MFS(R) OTC FUND MFS(R) MUNICIPAL INCOME FUND
MFS(R) RESEARCH FUND MFS(R) HIGH INCOME FUND
MFS(R) BOND FUND MFS(R) TOTAL RETURN FUND
MFS(R) MUNICIPAL LIMITED MATURITY FUND MFS(R) LIMITED MATURITY FUND
MFS(R) WORLD ASSET ALLOCATION FUND MFS(R) GOVERNMENT LIMITED MATURITY FUND
MFS(R) WORLD TOTAL RETURN FUND MFS(R) UTILITIES FUND
MFS(R) WORLD EQUITY FUND MFS(R) STRATEGIC INCOME FUND
MFS(R) WORLD GROWTH FUND MFS(R) NORTH CAROLINA MUNICIPAL BOND FUND
MFS(R) VIRGINIA MUNICIPAL BOND FUND MFS(R) CALIFORNIA MUNICIPAL BOND FUND
SUPPLEMENT TO CURRENT PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION
Each of the above-referenced Funds (each a "Fund") currently offers Class C
shares. Effective April 1, 1996, Class C shares purchased on or after this date
may be subject to a contingent deferred sales charge (a "CDSC") of 1.00% upon
redemption during the first year after purchase. In no event will Class C shares
purchased prior to April 1, 1996 be subject to a CDSC. MFS Fund Distributors,
Inc. ("MFD"), each Fund's distributor, will pay dealers 1% of the purchase price
of Class C shares purchased through such dealers on and after April 1, 1996, as
described below.
Each Fund also currently offers Class A shares at net asset value, without
an initial sales charge but subject to a CDSC of 1% upon redemption during the
first year after purchase under certain limited circumstances, as described in
each Fund's Prospectus. Effective April 1, 1996, the commissions paid by MFD to
dealers on such investments in Class A shares made through dealers will change,
as described below.
THIS SUPPLEMENT DESCRIBES THESE MATTERS IN MORE DETAIL. CAPTIONS CONTAINED
IN THIS SUPPLEMENT CORRESPOND TO PROSPECTUS CAPTIONS, AND INFORMATION CONTAINED
IN THIS SUPPLEMENT SUPERSEDES AND REPLACES ANY CONFLICTING INFORMATION CONTAINED
IN A FUND'S PROSPECTUS AND SAI.
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES. The "Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption proceeds, as
applicable)" imposed upon the redemption of Class C shares is 1.00% during the
first year after purchase.
EXAMPLE OF EXPENSES. The Fund's Prospectus indicates the amount of expenses an
investor would pay on a $1,000 investment in Class C shares of the Fund,
assuming (a) a 5% annual return and (b) redemption at the end of each of certain
specified time periods. Because Class C shares are subject to a 1% CDSC
commencing April 1, 1996, the expenses an investor in Class C shares purchased
on or after this date would pay on a $1,000 investment under these assumptions
will increase by $10 (i.e., 1% CDSC X $1,000) if the shares are redeemed within
one year after purchase.
THE FUND
Three classes of shares of the Fund currently are offered to the general
public. Class A shares are offered at net asset value plus an initial sales
charge (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) and
are subject to an annual distribution fee and service fee up to a maximum of
0.35% per annum (0.50% per annum in the case of the MFS World Asset Allocation
Fund). 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 fee 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.
INFORMATION CONCERNING SHARES OF THE FUND
PURCHASES
CLASS A SHARES: Class A shares are offered at net asset value, without an
initial sales charge but subject to a CDSC of 1% upon redemption during the
first year of the purchase under certain limited circumstances, as described in
the Fund's Prospectus. In the case of such purchases, MFD will pay commissions
to dealers on new investments in Class A shares made through such dealers as
follows:
COMMISSION PAID
BY MFD
TO DEALERS CUMULATIVE PURCHASE AMOUNT
----------- --------------------------
1.00% On the first $2,000,000, plus
0.80% Over $2,000,000 to $3,000,000, plus
0.50% Over $3,000,000 to $50,000,000, plus
0.25% Over $50,000,000
For purposes of determining the level of commissions to be paid to dealers with
respect to a shareholder's new investment in Class A shares made on or after
April 1, 1996, purchases for each shareholder account (and certain other
accounts for which the shareholder is a record or beneficial holder) will be
aggregated over a 12-month period (commencing from the date of the first such
purchase).
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. The maximum investment in Class C shares is $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. In
certain circumstances, the CDSC imposed upon redemption of Class C shares is
waived. Circumstances under which sales charges imposed on Class A and Class B
shares are waived are described in Appendix A to the Prospectus. The CDSC
imposed upon redemption of Class C shares is waived in the same circumstances
that apply to the waiver of the Class B CDSC. See "Redemptions and Repurchases
- -- Contingent Deferred Sales Charge" below for further discussion of the CDSC.
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 Class C Distribution Plan by
the Fund to MFD for the first year after purchase (see "Distribution Plans" in
the Prospectus). In addition, MFD or its affiliates may, from time to time, pay
dealers an additional commission equal to 0.50% of the net asset value of all
Class C shares sold by such dealers during a specified sales period.
Class C shares are not currently available for purchase by any retirement
plan qualified under Section 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.
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 other MFS Fund in the MFS Family of Funds
(the "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.
Prior to April 1, 1996, Class C shares of the MFS Funds were exchangeable
for shares of the MFS Money Market Fund at net asset value. Effective April 1,
1996, Class C shares of the MFS Funds may no longer be exchanged for shares of
the MFS Money Market Fund. However, Class C shares of the MFS Cash Reserve Fund,
another money market fund sponsored by MFS, are available for such exchanges
effective April 1, 1996. A prospectus for MFS Cash Reserve Fund may be obtained
free of charge by contacting the Shareholder Servicing Agent.
REDEMPTIONS AND REPURCHASES
CONTINGENT DEFERRED SALES CHARGE: Investments in Class C shares made on or
after April 1, 1996 ("Direct Purchase") 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. Prior to April 1, 1996, Class C shares of the MFS Funds
were not subject to a CDSC upon redemption. In no event will Class C shares of
the MFS Funds purchased prior to this date be subject to a CDSC. For the purpose
of calculating the CDSC upon redemption of shares acquired in an exchange on or
after April 1, 1996, the purchase of shares acquired in one or more exchanges is
deemed to have occurred at the time of the original purchase of the exchanged
shares (if such original purchase occurred prior to April 1, 1996, then no CDSC
would be imposed upon such a redemption).
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 applicability of a CDSC will be unaffected by exchanges or transfers of
registration, except as described in Appendix A to the Prospectus.
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 SAI regarding
the privilege.
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, effective yield,
tax-equivalent yield and distribution rate calculations assume no CDSC is
assessed.
SHAREHOLDER SERVICES
INVESTMENT AND WITHDRAWAL PROGRAMS --
DISTRIBUTION INVESTMENT PROGRAM: Prior to April 1, 1996, distributions made
on Class C shares of the MFS Funds could be automatically invested under the
Distribution Investment Program in shares of the MFS Money Market Fund at net
asset value. Effective April 1, 1996, distributions made on Class C shares of
the MFS Funds may no longer be automatically invested under the Distribution
Investment Program in shares of the MFS Money Market Fund. However, effective
April 1, 1996, distributions made on Class C shares of the MFS Funds may be
automatically invested under this Program in Class C shares of the MFS Cash
Reserve Fund, another money market fund sponsored by MFS.
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.
DOLLAR COST AVERAGING PROGRAMS --
AUTOMATIC EXCHANGE PLAN: Prior to April 1, 1996, Class C shares of the MFS
Funds were exchangeable under the Automatic Exchange Plan for shares of the MFS
Money Market Fund at net asset value. Effective April 1, 1996, Class C shares of
the MFS Funds may no longer be exchanged under the Automatic Exchange Plan for
shares of the MFS Money Market Fund. However, Class C shares of the MFS Cash
Reserve Fund, another money market fund sponsored by MFS, are available for such
exchanges effective April 1, 1996.
THE DATE OF THIS SUPPLEMENT IS APRIL 1, 1996.
