado River, TX, Municipal Water District, 6.25s, 2004 3,000 3,007,440
Danville, VA, Industrial Development Authority Rev
(Piedmont Mall), 8s, 2017 8,280 8,825,735
District of Columbia (National Public Radio), 7.7s, 2023 3,500 3,832,185
Harris County, TX, Cultural Education Facility (Space
Center Houston), 9.25s, 2023 70 73,303
Martha's Vineyard, MA, Land Bank (Land Acquisition), 8.125s, 2011 2,600 2,810,730
Massachusetts Health & Education Facilities Authority
(Learning Center for Deaf Children), 9.25s, 2014 800 844,808
Massachusetts Industrial Finance Agency (Brandon
Residential Treatment), 8.75s, 2024 5,225 5,917,521
Southeast Wisconsin Professional Baseball,
Certificates of Participation, MBIA, 0s, 2014 1,000 436,740
Southeast Wisconsin Professional Baseball,
Certificates of Participation, MBIA, 0s, 2015 1,000 413,080
Southeast Wisconsin Professional Baseball,
Certificates of Participation, MBIA, 0s, 2017 1,000 369,570
St. Louis County, MO, Industrial Development
Authority (Eagle Golf Enterprises), 10s, 2005 2,200 2,423,322
St. Louis County, MO, Industrial Development
Authority (Kiel Center Arena), 7.875s, 2024 1,000 1,100,210
--------------
$ 36,847,584
- --------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Identified Cost, $1,298,084,953) $1,426,227,520
- --------------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 1.5%
- --------------------------------------------------------------------------------------------------------
Bartow County, GA, Development Authority, Pollution
Control Rev. (Georgia Power Co.), due 03/01/24 $ 1,700 $ 1,700,000
Burke County, GA, Development Authority Pollution
Rev. (Georgia Power Co.), due 04/01/25 200 200,000
East Baton Rouge, LA, Pollution Control Rev. (Exxon
Corp.), due 11/01/19 1,000 1,000,000
East Baton Rouge, LA, Pollution Control Rev. (Exxon
Corp.), due 03/01/22 200 200,000
Harris County, TX, Industrial Development Corp.,
Pollution Control Rev. (Exxon Corp.), due 03/01/24 900 900,000
Jackson County, MS, Pollution Control Rev. (Chevron
USA, Inc.), due 12/01/16 600 600,000
Lincoln County, WY, Pollution Control Rev. (Exxon Corp.),
due 11/01/14 1,300 1,300,000
Lincoln County, WY, Pollution Control Rev. (Exxon Corp.),
due 11/01/14 600 600,000
Lincoln County, WY, Pollution Control Rev. (Exxon Corp.),
due 07/01/17 100 100,000
Massachusetts Water Resources Authority, due 04/01/28 9,300 9,300,000
New York City, NY, due 02/01/20 100 100,000
New York City, NY, due 08/15/23 100 100,000
New York City Municipal Water Finance Authority, due 06/15/22 600 600,000
Putnam County, GA, Pollution Control Rev. (Georgia
Power Co.), due 06/01/23 200 200,000
St. Charles Parish, LA, Pollution Control Rev. (Shell
Oil Co.), due 10/01/22 2,500 2,500,000
State of Oregon, due 12/01/19 700 700,000
Uinta County, WY, Pollution Control Rev. (Chevron
USA, Inc.), due 08/15/20 1,500 1,500,000
- --------------------------------------------------------------------------------------------------------
Total Floating Rate Demand Notes, at Amortized Cost and Value $ 21,600,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,319,684,953) $1,447,827,520
Other Assets, Less Liabilities (183,811)
- --------------------------------------------------------------------------------------------------------
Net assets - 100.0% $1,447,643,709
- --------------------------------------------------------------------------------------------------------
** Non-income producing security-in default.
+ Restricted security.
++ Security accruing partial interest-in default.
(+) Security valued by or at the direction of the Trustees.
(++) Inverse floating rate security.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
JULY 31, 1998
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,319,684,953) $1,447,827,520
Cash 17,564
Receivable for investments sold 4,027,095
Receivable for Fund shares sold 6,541,421
Interest receivable 19,184,348
Other assets 8,794
--------------
Total assets $1,477,606,742
--------------
Liabilities:
Distributions payable $ 4,291,534
Payable for investments purchased 16,282,577
Payable for Fund shares reacquired 5,807,749
Payable to affiliates -
Management fee 24,305
Shareholder servicing agent fee 4,479
Distribution and service fee 134,722
Administrative fee 566
Accrued expenses and other liabilities 3,417,101
--------------
Total liabilities $ 29,963,033
--------------
Net assets $1,447,643,709
==============
Net assets consist of:
Paid-in capital $1,493,756,973
Unrealized appreciation on investments 128,142,567
Accumulated net realized loss on investments (174,897,760)
Accumulated undistributed net investment income 641,929
--------------
Total $1,447,643,709
==============
Shares of beneficial interest outstanding 161,067,887
===========
Class A shares:
Net asset value per share
(net assets of $1,134,168,421 / 126,214,400 shares of
beneficial interest outstanding) $8.99
=====
Offering price per share (100 / 95.25) $9.44
=====
Class B shares:
Net asset value and offering price per share
(net assets of $313,475,288 / 34,853,487 shares of
beneficial interest outstanding) $8.99
=====
On sales of $100,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions of Class A
and Class B shares.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JULY 31, 1998
- --------------------------------------------------------------------------------
Net investment income:
Interest income $ 46,716,142
------------
Expenses -
Management fee $ 4,291,868
Trustees' compensation 39,751
Shareholder servicing agent fee 782,074
Distribution and service fee (Class B) 1,260,324
Administrative fee 99,029
Custodian fee 168,822
Printing 47,226
Postage 52,074
Auditing fees 21,250
Legal fees 19,733
Miscellaneous 301,770
------------
Total expenses $ 7,083,921
Fees paid indirectly (149,593)
------------
Net expenses $ 6,934,328
------------
Net investment income $ 39,781,814
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ (660,268)
Futures contracts 243,110
------------
Net realized loss on investments $ (417,158)
------------
Change in unrealized appreciation on investments $(13,164,988)
------------
Net realized and unrealized loss on investments $(13,582,146)
------------
Increase in net assets from operations $ 26,199,668
============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JULY 31, 1998 JANUARY 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 39,781,814 $ 77,180,458
Net realized loss on investments (417,158) (43,492,930)
Net unrealized gain (loss) on investments (13,164,988) 93,915,575
-------------- --------------
Increase in net assets from operations $ 26,199,668 $ 127,603,103
-------------- --------------
Distributions declared to shareholders -
From net investment income (Class A) $ (32,561,937) $ (67,068,274)
From net investment income (Class B) (7,112,168) (10,428,729)
-------------- --------------
Total distributions declared to shareholders $ (39,674,105) $ (77,497,003)
-------------- --------------
Net increase in net assets from Fund share
transactions $ 89,362,520 $ 207,501,009
-------------- --------------
Total increase in net assets $ 75,888,083 $ 257,607,109
Net assets:
At beginning of period 1,371,755,626 1,114,148,517
-------------- --------------
At end of period (including undistributed net
investment income of $641,929 and $534,220,
respectively) $1,447,643,709 $1,371,755,626
============== ==============
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 31,
SIX MONTHS ENDED ------------------------------------------------------------------------
JULY 31, 1998 1998 1997 1996 1995 1994
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning
of period $ 9.07 $ 8.73 $ 9.12 $ 8.60 $ 9.38 $ 9.26
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income $ 0.26 $ 0.57 $ 0.61 $ 0.61 $ 0.64 $ 0.77
Net realized and unrealized
gain (loss) on investments (0.08) 0.34 (0.36) 0.59 (0.75) 0.05
------ ------ ------ ------ ------ ------
Total from investment
operations $ 0.18 $ 0.91 $ 0.25 $ 1.20 $(0.11) $ 0.82
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment
income $(0.26) $(0.57) $(0.64) $(0.68) $(0.67) $(0.70)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 8.99 $ 9.07 $ 8.73 $ 9.12 $ 8.60 $ 9.38
====== ====== ====== ====== ====== ======
Total return(+) 2.06%++ 10.81% 2.87% 13.92% (1.04)% 9.19%
Ratios (to average net assets)/Supplemental data:
Expenses## 0.84%+ 0.89% 0.93% 0.93% 1.04% 1.10%
Net investment income 5.92%+ 6.42% 6.96% 6.83% 7.27% 7.15%
Portfolio turnover 4% 19% 17% 20% 32% 18%
Net assets at end of period
(000 omitted) $1,134,168 $1,107,181 $988,178 $1,009,031 $920,043 $809,957
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to January 31, 1995, are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 31, 1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 9.22 $ 9.09 $ 9.45 $ 9.55 $ 9.68
------ ------ ------ ------ ------
Income from investment operations -
Net investment income $ 0.73 $ 0.73 $ 0.74 $ 0.85 $ 0.88
Net realized and unrealized gain (loss) on
investments 0.06 0.17 (0.32) (0.09) (0.12)
------ ------ ------ ------ ------
Total from investment operations $ 0.79 $ 0.90 $ 0.42 $ 0.76 $ 0.76
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.75) $(0.77) $(0.78) $(0.81) $(0.82)
From net realized gain on investments -- -- -- (0.04) (0.07)
From paid-in capital -- -- -- (0.01) --
------ ------ ------ ------ ------
Total distributions declared to shareholders $(0.75) $(0.77) $(0.78) $(0.86) $(0.89)
------ ------ ------ ------ ------
Net asset value - end of period $ 9.26 $ 9.22 $ 9.09 $ 9.45 $ 9.55
====== ====== ====== ====== ======
Total return(+) 9.02% 10.34% 4.65% 8.24% 8.32%
Ratios (to average net assets)/Supplemental data:
Expenses 1.00% 1.03% 1.05% 1.02% 0.65%
Net investment income 7.95% 7.96% 8.17% 8.90% 9.27%
Portfolio turnover 10% 21% 41% 21% 23%
Net assets at end of period (000 omitted) $731,968 $648,043 $638,185 $485,037 $325,044
(+) Total returns for Class A shares do not include the applicable sales charge. If the charge had been included, the results
would have been lower.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
Financial Highlights - continued
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 31,
SIX MONTHS ENDED ----------------------------------------------------------------------
JULY 31, 1998 1998 1997 1996 1995 1994**
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of period $ 9.08 $ 8.74 $ 9.12 $ 8.60 $ 9.38 $ 9.40
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.22 $ 0.49 $ 0.52 $ 0.52 $ 0.57 $ 0.32
Net realized and unrealized gain
(loss) on investments (0.09) 0.34 (0.35) 0.59 (0.78) (0.14)
------ ------ ------ ------ ------ ------
Total from investment operations $ 0.13 $ 0.83 $ 0.17 $ 1.11 $(0.21) $ 0.18
------ ------ ------ ------ ------ ------
Less distributions declared to
shareholders from net investment
income $(0.22) $(0.49) $(0.55) $(0.59) $(0.57) $(0.20)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 8.99 $ 9.08 $ 8.74 $ 9.12 $ 8.60 $ 9.38
====== ====== ====== ====== ====== ======
Total return 1.50%++ 9.87% 1.96% 12.78% (2.13)% 1.89%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.72%+ 1.73% 1.86% 1.91% 2.10% 2.04%+
Net investment income 5.04%+ 5.50% 6.00% 5.84% 6.32% 5.43%+
Portfolio turnover 4% 19% 17% 20% 32% 18%
Net assets at end of period
(000 omitted) $313,475 $264,575 $125,971 $77,808 $55,675 $1
** For the period from the inception of Class B, September 7, 1993, through January 31, 1994.
+ Annualized.
++ Not annualized.
# Per share data for the periods subsequent to January 31, 1995, are based on average shares outstanding.
## For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid
indirectly.
(S) The distributor voluntarily waived a portion of its distribution fee for certain of the periods indicated. If this fee
had been incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment income -- $ 0.49 -- -- -- --
Ratios (to average net assets):
Expenses## -- 1.80% -- -- -- --
Net investment income -- 5.43% -- -- -- --
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Municipal High Income Fund (the Fund) is a non-diversified series of MFS
Series Trust III (the Trust). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Fund can invest up to 100% of its portfolio in high-yield securities rated
below investment grade. Investments in high-yield securities involve greater
degrees of credit and market risk than investments in higher-rated securities,
and tend to be more sensitive to economic conditions.
Investment Valuations - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on the
basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon
exchange or over-the-counter prices. Short-term obligations, which mature in
60 days or less, are valued at amortized cost, which approximates market
value. Futures contracts listed on commodities exchanges are reported at
market value using closing settlement prices. Securities for which there are
no such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Trustees.
Futures Contracts - The Fund may enter into futures contracts for the delayed
delivery of securities or contracts based on financial indices at a fixed
price on a future date. In entering such contracts, the Fund is required to
deposit with the broker either in cash or securities an amount equal to a
certain percentage of the contract amount. Subsequent payments are made or
received by the Fund each day, depending on the daily fluctuations in the
value of the contract, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. The Fund's investment in futures
contracts is designed to hedge against anticipated future changes in interest
rates or securities prices. Investments in interest rate futures for purposes
other than hedging may be made to modify the duration of the portfolio without
incurring the additional transaction costs involved in buying and selling the
underlying securities. Investments in contracts on related options for
purposes other than hedging may be made when the Fund has cash on hand and
wishes to participate in anticipated market appreciation while the cash is
being invested. Should interest rates or securities prices move unexpectedly,
the Fund may not achieve the anticipated benefits of the futures contracts and
may realize a loss.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and original issue discount is amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Interest payments received in additional securities are recorded on the ex-
interest date in an amount equal to the value of the security on such date.
The Fund uses the effective interest method for reporting interest income on
payment-in-kind (PIK) bonds. Legal fees and other related expenses incurred to
preserve and protect the value of a security owned are added to the cost of
the security; other legal fees are expensed. Capital infusions, which are
generally non-recurring, incurred to protect or enhance the value of high-
yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Fund. This amount is shown as a reduction of expenses on the Statement of
Operations.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided. The Fund files a tax return annually
using tax accounting methods required under provisions of the Code, which may
differ from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net investment
income and net realized gain reported on these financial statements may differ
from that reported on the Fund's tax return and, consequently, the character of
distributions to shareholders reported in the financial highlights may differ
from that reported to shareholders on Form 1099-DIV.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or net realized gains.
At January 31, 1998, the Fund, for federal income tax purposes, had a capital
loss carryforward of $169,959,618 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on January 31, 1999, ($2,433,909), January 31, 2000, ($4,786,449),
January 31, 2001, ($5,199,093), January 31, 2002, ($28,166,887), January 31,
2003, ($27,178,219), January 31, 2004, ($30,637,034), January 31, 2005,
($26,148,057) and January 31, 2006, ($45,409,970).
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses. Class B shares will
convert to Class A shares approximately eight years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at the following annual
rates:
BASED ON AVERAGE NET ASSETS BASED ON GROSS INCOME
- ---------------------------------------- ------------------------------------
First $1.3 billion 0.30% 4.75%
In excess of $1.3 billion 0.25%
The Fund pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from MFS. Certain officers and
Trustees of the Fund are officers or directors of MFS, MFS Fund Distributors,
Inc. (MFD), and MFS Service Center, Inc. (MFSC). The Fund has an unfunded
defined benefit plan for all of its independent Trustees and Mr. Bailey.
Included in Trustees' compensation is a net periodic pension expense of
$11,271 for the six months ended July 31, 1998.
Administrator - The Fund has an administrative services agreement with MFS to
provide the Fund with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the Fund pays MFS an administrative fee
at the following annual percentages of the Fund's average daily net assets:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received
$457,620 for the six months ended July 31, 1998, as its portion of the sales
charge on sales of Class A shares of the Fund. The Trustees have adopted a
distribution plan relating solely to Class B shares pursuant to Rule 12b-1 of
the Investment Company Act of 1940 as follows:
The Fund's distribution plan provides that the Fund will pay MFD a
distribution fee of 0.75% per annum, and a service fee of up to 0.25% per
annum, of the Fund's average daily net assets attributable to Class B shares.
Except in the case of the 0.25% per annum Class B service fee paid by the Fund
upon sale of Class B shares in the first year, payment of the Class B service
fee will be suspended until such date as the Trustees of the Trust may
determine. MFD will pay to securities dealers that enter into a sales
agreement with MFD all or a portion of the service fee attributable to Class B
shares. The service fee is intended to be additional consideration for
services rendered by the dealer with respect to Class B shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $0 for the six months ended July 31, 1998. Fees incurred under the
distribution plan during the six months ended July 31, 1998, were 0.88% of
average daily net assets attributable to Class B shares on an annualized
basis.
Certain Class A shares are subject to a contingent deferred sales charge in
the event of a shareholder redemption within 12 months following purchase. A
contingent deferred sales charge is imposed on shareholder redemptions of
Class B shares in the event of a shareholder redemption within six years of
purchase. MFD receives all contingent deferred sales charges. Contingent
deferred sales charges imposed during the six months ended July 31, 1998, were
$24,000 and $417,743 for Class A and Class B shares, respectively.
Shareholder Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as
a percentage of the Fund's average daily net assets at an effective annual
rate of 0.1125%.
(4) Portfolio Securities
Purchases and sales of investments, other than short-term obligations,
aggregated $146,234,682 and $52,396,058, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis, are
as follows:
Aggregate cost $1,319,684,953
--------------
Gross unrealized appreciation $ 139,103,788
Gross unrealized depreciation (10,961,221)
--------------
Net unrealized appreciation $ 128,142,567
==============
(5) Shares of Beneficial Interest
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED JULY 31, 1998 YEAR ENDED JANUARY 31, 1998
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 13,256,336 $119,360,314 25,471,927 $ 224,128,497
Shares issued to shareholders
in reinvestment of distributions 1,317,310 11,857,873 2,798,867 24,656,251
Shares reacquired (10,378,457) (93,438,158) (19,400,212) (171,063,899)
----------- ------------ ----------- -------------
Net increase 4,195,189 $ 37,780,029 8,870,582 $ 77,720,849
=========== ============ =========== =============
<CAPTION>
Class B Shares
SIX MONTHS ENDED JULY 31, 1998 YEAR ENDED JANUARY 31, 1998
--------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 7,394,910 $ 66,671,118 16,825,264 $ 148,354,869
Shares issued to shareholders
in reinvestment of
distributions 252,976 2,278,620 387,829 3,429,277
Shares reacquired (1,926,914) (17,367,247) (2,492,160) (22,003,986)
----------- ------------ ----------- -------------
Net increase 5,720,972 $ 51,582,491 14,720,933 $ 129,780,160
=========== ============ =========== =============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $805 million unsecured
line of credit provided by a syndication of banks under a line of credit
agreement. Borrowings may be made to temporarily finance the repurchase of
Fund shares. Interest is charged to each fund, based on its borrowings, at a
rate equal to the bank's base rate. In addition, a commitment fee, based on
the average daily unused portion of the line of credit, is allocated among the
participating funds at the end of each quarter. The commitment fee allocated
to the Fund for the six months ended July 31, 1998, was $1,546.
(7) Restricted Securities
The Fund may invest not more than 15% of its net assets in securities which
are subject to legal or contractual restrictions on resale. At July 31, 1998,
the Fund owned the following restricted securities (constituting 0.5% of net
assets) which may not be publicly sold without registration under the
Securities Act of 1933. The Fund does not have the right to demand that such
securities be registered. The value of these securities is determined by
valuations furnished by dealers or by a pricing service, or if not available,
are valued at fair value as determined in good faith by or at the direction of
the Trustees.
<TABLE>
<CAPTION>
DATE OF PRINCIPAL
DESCRIPTION ACQUISITION AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Eastern Band Cherokee Indian Community,
NC, 10.25s, 2009 11/25/86 $2,885,000 $2,964,523 $2,903,204
Eastern Band Cherokee Indian Community,
NC, 11s, 2012 9/19/86 950,000 859,632 955,947
Hannibal, MO, Industrial Development
Authority, 9.5s, 2022 3/23/92 3,000,000 2,971,570 3,554,250
----------
$7,413,401
==========
</TABLE>
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
MFS High Income Fund
(a) Financial Statements Included in Part A: For each of the years
in the ten-year period ended January 31, 1998:
Financial Highlights
Financial Statements Included in Part B:
At January 31, 1998:
Statement of Assets and Liabilities*
Portfolio of Investments*
For the year ended January 31, 1998:
Statement of Operations*
For the two years ended January 31, 1998:
Statement of Changes in Net Assets*
MFS Municipal High Income Fund
(a) Financial Statements Included in Part A: For each of the years
in the ten-year period ended January 31, 1998.
Financial Highlights
For the six-month period ended July 31, 1998:
Financial Highlights (unaudited)
Financial Statements Included in Part B:
At January 31, 1998:
Statement of Assets and Liabilities**
Portfolio of Investments**
At July 31, 1998:
Statement of Assets and Liabilities
(unaudited)
Portfolio of Investments (unaudited)
For the year ended January 31, 1998:
Statement of Operations**
For the six months ended July 31, 1998:
Statement of Operations (unaudited)
For the two years ended January 31, 1998:
Statement of Changes in Net Assets**
For the six months ended July 31, 1998:
Statement of Changes in Net Assets (unaudited)
- -----------------------------
* Incorporated herein by reference to the Fund's Annual Report to shareholders
dated January 31, 1998, filed via EDGAR with the SEC on April 8, 1998.
** Incorporated herein by reference to the Fund's Annual Report to shareholders
dated January 31, 1998, filed via EDGAR with the SEC on April 7, 1998.
(b) Exhibits:
1 (a) Amended and Restated Declaration of Trust,
dated February 17, 1995. (1)
(b) Amendment to Declaration of Trust to add Class P Shares,
dated June 20, 1996. (8).
(c) Amendment to Declaration of Trust dated December 19, 1996
to redesignate Class P Shares as Class I Shares. (12)
(d) Amendment to Declaration of Trust, dated May 14, 1998, to
establish MFS High Yield Opportunities Fund as a new
series. (15)
(e) Form of Amendment to Declaration of Trust, dated September
16, 1998; filed herewith.
2 Amended and Restated By-Laws, dated December 21, 1994. (1)
3 Not Applicable.
4 Form of Share Certificate for Classes of Shares. (7)
5 (a) Investment Advisory Agreement for MFS High Income
Fund, dated May 20, 1987. (1)
(b) Investment Advisory Agreement for MFS Municipal High
Income Fund dated September 1, 1993. (5)
(c) Amendment to Investment Advisory Agreement for MFS
Municipal High Income Fund, dated August 1, 1995. (6)
(d) Form of Investment Advisory Agreement for MFS High Yield
Opportunities Fund. (15)
6 (a) Dealer Agreement between MFS Fund Distributors, Inc.
("MFD"), and a dealer and the Mutual Fund Agreement
between MFD and a bank or NASD affiliate, as amended on
April 11, 1997. (12)
(b) Distribution Agreement, dated January 1, 1995. (1)
7 Retirement Plan for Non-Interested Person Trustees, dated
February 1, 1991. (5)
8 (a) Custodian Agreement, dated May 24, 1988. (5)
(b) Amendment to Custodian Agreement, dated May 24, 1988. (5)
(c) Amendment to Custodian Agreement, dated October 1,
1989. (5)
(d) Amendment to Custodian Agreement, dated September 17,
1991. (5)
9 (a) Shareholder Servicing Agent Agreement, dated August 1,
1985. (5)
(b) Amendment to the Shareholder Servicing Agreement dated
January 1, 1998 to amend Fee Schedule. (15)
(c) Exchange Privilege Agreement, dated July 30, 1997. (13)
(d) Loan Agreement by and among the Banks named therein, the
MFS Funds named therein, and The First National Bank of
Boston, dated as of February 21, 1995. (3)
(e) Third Amendment dated February 14, 1997 to Loan Agreement
dated February 21, 1995 by and among the Banks named
therein and The First National Bank of Boston. (14)
(f) Dividend Disbursing Agency Agreement, dated February 1,
1986. (2)
(g) Master Administrative Services Agreement, dated March 1,
1997 as amended. (10)
10 Consent and Opinion of Counsel, dated May 13, 1998. (15)
11 (a) Consent of Deloitte & Touche LLP - MFS High Income
Fund. (16)
(b) Consent of Ernst & Young LLP - MFS Municipal High Income
Fund. (16)
12 Not Applicable.
13 Not Applicable.
14 (a) Forms for Individual Retirement Account Disclosure
Statement as currently in effect. (4)
(b) Forms for MFS 403(b) Custodial Account Agreement as
currently in effect. (4)
(c) Forms for MFS Prototype Paired Defined Contribution Plans
and Trust Agreement as currently in effect. (4)
(d) Forms for Roth Individual Retirement Account Disclosure
Statement and Trust Agreement as currently in effect. (9).
15 (a) Master Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940, effective January 1,
1997. (11)
(b) Exhibits as revised February 11, 1998 to Master
Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to replace those exhibits
to the Master Distribution Plan contained in Exhibit 15(a)
above. (10).
(c) Form of Revised Master Distribution Plan, effective
September 16, 1998, pursuant to Rule 12b-1 under the
Investment Company Act of 1940; filed herewith.
16 Schedule of Computation for Performance Quotations -
Yield, Distribution Rate, Total Rate of Return - MFS High
Income Fund; and Yield, Distribution Rate, Tax-Equivalent
Yield and Total Return - MFS Municipal High Income Fund.
(2)
17 Financial Data Schedules for each class of
each operational series. (16)
18 (a) Plan effective September 6, 1996, as amended, pursuant
to Rule 18f-3(d) under the Investment Company Act of 1940
(Exhibit A dated May 2, 1998). (16)
(b) Plan, effective September 6, 1996, as amended and restated
May 27, 1998, pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940 (17)
Power of Attorney, dated September 21, 1994. (1)
Power of Attorney, dated February 19, 1998. (15)
- -----------------------------
(1) Incorporated by reference to the Registrant's Post-Effective Amendment No.
20 filed with the SEC via EDGAR on May 31, 1995.
(2) Incorporated by reference to MFS Municipal Series Trust (File Nos. 2-92915
and 811-4096) Post-Effective Amendment No. 28 filed with the SEC via EDGAR
on July 28, 1995.
(3) Incorporated by reference to Amendment No. 8 on Form N-2 for MFS Municipal
Income Trust (File No. 811-4841) filed with the SEC via EDGAR on February
28, 1995.
(4) Incorporated by reference to MFS Series Trust IX (File Nos. 2-50409 and
811-2464) Post-Effective Amendment No. 32 filed with the SEC via EDGAR on
August 28, 1995.
(5) Incorporated by reference to the Registrant's Post-Effective Amendment No.
21 filed with the SEC via EDGAR on October 13, 1995.
(6) Incorporated by reference to the Registrant's Post-Effective Amendment No.
22 filed with the SEC via EDGAR on May 29, 1996.
(7) Incorporated by reference to MFS Series Trust I (File Nos. 33-7638 and
811-4777) Post-Effective Amendment No. 25 filed with the SEC via EDGAR on
August 27, 1996.
(8) Incorporated by reference to Registrant's Post-Effective Amendment No. 23
filed with the SEC via EDGAR on August 27, 1996.
(9) Incorporated by reference to MFS Series Trust VIII (File Nos. 33-37972 and
811-5262) Post-Effective Amendment No. 14 filed with the SEC via EDGAR on
February 26, 1998.
(10) Incorporated by reference to Massachusetts Investors Growth Stock Fund
(File Nos. 2-14677 and 811-859) Post-Effective Amendment No. 65 filed with
the SEC via EDGAR on March 30, 1998.
(11) Incorporated by reference to MFS Series Trust IV (File Nos. 33-7638 and
811-2594) Post-Effective Amendment No. 18 filed with the SEC via EDGAR on
December 27, 1996.
(12) Incorporated by reference to the Registrant's Post-Effective Amendment No.
24 filed with the SEC via EDGAR on May 29, 1997.
(13) Incorporated by reference to Massachusetts Investors Growth Stock Fund
(File Nos. 2-14677 and 811-859) Post-Effective Amendment No. 64 filed with
the SEC via EDGAR on October 29, 1997.
(14) Incorporated by reference to MFS Series Trust I (File Nos. 33-7638 and
811-4777) Post-Effective Amendment No. 24 filed with the SEC via EDGAR on
May 29, 1997.
(15) Incorporated by reference to Registrant's Post-Effective Amendment No. 25
filed with the SEC via EDGAR on May 15, 1998.
(16) Incorporated by reference to Registrant's Post-Effective Amendment No. 26
filed with the SEC via EDGAR on May 28, 1998.
(17) Incorporated by reference to MFS Series Trust II (File Nos. 33-7637 and
811-4775) Post-Effective Amendment No. 27 filed with the SEC via EDGAR on
May 29, 1998.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not Applicable.
Item 26. Number of Holders of Securities
For MFS High Income Fund
(1) (2)
Title of Class Number of Record Holders
Class A Shares of Beneficial Interest 37,288
(without par value) (as of August 31,1998)
Class B Shares of Beneficial Interest 21,372
(without par value) (as of August 31, 1998)
Class C Shares of Beneficial Interest 2,624
(without par value) (as of August 31, 1998)
Class I Shares of Beneficial Interest 8
(without par value) (as of August 31, 1998)
For MFS Municipal High Income Fund
(1) (2)
Title of Class Number of Record Holders
Class A Shares of Beneficial Interest 26,719
(without par value) (as of August 31, 1998)
Class B Shares of Beneficial Interest 5,568
(without par value) (as of August 31, 1998)
Class C Shares of Beneficial Interest 0
(without par value) (as of August 31, 1998)
For MFS High Yield Opportunities Fund
(1) (2)
Title of Class Number of Record Holders
Class A Shares of Beneficial Interest 28
(without par value) (as of August 31, 1998)
Class B Shares of Beneficial Interest 107
(without par value) (as of August 31, 1998)
Class C Shares of Beneficial Interest 15
(without par value) (as of August 31, 1998)
Class I Shares of Beneficial Interest 4
(without par value) (as of August 31, 1998)
Item 27. Indemnification
Reference is hereby made to (a) Article V of Registrant's Amended and
Restated Declaration of Trust, incorporated by reference to Post-Effective
Amendment No. 20, filed with the SEC on May 31, 1995 and (b) Section 9 of the
Shareholder Servicing Agent Agreement, incorporated by reference to Registrant's
Post-Effective Amendment No. 21 filed with the SEC via EDGAR on October 13,
1995.
The Trustees and Officers of the Registrant and the personnel of the
Registrant's investment adviser and principal underwriter are insured under an
errors and omissions liability insurance policy. The Registrant and its officers
are also insured under the fidelity bond required by Rule 17g-1 under the
Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser
MFS serves as investment adviser to the following open-end Funds
comprising the MFS Family of Funds (except the Vertex Funds mentioned below):
Massachusetts Investors Trust, Massachusetts Investors Growth Stock Fund, MFS
Growth Opportunities Fund, MFS Government Securities Fund, MFS Government
Limited Maturity Fund, MFS Series Trust I (which has thirteen series: MFS
Managed Sectors Fund, MFS Cash Reserve Fund, MFS World Asset Allocation Fund,
MFS Strategic Growth Fund, MFS Research Growth and Income Fund, MFS Core Growth
Fund, MFS Equity Income Fund, MFS Special Opportunities Fund, MFS Convertible
Securities Fund, MFS Blue Chip Fund, MFS New Discovery Fund, MFS Science and
Technology Fund and MFS Research International Fund), MFS Series Trust II (which
has three series: MFS Emerging Growth Fund, MFS Large Cap Growth Fund and MFS
Intermediate Income Fund), MFS Series Trust III (which has two series: MFS High
Income Fund and MFS Municipal High Income Fund), MFS Series Trust IV (which has
four series: MFS Money Market Fund, MFS Government Money Market Fund, MFS
Municipal Bond Fund and MFS Mid Cap Growth Fund), MFS Series Trust V (which has
six series: MFS Total Return Fund, MFS Research Fund, MFS International
Opportunities Fund, MFS International Strategic Growth Fund, MFS International
Value Fund and MFS Asia Pacific Fund), MFS Series Trust VI (which has three
series: MFS World Total Return Fund, MFS Utilities Fund and MFS World Equity
Fund), MFS Series Trust VII (which has two series: MFS World Governments Fund
and MFS Value Fund), MFS Series Trust VIII (which has two series: MFS Strategic
Income Fund and MFS World Growth Fund), MFS Series Trust IX (which has three
series: MFS Bond Fund, MFS Limited Maturity Fund and MFS Municipal Limited
Maturity Fund), MFS Series Trust X (which has eight series: MFS Government
Mortgage Fund, MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS
International Growth Fund, MFS International Growth and Income Fund, MFS Real
Estate Investment Fund, MFS Strategic Value Fund, MFS Small Cap Value Fund and
MFS Emerging Markets Debt Fund), MFS Series Trust XI (which has six series: MFS
Union Standard Equity Fund, Vertex All Cap Fund, Vertex Research All Cap Fund,
Vertex Growth Fund, Vertex Discovery Fund and Vertex Contrarian Fund (the Vertex
Funds are expected to be declared effective April 28, 1998)), and MFS Municipal
Series Trust (which has 16 series: MFS Alabama Municipal Bond Fund, MFS Arkansas
Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal
Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland Municipal Bond Fund,
MFS Massachusetts Municipal Bond Fund, MFS Mississippi Municipal Bond Fund, MFS
New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS
Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS
Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund, MFS West
Virginia Municipal Bond Fund and MFS Municipal Income Fund) (the "MFS Funds").
The principal business address of each of the MFS Funds is 500 Boylston Street,
Boston, Massachusetts 02116.
MFS also serves as investment adviser of the following open-end
Funds: MFS Institutional Trust ("MFSIT") (which has seven series) and MFS
Variable Insurance Trust ("MVI") (which has thirteen series). The principal
business address of each of the aforementioned funds is 500 Boylston Street,
Boston, Massachusetts 02116.
In addition, MFS serves as investment adviser to the following
closed-end funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS
Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter
Income Trust and MFS Special Value Trust (the "MFS Closed-End Funds"). The
principal business address of each of the MFS Closed-End Funds is 500 Boylston
Street, Boston, Massachusetts 02116.
Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust
("MFS/SL") (which has 26 series), Money Market Variable Account, High Yield
Variable Account, Capital Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account, Total Return Variable
Account and Managed Sectors Variable Account (collectively, the "Accounts"). The
principal business address of MFS/SL is 500 Boylston Street, Boston,
Massachusetts 02116. The principal business address of each of the
aforementioned Accounts is One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181.
Vertex Investment Management, Inc., a Delaware corporation and a
wholly owned subsidiary of MFS, whose principal business address is 500 Boylston
Street, Boston, Massachusetts 02116 ("Vertex"), serves as investment adviser to
Vertex All Cap Fund, Vertex Research All Cap Fund, Vertex Growth Fund, Vertex
Discovery Fund and Vertex Contrarian Fund, each a series of MFS Series Trust XI.
The principal business address of the aforementioned Funds is 500 Boylston
Street, Boston, Massachusetts 02116.
MFS International Ltd. ("MIL"), a limited liability company organized
under the laws of Bermuda and a subsidiary of MFS, whose principal business
address is Cedar House, 41 Cedar Avenue, Hamilton HM12 Bermuda, serves as
investment adviser to and distributor for MFS American Funds (which has six
portfolios: MFS American Funds-U.S. Equity Fund, MFS American Funds-U.S.
Emerging Growth Fund, MFS American Funds-U.S. High Yield Bond Fund, MFS American
Funds - U.S. Dollar Reserve Fund, MFS American Funds-Charter Income Fund and MFS
American Funds-U.S. Research Fund) (the "MIL Funds"). The MIL Funds are
organized in Luxembourg and qualify as an undertaking for collective investments
in transferable securities (UCITS). The principal business address of the MIL
Funds is 47, Boulevard Royal, L-2449 Luxembourg.
MIL also serves as investment adviser to and distributor for MFS
Meridian U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS
Meridian Global Governments Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
World Growth Fund, MFS Meridian Money Market Fund, MFS Meridian World Total
Return Fund, MFS Meridian U.S. Equity Fund, MFS Meridian Research Fund, MFS
Meridian U.S. High Yield Fund, MFS Meridian Emerging Markets Debt Fund, MFS
Meridian Strategic Growth Fund and MFS Meridian World Asset Allocation Fund
(collectively the "MFS Meridian Funds"). Each of the MFS Meridian Funds is
organized as an exempt company under the laws of the Cayman Islands. The
principal business address of each of the MFS Meridian Funds is P.O. Box 309,
Grand Cayman, Cayman Islands, British West Indies.
MFS International (U.K.) Ltd. ("MIL-UK"), a private limited company
registered with the Registrar of Companies for England and Wales whose current
address is 4 John Carpenter Street, London, England ED4Y 0NH, is involved
primarily in marketing and investment research activities with respect to
private clients and the MIL Funds and the MFS Meridian Funds.
MFS Institutional Advisors (Australia) Ltd. ("MFSI-Australia"), a
private limited company organized under the Corporations Law of New South Wales,
Australia whose current address is Level 37, Governor Phillip Tower, One Farrer
Place, Sydney, N5W2000, Australia, is involved primarily in investment
management and distribution of Australian superannuation unit trusts and acts as
an investment adviser to institutional accounts.
MFS Holdings Australia Pty Ltd. ("MFS Holdings Australia"), a private
limited company organized pursuant to the Corporations Law of New South Wales,
Australia whose current address is Level 37, Governor Phillip Tower, One Farrer
Place, Sydney, NSW2000 Australia, and whose function is to serve
primarily as a holding company.
MFS Fund Distributors, Inc. ("MFD"), a wholly owned
subsidiary of MFS, serves as distributor for the MFS Funds, MVI
and MFSIT.
MFS Service Center, Inc. ("MFSC"), a wholly owned
subsidiary of MFS, serves as shareholder servicing agent to the
MFS Funds, the MFS Closed-End Funds, MFSIT and MVI.
MFS Institutional Advisors, Inc. ("MFSI"), a wholly
owned subsidiary of MFS, provides investment advice to
substantial private clients.
MFS Retirement Services, Inc. ("RSI"), a wholly owned
subsidiary of MFS, markets MFS products to retirement plans and
provides administrative and record keeping services for
retirement plans.
MFS
The Directors of MFS are Jeffrey L. Shames, Arnold D.
Scott, John W. Ballen, Kevin R. Parke, Thomas J. Cashman, Jr.,
Joseph W. Dello Russo, William W. Scott, Donald A. Stewart and
John D. McNeil. Mr. Shames is the Chairman and Chief Executive
Officer, Mr. Ballen is President and Chief Investment Officer,
Mr. Scott is a Senior Executive Vice President and Secretary,
William W. Scott, Jr., Thomas J. Cashman, Jr., Joseph W. Dello
Russo and Kevin R. Parke are Executive Vice Presidents (Mr.
Parke is also Chief Equity Officer), Stephen E. Cavan is a
Senior Vice President, General Counsel and an Assistant
Secretary, Robert T. Burns is a Senior Vice President, Associate
General Counsel and an Assistant Secretary of MFS, and Thomas B.
Hastings is a Vice President and Treasurer of MFS.
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS Growth Opportunities Fund
MFS Government Securities Fund
MFS Series Trust I
MFS Series Trust V
MFS Series Trust VI
MFS Series Trust X
MFS Government Limited Maturity Fund
Stephen E. Cavan is the Secretary, W. Thomas London is
the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E.
Bradley, Vice Presidents of MFS, are the Assistant Treasurers,
James R. Bordewick, Jr., Senior Vice President and Associate
General Counsel of MFS, is the Assistant Secretary.
MFS Series Trust II
Leslie J. Nanberg, Senior Vice President of MFS, is a
Vice President, Stephen E. Cavan is the Secretary, W. Thomas
London is the Treasurer, James O. Yost, Ellen M. Moynihan and
Mark E. Bradley are the Assistant Treasurers, and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Government Markets Income Trust
MFS Intermediate Income Trust
Leslie J. Nanberg, Senior Vice President of MFS, is a
Vice President, Stephen E. Cavan is the Secretary, W. Thomas
London is the Treasurer, James O. Yost, Ellen M. Moynihan and
Mark E. Bradley are the Assistant Treasurers, and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Series Trust III
James T. Swanson, Robert J. Manning and Joan S.
Batchelder, Senior Vice Presidents of MFS, and Bernard
Scozzafava, Vice President of MFS, are Vice Presidents, Sheila
Burns-Magnan, Assistant Vice President of MFS, and Daniel E.
McManus, Vice President of MFS, are Assistant Vice Presidents,
Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley
are the Assistant Treasurers, and James R. Bordewick, Jr. is the
Assistant Secretary.
MFS Series Trust IV
MFS Series Trust IX
Robert A. Dennis and Geoffrey L. Kurinsky, Senior Vice
Presidents of MFS, are Vice Presidents, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost,
Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant
Secretary.
MFS Series Trust VII
Leslie J. Nanberg and Stephen C. Bryant, Senior Vice
Presidents of MFS, are Vice Presidents, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost,
Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant
Secretary.
MFS Series Trust VIII
Jeffrey L. Shames, Leslie J. Nanberg and James T.
Swanson and John D. Laupheimer, Jr., a Senior Vice President of
MFS, are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan
and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Municipal Series Trust
Robert A. Dennis is Vice President, David B. Smith and
Geoffrey L. Schechter, Vice Presidents of MFS, are Vice
Presidents, Daniel E. McManus, Vice President of MFS, is an
Assistant Vice President, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan
and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Variable Insurance Trust
MFS Series Trust XI
MFS Institutional Trust
Jeffrey L. Shames is the President and Chairman,
Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley
are the Assistant Treasurers and James R. Bordewick, Jr. is the
Assistant Secretary.
MFS Municipal Income Trust
Robert J. Manning is Vice President, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant
Secretary.
MFS Multimarket Income Trust
MFS Charter Income Trust
Leslie J. Nanberg and James T. Swanson are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London
is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers and James R. Bordewick, Jr.
is the Assistant Secretary.
MFS Special Value Trust
Robert J. Manning is Vice President, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant
Secretary.
MFS/Sun Life Series Trust
John D. McNeil, Chairman and Director of Sun Life
Assurance Company of Canada, is the Chairman, Stephen E. Cavan
is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant
Treasurers and James R. Bordewick, Jr. is the Assistant
Secretary.
Money Market Variable Account
High Yield Variable Account
Capital Appreciation Variable Account
Government Securities Variable Account
Total Return Variable Account
World Governments Variable Account
Managed Sectors Variable Account
John D. McNeil is the Chairman, Stephen E. Cavan is
the Secretary, and James R. Bordewick, Jr. is the Assistant
Secretary.
Vertex
Jeffrey L. Shames and Arnold D. Scott are the
Directors, Jeffrey L. Shames is the President, Kevin R. Parke
and John W. Ballen are Executive Vice Presidents, John F.
Brennan, Jr., and John D. Laupheimer are Senior Vice Presidents,
Brian E. Stack is a Vice President, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer,
Stephen E. Cavan is the Secretary and Robert T. Burns is the
Assistant Secretary.
MIL
Arnold D. Scott, Jeffrey L. Shames and Thomas J.
Cashman, Jr. are Directors, Stephen E. Cavan is a Director,
Senior Vice President and the Clerk, Robert T. Burns is an
Assistant Clerk, Joseph W. Dello Russo, Executive Vice President
and Chief Financial Officer of MFS, is the Treasurer and Thomas
B. Hastings is the Assistant Treasurer.
MIL-UK
Thomas J. Cashman, Jr. is President and a Director,
Arnold D. Scott and Jeffrey L. Shames are Directors, Stephen E.
Cavan is a Director and the Secretary, Joseph W. Dello Russo is
the Treasurer, Thomas B. Hastings is the Assistant Treasurer and
Robert T. Burns is the Assistant Secretary.
MFSI - Australia
Thomas J. Cashman, Jr. is President and a Director,
Graham E. Lenzer, John A. Gee and David Adiseshan are Directors,
Stephen E. Cavan is the Secretary, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, and
Robert T. Burns is the Assistant Secretary.
MFS Holdings - Australia
Jeffrey L. Shames is the President and a Director,
Arnold D. Scott, Thomas J. Cashman, Jr., and Graham E. Lenzer
are Directors, Stephen E. Cavan is the Secretary, Joseph W.
Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, and Robert T. Burns is the Assistant
Secretary.
MIL Funds
Richard B. Bailey, John A. Brindle, Richard W. S.
Baker, Arnold D. Scott, Jeffrey L. Shames and William F. Waters
are Directors, Stephen E. Cavan is the Secretary, W. Thomas
London is the Treasurer, James O. Yost, Ellen M. Moynihan and
Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Meridian Funds
Richard B. Bailey, John A. Brindle, Richard W. S.
Baker, Arnold D. Scott, Jeffrey L. Shames and William F. Waters
are Directors, Stephen E. Cavan is the Secretary, W. Thomas
London is the Treasurer, James R. Bordewick, Jr. is the
Assistant Secretary and James O. Yost, Ellen M. Moynihan and
Mark E. Bradley are the Assistant Treasurers.
MFD
Arnold D. Scott and Jeffrey L. Shames are Directors,
William W. Scott, Jr., an Executive Vice President of MFS, is
the President, Stephen E. Cavan is the Secretary, Robert T.
Burns is the Assistant Secretary, Joseph W. Dello Russo is the
Treasurer, and Thomas B. Hastings is the Assistant Treasurer.
MFSC
Arnold D. Scott and Jeffrey L. Shames are Directors,
Joseph A. Recomendes, a Senior Vice President and Chief
Information Officer of MFS, is Vice Chairman and a Director,
Janet A. Clifford is the President, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer,
Stephen E. Cavan is the Secretary, and Robert T. Burns is the
Assistant Secretary.
MFSI
Jeffrey L. Shames, and Arnold D. Scott are Directors,
Thomas J. Cashman, Jr., is the President and a Director, Leslie
J. Nanberg is a Senior Vice President, a Managing Director and a
Director, Kevin R. Parke is the Executive Vice President and a
Managing Director, George F. Bennett, Jr., John A. Gee, Brianne
Grady, Joseph A. Kosciuszek and Joseph J. Trainor are Senior
Vice Presidents and Managing Directors, Joseph W. Dello Russo is
the Treasurer, Thomas B. Hastings is the Assistant Treasurer and
Robert T. Burns is the Secretary.
RSI
Arnold D. Scott is the Chairman and a Director, Martin
E. Beaulieu is the President, William W. Scott, Jr. is a
Director, Joseph W. Dello Russo is the Treasurer, Thomas B.
Hastings is the Assistant Treasurer, Stephen E. Cavan is the
Secretary and Robert T. Burns is the Assistant Secretary.
In addition, the following persons, Directors or officers of MFS,
have the affiliations indicated:
Donald A. Stewart President and a Director, Sun
Life Assurance Company of
Canada, Sun Life Centre, 150
King Street West, Toronto,
Ontario, Canada (Mr. Stewart
is also an officer and/or
Director of various
subsidiaries and affiliates of
Sun Life)
John D. McNeil Chairman, Sun Life Assurance
Company of Canada, Sun Life
Centre, 150 King Street West,
Toronto, Ontario, Canada (Mr.
McNeil is also an officer
and/or Director of various
subsidiaries and affiliates of
Sun Life)
Joseph W. Dello Russo Director of Mutual Fund
Operations, The Boston
Company, Exchange Place,
Boston, Massachusetts (until
August, 1994)
Item 29. Distributors
(a) Reference is hereby made to Item 28 above.
(b) Reference is hereby made to Item 28 above; the principal business
address of each of these persons is 500 Boylston Street, Boston, Massachusetts
02116.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or
in part, at the office of the Registrant and the following locations:
NAME ADDRESS
---- -------
Massachusetts Financial Services 500 Boylston Street
Company (investment adviser) Boston, MA 02116
MFS Fund Distributors, Inc. 500 Boylston Street
(principal underwriter) Boston, MA 02116
State Street Bank and Trust Company State Street South
(custodian) 5-West
North Quincy, MA 02171
MFS Service Center, Inc. 500 Boylston Street
(transfer agent) Boston, MA 02116
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its latest annual report to shareholders upon
request and without charge.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the provisions set forth in Item 27 of
this Part C, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the 16th day of September, 1998.
MFS SERIES TRUST III
By: JAMES R. BORDEWICK, JR.
--------------------------
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on September 16, 1998.
SIGNATURE TITLE
--------- -----
STEPHEN E. CAVAN* Principal Executive Officer
- -----------------------------
Stephen E. Cavan
W. THOMAS LONDON* Treasurer (Principal Financial Officer
- ----------------------------- and Principal Accounting Officer)
W. Thomas London
RICHARD B. BAILEY* Trustee
- -----------------------------
Richard B. Bailey
PETER G. HARWOOD* Trustee
- -----------------------------
Peter G. Harwood
J. ATWOOD IVES* Trustee
- -----------------------------
J. Atwood Ives
LAWRENCE T. PERERA* Trustee
- -----------------------------
Lawrence T. Perera
WILLIAM J. POORVU* Trustee
- -----------------------------
William J. Poorvu
CHARLES W. SCHMIDT* Trustee
- -----------------------------
Charles W. Schmidt
ARNOLD D. SCOTT* Trustee
- -----------------------------
Arnold D. Scott
JEFFREY L. SHAMES* Trustee
- -----------------------------
Jeffrey L. Shames
ELAINE R. SMITH* Trustee
- -----------------------------
Elaine R. Smith
DAVID B. STONE* Trustee
- -----------------------------
David B. Stone
*By: /s/ JAMES R. BORDEWICK, JR.
----------------------------
Name: James R. Bordewick, Jr.
as Attorney-in-fact
Executed by James R. Bordewick, Jr. on
behalf of those indicated pursuant to
(i) a Power of Attorney dated
September 21, 1994, incorporated by
reference to the Registrant's Post-
Effective Amendment No. 20 filed with
the Securities and Exchange Commission
via EDGAR on May 31, 1995; and (ii) a
Power of Attorney dated February 19,
1998, incorporated by reference to the
Registrant's Post- Effective Amendment
No. 25 filed with the Securities and
Exchange Commission via EDGAR on May
15, 1998.
<PAGE>
MFS SERIES TRUST III
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
1 (e) Form of Amendment to Declaration of Trust, dated
September 16, 1998.
15 (c) Form of Revised Master Distribution Plan, effective
September 16, 1998, pursuant to Rule 12b-1 under the
Investment Company Act
of 1940.
<PAGE>
EXHIBIT 1(e)
FORM OF
MFS SERIES TRUST III
CERTIFICATION OF AMENDMENT
TO DECLARATION OF TRUST
ESTABLISHMENT AND DESIGNATION
OF CLASSES
Pursuant to Section 6.9 of the Amended and Restated Declaration of
Trust dated February 15, 1995 (the "Declaration") of MFS Series Trust III, a
business trust organized under the laws of The Commonwealth of Massachusetts
(the "Trust"), the undersigned Trustees of the Trust, being a majority of the
Trustees of the Trust, hereby divide the shares of MFS Municipal High Income
Fund, a series of the Trust, to create an additional class of shares, (as
defined in the Declaration), such series to have the following special and
relative rights:
1. The additional class of shares is designated "Class C Shares";
2. Class C Shares shall be entitled to all the rights and preferences
accorded to shares under the Declaration;
3. The purchase price of Class C Shares, the method of determination of
the net asset value of Class C Shares, the price, terms and manner
of redemption of Class C Shares, and the relative dividend rights of
holders of Class C Shares shall be established by the Trustees of
the Trust in accordance with the Declaration and shall be set forth
in the current prospectus and statement of additional information of
the Trust or any series thereof, as amended from time to time,
contained in the Trust's registration statement under the Securities
Act of 1933, as amended;
4. Class C Shares shall vote together as a single class except that
Shares of a class may vote separately on matters affecting only that
class and Shares of a class not affected by a matter will not vote
on that matter; and
5. A class of Shares of any series of the Trust may be terminated by
the Trustees by written notice to the Shareholders of the class.
<PAGE>
IN WITNESS WHEREOF, a majority of the Trustees of the Trust have executed
this amendment, in one or more counterparts, all constituting a single
instrument, as an instrument under seal in The Commonwealth of Massachusetts, as
of this ____ day of ________________, 1998 and further certify, as provided by
the provisions of Section 9.3(c) of the Declaration, that this amendment was
duly adopted by the undersigned in accordance with the second sentence of
Section 9.3(a) of the Declaration.
- --------------------------- -------------------------
Richard B. Bailey Charles W. Schmidt
63 Atlantic Avenue 63 Claypit Hill Road
Boston, MA 02110 Wayland, MA 01778
- --------------------------- -------------------------
Peter G. Harwood Arnold D. Scott
211 Lindsay Pond Road 20 Rowes Wharf
Concord, MA 01742 Boston, MA 02110
- --------------------------- -------------------------
J. Atwood Ives Jeffrey L. Shames
17 West Cedar Street 38 Lake Avenue
Boston, MA 02108 Newton, MA 02159
- --------------------------- -------------------------
Lawrence T. Perera Elaine R. Smith
18 Marlborough Street 75 Scotch Pine Road
Boston, MA 02116 Weston, MA 02193
- --------------------------- -------------------------
William J. Poorvu David B. Stone
975 Memorial Drive 282 Beacon Street
Cambridge, MA 02138 Boston, MA 02116
<PAGE>
EXHIBIT 15(C)
FORM OF
MFS FUNDS
MASTER DISTRIBUTION PLAN PURSUANT TO RULE 12B-1 UNDER THE
INVESTMENT COMPANY ACT OF 1940
Effective January 1, 1997
This Distribution Plan (the "Plan") has been adopted by each of the
registered investment companies identified from time to time on Exhibit A hereto
(the "Trust" or "Trusts"), severally and not jointly, pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"), and sets
forth the material aspects of the financing of the distribution of the classes
of shares representing interests in the same portfolio issued by the Trusts.
WITNESSETH:
WHEREAS, each Trust is engaged in business as an open-end management investment
company and is registered under the 1940 Act, some consisting of multiple
investment portfolios or series, each of which has separate investment
objectives and policies and segregated assets (the "Fund" or "Funds"); and
WHEREAS, each Fund intends to distribute its Shares of Beneficial Interest
(without par value) ("Shares") in accordance with Rule 12b-1 under the 1940 Act,
and desires to adopt this Distribution Plan as a plan of distribution pursuant
to such Rule; and
WHEREAS, each Fund presently offers multiple classes of Shares, some Funds
presently offering only certain classes of Shares to investors;
WHEREAS, each Trust has entered into a distribution agreement (the "Distribution
Agreement") in a form approved by the Board of Trustees of each Trust (the
"Board of Trustees") in the manner specified in Rule 12b-1, with MFS Fund
Distributors, Inc., a Delaware corporation, as distributor (the "Distributor"),
whereby the Distributor provides facilities and personnel and renders services
to each Fund in connection with the offering and distribution of Shares; and
WHEREAS, each Trust recognizes and agrees that the Distributor may retain the
services of firms or individuals to act as dealers (the "Dealers") of the Shares
in connection with the offering of Shares; and
WHEREAS, the Distribution Agreement provides that: (a) a sales charge may be
paid by investors who purchase Shares designated "Class A" and that the
Distributor and Dealers will receive such sales charge as partial compensation
for their services in connection with the sale of Class A Shares, and (b) the
Distributor may (but is not required to) impose certain deferred sales charges
in connection with the repurchase of Shares and the Distributor may retain or
receive from a fund, as the case may be, all such deferred sales charges; and
WHEREAS, the Board of Trustees of each Trust, in considering whether each Fund
should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of a Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its
shareholders; and
NOW THEREFORE, the Board of Trustees of each Trust hereby adopts this Plan for
each Fund as a plan of distribution in accordance with Rule 12b-1, relating to
the classes of Shares each Fund from time to time offers, on the following terms
and conditions:
1. SERVICES PROVIDED AND EXPENSES BORNE BY DISTRIBUTOR.
1.1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares. Among other things, the Distributor shall
be responsible for any commissions payable to Dealers (including any
ongoing maintenance commissions), all expenses of printing (excluding
typesetting) and distributing prospectuses to prospective shareholders
and providing such other related services as are reasonably necessary
in connection therewith.
1.2. The Distributor shall bear all distribution-related expenses to the
extent specified in the Distribution Agreement in providing the
services described in Section 1.1, including, without limitation, the
compensation of personnel necessary to provide such services and all
costs of travel, office expenses (including rent and overhead),
equipment, printing, delivery and mailing costs.
2. DISTRIBUTION FEES AND SERVICE FEES.
2.1 Distribution and Service Fees Common to Each Class of Shares.
2.1.1. Service Fees. As partial consideration for the personal services
and/or account maintenance services performed by each Dealer in the
performance of its obligations under its dealer agreement with the
Distributor, each Fund shall pay each Dealer a service fee periodically
at a rate not to exceed 0.25% per annum of the portion of the average
daily net assets of the Fund that is represented by the Class of Shares
that are owned by investors for whom such Dealer is the holder or
dealer of record. That portion of the Fund's average daily net assets
on which the fees payable under this Section 2.1.1. hereof are
calculated may be subject to certain minimum amount requirements as may
be determined, and additional or different dealer qualification
standards that may be established, from time to time, by the
Distributor. The Distributor shall be entitled to be paid any fees
payable under this Section 2.1.1. hereof with respect to Shares for
which no Dealer of record exists or qualification standards have not
been met as partial consideration for personal services and/or account
maintenance services provided by the Distributor to those Shares. The
service fee payable pursuant to this Section 2.1.1. may from time to
time be paid by a Fund to the Distributor and the Distributor will then
pay these fees to Dealers on behalf of the Fund or retain them in
accordance with this paragraph.
2.1.2. Distribution Fees. As partial consideration for the services
performed as specified in the Distribution Agreement and expenses
incurred in the performance of its obligations under the Distribution
Agreement, a Fund shall pay the Distributor a distribution fee
periodically at a rate based on the average daily net assets of a Fund
attributable to the designated Class of Shares. The amount of the
distribution fee paid by the Fund differs with respect to each Class of
Shares, as does the use by the Distributor of such distribution fees.
2.2. Distribution Fees Relating to Class A Shares
2.2.1. It is understood that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Class A
Shares by a Fund and the Distributor may retain (or receive from the
Fund, as the case may be) all such deferred sales charges. Each Fund
listed on Exhibit B hereto shall pay the Distributor a distribution fee
periodically at a rate of 0.10% per annum of average daily net assets
of the Fund attributable to Class A Shares. Each Fund listed on Exhibit
C hereto shall pay the Distributor a distribution fee periodically at a
rate not to exceed 0.25% per annum of average daily net assets of the
Fund attributable to Class A Shares. Such payments shall commence
following shareholder approval of the Plan but only upon notification
by the Distributor to the Fund of the commencement of the Plan (the
"Commencement Date").
2.2.2. The aggregate amount of fees and expenses paid pursuant to
Sections 2.1. and 2.2. hereof shall not exceed 0.35% per annum and
0.50% per annum of the average daily net assets attributable to Class A
Shares of each Fund listed on Exhibit B hereto and Exhibit C, hereto,
respectively. No fees shall be paid pursuant to Section 2.2.1. hereof
or this Section 2.2.2. to any insurance company which has entered into
an agreement with the Trust on behalf of a Fund and the Distributor
that permits such insurance company to purchase Class A Shares from a
Fund at their net asset value in connection with annuity agreements
issued in connection with the insurance company's separate accounts.
2.3. Distribution Fees Relating to Class B Shares
2.3.1. It is understood that the Distributor may impose certain
deferred sales charges in connection with the repurchase of Class B
Shares by a Fund and the Distributor may retain (or receive from the
Fund, as the case may be) all such deferred sales charges. As
additional consideration for all services performed and expenses
incurred in the performance of its obligations under the Distribution
Agreement relating to Class B Shares, a Fund shall pay the Distributor
a distribution fee periodically at a rate not to exceed 0.75% per annum
of the Fund's average daily net assets attributable to Class B Shares.
2.3.2. Each Fund understands that agreements between the Distributor
and the Dealers may provide for payment of commissions to Dealers in
connection with the sale of Class B Shares and may provide for a
portion (which may be all or substantially all) of the fees payable by
a Fund to the Distributor under the Distribution Agreement to be paid
by the Distributor to the Dealers in consideration of the Dealer's
services as a dealer of the Class B Shares. Except as described in
Section 2.1., nothing in this Plan shall be construed as requiring a
Fund to make any payment to any Dealer or to have any obligations to
any Dealer in connection with services as a dealer of Class B Shares.
The Distributor shall agree and undertake that any agreement entered
into between the Distributor and any Dealer shall provide that, except
as provided in Section 2.1., such Dealer shall look solely to the
Distributor for compensation for its services thereunder and that in no
event shall such Dealer seek any payment from the Fund.
2.4. Distribution Fees Relating to Class C Shares
2.4.1. It is understood that the Distributor may (but is not required
to) impose certain deferred sales charges in connection with the
repurchase of Class C Shares by a Fund and the Distributor may retain
(or receive from the Fund, as the case may be) all such deferred sales
charges. As additional consideration for all services performed and
expenses incurred in the performance of its obligations under the
Distribution Agreement relating to Class C Shares, a Fund shall pay the
Distributor a distribution fee periodically at a rate not to exceed
0.75% per annum of the Fund's average daily net assets attributable to
Class C Shares.
2.4.2. Each Fund understands that agreements between the Distributor
and the Dealers may provide for payment of commissions to Dealers in
connection with the sales of Class C Shares and may provide for a
portion (which may be all or substantially all) of the fees payable by
a Fund to the Distributor under the Distribution Agreement to be paid
to the Dealers in consideration of the Dealer's services as a dealer of
the Class C Shares. Except as described in Section 2.1., nothing in
this Plan shall be construed as requiring a Fund to make any payment to
any Dealer or to have any obligations to any Dealer in connection with
services as a dealer of Class C Shares. The Distributor shall agree and
undertake that any agreement entered into between the Distributor and
any Dealer shall provide that, except as provided in Section 2.1., such
Dealer shall look solely to the Distributor for compensation for its
services thereunder and that in no event shall such Dealer seek any
payment from the Fund.
3. EXPENSES BORNE BY FUND. Each Fund shall pay all fees and expenses of any
independent auditor, legal counsel, investment adviser, administrator,
transfer agent, custodian, shareholder servicing agent, registrar or
dividend disbursing agent of the Fund; expenses of distributing and
redeeming Shares and servicing shareholder accounts; expenses of preparing,
printing and mailing prospectuses, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to
shareholders of a Fund, except that the Distributor shall be responsible for
the distribution-related expenses as provided in Section 1 hereof.
4. ACTION TAKEN BY THE TRUST. Nothing herein contained shall be deemed to
require a Trust to take any action contrary to its Declaration of Trust or
By-laws or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of
Trustees of the responsibility for and control of the conduct of the affairs
of a Fund.
5. EFFECTIVENESS OF PLAN. This Plan shall become effective upon (a) approval by
a vote of at least a "majority of the outstanding voting securities" of each
particular class of Shares (unless previously so approved), and (b) approval
by a vote of the Board of Trustees and a vote of a majority of the Trustees
who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "Qualified Trustees"), such votes to be cast in
person at a meeting called for the purpose of voting on this Plan.
6. DURATION OF PLAN. This Plan shall continue in effect indefinitely; provided
however, that such continuance is "specifically approved at least annually"
by vote of both a majority of the Trustees of the Trust and a majority of
the Qualified Trustees, such votes to be cast in person at a meeting called
for the purpose of voting on the continuance of this Plan. If such annual
approval is not obtained, this Plan, with respect to the classes of Shares
with respect to which such approval was not obtained, shall expire 12 months
after the effective date of the last approval.
7. AMENDMENTS OF PLAN. This Plan may be amended at any time by the Board of
Trustees; provided that this Plan may not be amended to increase materially
the amount of permitted expenses hereunder without the approval of holders
of a "majority of the outstanding voting securities" of the affected Class
of Shares and may not be materially amended in any case without a vote of a
majority of both the Trustees and the Qualified Trustees. This Plan may be
terminated at any time by a vote of a majority of the Qualified Trustees or
by a vote of the holders of a "majority of the outstanding voting
securities" of Shares.
8. REVIEW BY BOARD OF TRUSTEES. Each Fund and the Distributor shall provide the
Board of Trustees, and the Board of Trustees shall review, at least
quarterly, a written report of the amounts expended under this Plan and the
purposes for which such expenditures were made.
9. SELECTION AND NOMINATION OF QUALIFIED TRUSTEES. While this Plan is in
effect, the selection and nomination of Qualified Trustees shall be
committed to the discretion of the Trustees who are not "interested persons"
of the Trust.
10. DEFINITIONS; COMPUTATION OF FEES. For the purposes of this Plan, the terms
"interested persons", "majority of the outstanding voting securities" and
"specifically approved at least annually" are used as defined in the 1940
Act or the rules and regulations adopted thereunder. All references herein
to "Fund" shall be deemed to refer to a Trust where such Trust does not have
multiple portfolios or series. In addition, for purposes of determining the
fees payable to the Distributor hereunder, (i) the value of a Fund's net
assets shall be computed in the manner specified in each Fund's then-current
prospectus and statement of additional information for computation of the
net asset value of Shares of the Fund and (ii) the net asset value per Share
of a particular class shall reflect any plan adopted under Rule 18f-3 under
the 1940 Act.
11. RETENTION OF PLAN RECORDS. Each Trust shall preserve copies of this Plan,
and each agreement related hereto and each report referred to in Section 8.1
hereof (collectively, the "Records") for a period of six years from the end
of the fiscal year in which such Record was made and each such record shall
be kept in an easily accessible place for the first two years of said
record-keeping.
12. APPLICABLE LAW. This Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
13. SEVERABILITY OF PLAN. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
the Plan shall not be affected thereby. The provisions of this Plan are
severable with respect to each Class of Shares offered by a Fund and with
respect to each Fund.
14. SCOPE OF TRUST'S OBLIGATION. A copy of the Declaration of Trust of each
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts. It is acknowledged that the obligations of or arising out of
this Plan are not binding upon any of the Trust's trustees, officers,
employees, agents or shareholders individually, but are binding solely upon
the assets and property of the Trust in accordance with its proportionate
interest hereunder. If this Plan is adopted by the Trust on behalf of one or
more series of the Trust, it is further acknowledged that the assets and
liabilities of each series of the Trust are separate and distinct and that
the obligations of or arising out of this Plan are binding solely upon the
assets or property of the series on whose behalf the Trust has adopted this
Plan. If the Trust has adopted this Plan on behalf of more than one series
of the Trust, it is also acknowledged that the obligations of each series
hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and no series shall be responsible for the
obligations of another series.
<PAGE>
EXHIBIT A
Funds and Share Classes Covered by Rule 12B-1 Plan
As of: September 16, 1998
- --------------------------------------------------------------------------------
CLASSES OF SHARES
COVERED BY RULE 12b-1 ADOPTION OF
FUND PLAN RULE 12b-1 PLAN
- --------------------------------------------------------------------------------
MFS High Income Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS High Yield Opportunities Fund A,B,C July 1, 1998
- --------------------------------------------------------------------------------
MFS Municipal High Income Fund B,C September 16, 1998
- --------------------------------------------------------------------------------
MFS Municipal Bond Fund B January 1, 1997
- --------------------------------------------------------------------------------
MFS Mid Cap Growth Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Total Return Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Research Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS World Governments Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Capital Opportunities Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Bond Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Limited Maturity Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Municipal Limited Maturity Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Government Mortgage Fund A,B January 1, 1997
- --------------------------------------------------------------------------------
MFS/Foreign & Colonial Emerging Markets
Equity Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS International Growth Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS International Growth and Income Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
Massachusetts Investors Trust A,B,C January 1, 1997
- --------------------------------------------------------------------------------
Massachusetts Investors Growth
Stock Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS Growth Opportunities Fund A,B January 1, 1997
- --------------------------------------------------------------------------------
MFS Government Securities Fund A,B,C January 1, 1997
- --------------------------------------------------------------------------------
MFS International Opportunities Fund A,B,C October 8, 1997
- --------------------------------------------------------------------------------
MFS International Value Fund A,B,C October 8, 1997
- --------------------------------------------------------------------------------
MFS International Strategic Growth Fund A,B,C October 8, 1997
- --------------------------------------------------------------------------------
MFS Asia Pacific Fund A,B,C October 8, 1997
- --------------------------------------------------------------------------------
MFS Strategic Value Fund A,B,C March 17, 1998
- --------------------------------------------------------------------------------
MFS Small Cap Value Fund A,B,C March 17, 1998
- --------------------------------------------------------------------------------
MFS Emerging Markets Debt Fund A,B,C March 17, 1998
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B
AS OF: JULY 1, 1998
Massachusetts Investors Trust
MFS High Income Fund
MFS High Yield Opportunities Fund
MFS Mid-Cap Growth Fund
MFS Total Return Fund
MFS Research Fund
MFS World Governments Fund
MFS Capital Opportunities Fund
MFS Bond Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
MFS Government Mortgage Fund
Massachusetts Investors Growth Stock Fund
MFS Growth Opportunities Fund
MFS Government Securities Fund
MFS Strategic Value Fund
MFS Small Cap Value Fund
MFS Emerging Markets Debt Fund
<PAGE>
EXHIBIT C
AS OF: OCTOBER 8, 1997
MFS/Foreign & Colonial Emerging Markets Equity Fund
MFS International Growth Fund
MFS International Growth & Income Fund
MFS International Opportunities Fund
MFS International Value Fund
MFS International Strategic Growth Fund
MFS Asia Pacific Fund
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<NAME> MFS SERIES TRUST III
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