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MFS OTC FUND
Supplement to the January 1, 1996 Prospectus
The section of the Prospectus entitled "Expense Summary" is revised as
follows:
1. EXPENSE SUMMARY
Shareholder Transaction Expenses:
Class A Class B Class C
Maximum Initial Sales Charge Imposed
on Purchases of Fund Shares (as a
percentage of offering price) 5.75% 0.00% 0.00%
Maximum Contingent Deferred Sales
Charge (as a percentage of original
purchase price or redemption proceeds,
as applicable) See Below1 4.00% 1.00%
Annual Operating Expenses of the Fund (as a percentage of average daily net
assets):
Management Fees 0.75% 0.75% 0.75%
Rule 12b-1 Fees 0.25%2 1.00%3 1.00%3
Other Expenses (after expense
reduction)(4)(5) 0.50% 0.57% 0.50%
Total Operating Expenses (after expense
reduction)(4) 1.50% 2.32% 2.25%
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(1) Purchases of $1 million or more are not subject to an initial sales charge;
however, a contingent deferred sales charge ("CDSC") of 1% 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").
(2) The Fund has adopted a Distribution Plan for its Class A shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which provides that it will pay
distribution/service fees aggregating up to (but not necessarily all of)
0.35% per annum of the average daily net assets attributable to Class A
shares (see "Information Concerning Shares of the Fund - Distribution
Plans"). Payment of the 0.10% per annum Class A distribution fee will
commence on such date as the Trustees of the Trust may determine.
Distribution expenses paid under this Plan, together with the initial sales
charge, 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.
(3) The Fund has adopted separate Distribution Plans for its Class B and Class
C shares in accordance with Rule 12b-1 under the 1940 Act, which provide
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 Class B shares under the Class B Distribution Plan and
Class C shares under the Class C Distribution Plan (see "Information
Concerning Shares of the Fund - Distribution Plans"). Distribution expenses
paid under these Plans, together with any CDSC payable upon redemption of
Class B shares, 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.
(4) MFS has agreed to pay, for an indefinite period, the expenses of the Fund
such that the aggregate operating expenses of the Fund's Class A shares do
not exceed, on an annualized basis, 1.50% of its average daily net assets.
This obligation may be terminated or revised by MFS at any time. See
"Information Concerning Shares of the Fund - Expenses" in the Prospectus.
MFS has also agreed to reduce "Other Expenses" of the Fund's Class B and
Class C shares by 0.04% during such time that MFS is bearing certain
expenses with respect to the Fund's Class A shares. This obligation may be
terminated or revised by MFS at any time. Absent these reductions, "Other
Expenses" for Class A, Class B and Class C shares would have been 0.54%,
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0.61% and 0.54%, respectively and "Total Operating Expenses" would have
been 1.54%, 2.36% and 2.29%, respectively.
(5) 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."
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):
Period Class A Class B Class C
(1) (1)
1 year $ 72 $ 64 $ 24 $ 33 $ 23
3 years 103 102 72 70 70
5 years 137 144 124 120 120
10 years 230 245(2) 245(2) 258 258
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(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 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 Fund
expenses 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 Plans."
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.
* * *
The last paragraph on page 21 and continuing on page 22 of the
Prospectus is deleted and replaced in its entirety by the following:
"Current Level of Distribution and Service Fees. The Fund's Class A,
Class B and Class C distribution and service fees for its current fiscal year
are 0.25%, 1.00% and 1.00%, respectively. Payment of the 0.10% per annum Class A
distribution fee will commence on such date as the Trustees of the Trust may
determine."
The date of this Supplement is May 3, 1996.