<PAGE>
FILE NO. ___________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MFS/SUN LIFE SERIES TRUST
(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
COMMUNICATIONS AND COPIES TO:
BONNIE S. ANGUS RUTH S. EPSTEIN
ONE SUN LIFE EXECUTIVE PARK COVINGTON & BURLING
WELLESLEY HILLS, MASSACHUSETTS 02181 1201 PENNSYLVANIA AVENUE, N.W.
(NAME AND ADDRESS OF AGENT FOR SERVICE) P.O. BOX 7566
WASHINGTON, D.C. 20044
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE 30 DAYS AFTER FILING
PURSUANT TO RULE 488 UNDER THE SECURITIES ACT OF 1933.
PURSUANT TO RULE 24f-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS PREVIOUSLY REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF
BENEFICIAL INTEREST WITHOUT PAR VALUE. ACCORDINGLY, NO FILING FEE IS DUE IN
CONNECTION WITH THIS REGISTRATION STATEMENT. THE REGISTRANT FILED A RULE 24f-2
NOTICE ON FEBRUARY 29, 1996 FOR ITS MOST RECENT FISCAL YEAR ENDING DECEMBER 31,
1995.
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<PAGE>
MFS/SUN LIFE SERIES TRUST
FORM N-14 REGISTRATION STATEMENT CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a) UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
FORM N-14
ITEM LOCATION
<C> <S> <C>
PART A PROSPECTUS/PROXY STATEMENT
1 Beginning of Registration Facing Page of Registration Statement;
Statement and Outside Front Cross Reference Sheet; Cover Page of
Cover Page of Prospectus Prospectus/Proxy Statement
2 Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3 Fee Table, Synopsis Summary; Risk Factors
Information and Risk Factors
4 Information About the Summary; Information About the
Transaction Reorganization; Exhibit A
5 Information About the Summary; Information About the Series
Registrant Trust; Exhibit B
6 Information About the Summary; Information About Sun Growth
Company Being Acquired
7 Voting Information Cover Page of Prospectus/Proxy Statement;
Voting Information
8 Interest of Certain Persons Interest of MFS in the Transaction
and Experts
9 Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
PART B STATEMENT OF ADDITIONAL INFORMATION
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 Additional Information About Additional Information About the MFS/Sun
the Registrant Life Series Trust
13 Additional Information About Additional Information About the Sun
the Company Being Acquired Growth Variable Annuity Fund, Inc.
14 Financial Statements Financial Statements of the Series Trust;
Financial Statements of Sun Growth.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-14
ITEM LOCATION
<C> <S> <C>
PART C OTHER INFORMATION
15 Indemnification Indemnification
16 Exhibits Exhibits
17 Undertakings Undertakings
</TABLE>
<PAGE>
PART A
Attached hereto and made a part hereof is the combined Prospectus/Proxy
Statement dated October , 1996.
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS
(617) 237-6030
October ___, 1996
Dear Contract Owner:
A special meeting of the stockholders of Sun Growth Variable Annuity Fund,
Inc. ("Sun Growth") will be held at the U.S. Headquarters Office of Sun Life
Assurance Company of Canada, One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181, on __________ ___, 1996 at 9:00 a.m. (local time).
All of the variable portion of your Sun Life Assurance Company of Canada
(U.S.)("Sun Life (U.S.)") Variable Annuity Contract (the "Contract") is invested
in shares of Sun Growth. Although you are not a stockholder of Sun Growth, you
do have the right to instruct Sun Life (U.S.), the issuer of the Contract, as to
the manner in which the number of shares of Sun Growth attributable to your
Contract should be voted. Sun Life (U.S.) will follow voting instructions
received at least one day prior to the meeting. Shares for which no timely
voting instructions are received will be voted by Sun Life (U.S.) in the same
proportion as the shares for which instructions are received from persons having
such right.
At the meeting stockholders will be asked to vote upon a proposal to
exchange the assets and liabilities of Sun Growth for shares of the Money Market
Series of MFS/Sun Life Series Trust (the "Series Trust") and to authorize the
dissolution of Sun Growth and the distribution of the Money Market Series shares
received by Sun Growth to Sun Growth stockholders. If the proposed transaction
is approved and consummated, the exchange will be made on the basis of the value
of the assets of Sun Growth transferred and the net asset value of shares of the
Money Market Series received in exchange.
The Board of Directors of Sun Growth believes that the proposed transaction
is in the best interests of shareholders of Sun Growth. As set forth in the
accompanying combined Prospectus/Proxy Statement, the principal reason for the
proposed transaction is to afford the Contract Owners the advantages of
economies of scale with respect to expenses that are not available to them
through investment in a small fund such as Sun Growth.
We have enclosed a copy of the Notice of Special Meeting of Stockholders and
Prospectus/Proxy Statement dated October ____, 1996 and a card entitled "Voting
Instructions." This card should be used to register your vote on the proposal to
be acted upon at the meeting.
Your instructions are important. We urge you to read the accompanying
Prospectus/Proxy Statement and attachments carefully and to complete and sign
the enclosed voting instructions card and return it as soon as possible in the
enclosed postage-paid return envelope so that you will be represented at the
meeting.
Sincerely yours,
John D. McNeil
Chairman
Sun Life Assurance Company of Canada
(U.S.)
<PAGE>
SUN GROWTH VARIABLE ANNUITY FUND, INC.
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02181
(617) 237-6030
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A Special Meeting of Stockholders of Sun Growth Variable Annuity Fund, Inc.
("Sun Growth") will be held at the U.S. Headquarters Office of Sun Life
Assurance Company of Canada, One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181, on the ___ day of _______, 1996 at 9 o'clock in the morning
(local time), for the following purposes:
1. To consider and vote upon a proposal:
(a) to authorize the transfer of the assets and liabilities of Sun
Growth to the Money Market Series of MFS/Sun Life Series Trust (the "Series
Trust") in exchange for shares of the Money Market Series, all in accordance
with an Agreement and Plan of Reorganization dated October 1, 1996 between Sun
Growth and the Series Trust (the "Agreement"), which Agreement is described in
and attached to the accompanying Prospectus/Proxy Statement; and
(b) subject to the consummation of the aforesaid transfer, to authorize
the dissolution of Sun Growth and the distribution on a pro rata basis to the
stockholders of Sun Growth of all shares of the Money Market Series received by
Sun Growth in accordance with the terms of the Agreement.
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ITEM 1.
Shareholders of record as of the close of business on the ___ day of
___________, 1996 are entitled to notice of and to vote at the meeting or at any
adjournments thereof.
By Order of the Board of Directors
of Sun Growth Variable Annuity Fund,
Inc.
Bonnie S. Angus
Secretary
Wellesley Hills, Massachusetts
October __, 1996
1
<PAGE>
PROSPECTUS/PROXY STATEMENT
DATED OCTOBER __, 1996
ACQUISITION OF THE ASSETS OF
SUN GROWTH VARIABLE ANNUITY FUND, INC.
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02181
(617) 237-6030
BY AND IN EXCHANGE FOR SHARES OF
MFS/SUN LIFE SERIES TRUST
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 954-5000
This combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Sun Growth
Variable Annuity Fund, Inc. ("Sun Growth") to be used at a Special Meeting of
Stockholders of Sun Growth (the "Special Meeting") to be held at the U.S.
Headquarters Office of Sun Life Assurance Company of Canada, One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02181 on ________________, 1996
at 9:00 a.m. (local time), and at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Special Meeting of Stockholders.
At the Special Meeting, stockholders of Sun Growth will be asked to consider
and act upon a proposal (a) to authorize the transfer of the assets and
liabilities of Sun Growth to the Money Market Series of MFS/ Sun Life Series
Trust (the "Series Trust") in exchange for shares of the Money Market Series,
all in accordance with an Agreement and Plan of Reorganization dated October 1,
1996 between Sun Growth and the Series Trust (the "Agreement"); and (b) subject
to the consummation of the aforesaid transfer, to authorize the dissolution of
Sun Growth and the distribution on a pro rata basis to the stockholders of Sun
Growth of all shares of the Money Market Series received by Sun Growth in
accordance with the terms of the Agreement. (The transactions contemplated by
the Agreement are referred to herein as the "Reorganization"). The Agreement is
attached hereto as Exhibit A.
Stockholders of record at the close of business on _______________, 1996
will be entitled to one vote for each share held. As of _____________, 1996,
there were __________ shares of common stock of Sun Growth outstanding, all of
which were owned of record by Sun Life Assurance Company of Canada (U.S.)("Sun
Life (U.S.)") and held in Sun Life of Canada (U.S.) Variable Accounts A and B
("Variable Accounts A and B"), which are separate accounts established to fund
benefits under certain individual variable annuity contracts issued by Sun Life
(U.S.)(the "Contracts"). Sun Life (U.S.) is a wholly-owned subsidiary of Sun
Life Assurance Company of Canada ("Sun Life (Canada)"). Sun Life (U.S.) will
solicit voting instructions with respect to shares held by Variable Accounts A
and B from owners of and payees under the Contracts. All shares of Sun Growth
held by Sun Life (U.S.) will be voted. Shares for which voting instructions are
received by Sun Life (U.S.) at least one day prior to the Special Meeting from
persons having such right will be voted by Sun Life (U.S.) in accordance with
such instructions; all other outstanding shares will be voted in the same
proportions as the shares for which instructions are received from persons
having such right.
This Prospectus/Proxy Statement sets forth concisely the information about
the Series Trust (including the Money Market Series) that stockholders of Sun
Growth should know before voting. It should be retained for future reference.
The Series Trust Prospectus dated May 1, 1996 accompanies this Prospectus/Proxy
Statement as Exhibit B, and is incorporated by reference herein. A Statement of
Additional Information, dated October ____, 1996, relating to this
Prospectus/Proxy Statement and the Reorganization (the "SAI"). and the Series
Trust's Statement of Additional Information dated May 1, 1996 (the "Series Trust
SAI") have been filed with the Securities and Exchange Commission (the "SEC")
and are also incorporated by reference into this Prospectus/Proxy Statement.
Copies of the SAI and the Series Trust SAI are available upon request and
without charge by contacting Cheri M. Lamie, Sun Life Assurance Company of
Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02181, telephone (800) 225-3950.
This combined Prospectus/Proxy Statement is expected to be mailed to
stockholders of Sun Growth on or about October __, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary 4
Risk Factors 5
Information About the Reorganization 5
Background and Reasons for the Reorganization 5
Principal Terms of the Agreement; Description of
Securities to be Issued 6
Capitalization 7
Federal Income Tax Consequences 8
Description of Securities to be Issued 8
Comparative Information About the Funds 8
Information About the Series Trust 9
Information About Sun Growth 9
Condensed Financial Information 10
Investment Objectives, Policies and Restrictions 10
Management of Sun Growth 10
Portfolio Manager 11
Custodian, Transfer Agent and Dividend Paying Agent 11
Description of Common Stock 11
Income Dividends and Capital Gain Distributions 11
Tax Features 11
Purchase and Redemption of Sun Growth Shares 12
Available Information 12
Voting Information 12
Interest of MFS in the Transaction 12
Other Information About the Transaction 13
Other Matters 13
EXHIBITS
EXHIBIT A -- Agreement and Plan of Reorganization dated
October 1, 1996 14
EXHIBIT B -- Series Trust Prospectus dated May 1, 1996
</TABLE>
3
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS/PROXY STATEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS/PROXY STATEMENT, IN THE AGREEMENT AND PLAN OF REORGANIZATION DATED
OCTOBER 1, 1996 AND IN THE MFS/SUN LIFE SERIES TRUST PROSPECTUS DATED MAY 1,
1996, COPIES OF WHICH ACCOMPANY THIS PROSPECTUS/PROXY STATEMENT AS EXHIBITS A
AND B, RESPECTIVELY, AND IN THE SAI AND THE SERIES TRUST SAI, ALL OF WHICH ARE
INCORPORATED BY REFERENCE HEREIN.
The Agreement calls for the transfer of the assets of Sun Growth to the
Money Market Series of the Series Trust in exchange for shares of the Money
Market Series and the assumption by the Money Market Series of the liabilities
of Sun Growth. Subject to consummation of the exchange, the Agreement calls for
the dissolution of Sun Growth and the distribution on a pro rata basis to the
stockholders of Sun Growth of all shares of the Money Market Series received by
Sun Growth pursuant to the exchange. Following the Reorganization the assets of
Sun Growth and the Money Market Series will be combined and the stockholders of
Sun Growth will become the owners of shares of the Money Market Series having a
net asset value equal to the value of the assets of Sun Growth transferred to
the Money Market Series. See "Information About the Reorganization" and the
Agreement (Exhibit A).
Massachusetts Financial Services Company ("MFS" or the "Adviser"), a
subsidiary of Sun Life (U.S.), serves as investment adviser to both Sun Growth
and the Money Market Series (together, the "Funds" and each, a "Fund"). The
Funds are both open-end management investment companies ("mutual funds"). The
Money Market Series' investment objective is to seek maximum current income to
the extent consistent with stability of principal by investing exclusively in
U.S. dollar-denominated money market instruments which mature in less than 13
months. See "Information about the Series Trust." Sun Growth's assets are
invested exclusively in short-term obligations that are permissible investments
for the Money Market Series. See "Information about the Reorganization --
Background and Reasons for the Reorganization." The investment restrictions of
both Funds are substantially similar in all material respects. See "Information
about the Reorganization -- Comparative Information about the Funds."
The net asset value of each Fund is determined as of the close of regular
trading on the New York Stock Exchange on each day the Exchange is open for
trading. The Money Market Series determines its net asset value per share and
treats dividends and distributions differently from Sun Growth. See "Information
about the Reorganization -- Comparative Information about the Funds." As of June
30, 1996, net assets of the Money Market Series and Sun Growth were $328,229,961
and $684,765, respectively.
The following table compares the fees and other expenses paid by the Money
Market Series and Sun Growth for the year ended December 31, 1995. The table
does not reflect expenses applicable to the Contracts or Variable Accounts A or
B.
<TABLE>
<CAPTION>
MONEY
SUN MARKET
GROWTH SERIES
------------ -----------
<S> <C> <C>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.50% 0.50%
Other Expenses 1.00%* 0.09%
--- ---
Total Operating Expenses 1.50%* 0.59%
--- ---
--- ---
</TABLE>
* MFS has undertaken to reimburse Sun Growth for its expenses (exclusive of
interest, taxes and portfolio brokerage commissions) for any calendar year in
excess of 1.50% of the first $30 million of net assets. Absent this
undertaking, Sun Growth's "Other Expenses" would have been 3.92% and its
"Total Operating Expenses" would have been 4.42%, for 1995. MFS has a similar
obligation to reimburse the Money Market Series for expenses exceeding 0.60%
of the average daily net assets of the Money Market Series for the year.
Both Funds sell and redeem their shares, without a sales charge, on any day
on which the net asset value of their respective assets can be calculated.
Purchases and redemptions are effected at the net asset
4
<PAGE>
value per share next determined after receipt of the purchase or redemption
order. Both funds may suspend the right of redemption under certain
circumstances. See "Information About Sun Growth -- Purchase, Sale and
Redemption of Sun Growth's Shares" in this Prospectus/Proxy Statement, and
"Purchases" and "Redemptions" in the Series Trust Prospectus (Exhibit B).
As a condition of the Reorganization, Sun Growth will receive an opinion of
counsel that the Reorganization will be considered a tax-free "reorganization"
under applicable provisions of the Internal Revenue Code, so that for federal
income tax purposes no gain or loss will be recognized by Sun Growth, the Series
Trust or their stockholders or shareholders, as a result of the Reorganization.
The tax cost basis of the Money Market Series shares received by the
stockholders of Sun Growth will be the same as that of their Sun Growth stock
immediately prior to the exchange. The transaction will have no federal income
tax effect on Contract Owners. Sun Growth has not applied to the IRS for a
ruling with respect to the matters described above. See "Federal Income Tax
Consequences" below.
RISK FACTORS
Due to the similarities between the investment objectives and policies of
the Money Market Series and the current investment policies of Sun Growth, the
risks associated with investments in the Funds are substantially similar. Such
risks are generally those associated with an investment in money market
securities, as described in the Series Trust's Prospectus. Moreover, as stated
in the Series Trust Prospectus under "Money Market Series", to the extent the
Adviser attempts to increase yield by trading to take advantage of short-term
market variations, a high portfolio turnover rate could result, but this should
not adversely affect the Money Market Series. High portfolio turnover may result
in additional transaction costs.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE REORGANIZATION
Sun Growth was organized in 1981 as the funding vehicle for Contracts
participating in the investment experience of Variable Accounts A and B.
Originally, the primary investment objective of Sun Growth was long-term growth
of capital, with income, while a factor in portfolio selection, being secondary
to Sun Growth's principal objective. Pursuant to this objective, Sun Growth
expected to invest in equity securities, including common stocks, securities
having a call on common stocks by means of a conversion privilege or warrants
attached, and warrants or other rights to purchase common stock, of a
diversified list of companies believed to have favorable long-term prospects.
These investment objectives and policies were changeable without stockholder
approval.
On November 8, 1982, Sun Life (U.S.) discontinued the sale and issue of the
Contracts, although Sun Life (U.S.) continued to accept additional periodic
purchase payments on Contracts issued prior to that date. In 1983, Sun Life
(U.S.) offered owners of the Contracts the right to exchange such Contracts for
contracts participating in the investment experience of other separate accounts
established by Sun Life (U.S.) which invest in other mutual funds. Acceptance of
this offer by many Contract Owners as well as surrenders of and withdrawals
under the Contracts have diminished the assets of Sun Growth, and Sun Growth has
experienced a pattern of net redemptions since 1983. Due to its small size and
continuing net redemptions, Sun Growth experienced difficulty in pursuing its
primary objective of long term growth of capital, and the Board of Directors and
the Adviser determined that it was in the stockholders' best interests to invest
Sun Growth's assets primarily in short-term obligations in anticipation of
additional redemptions.
Sun Growth is now a very small fund with net assets of only $684,765 at June
30, 1996, and continued net redemptions are expected. The Board of Directors of
Sun Growth has determined that economies of scale with respect to fees and
expenses cannot be realized by Sun Growth. The Money Market Series, a much
larger fund with net assets of $328,229,961 at June 30, 1996, presently realizes
substantial economies of scale. After consideration of all relevant factors and
the alternatives available to Sun Growth, the Board concluded that the
Reorganization is in the best interests of the stockholders of Sun Growth.
The principal factors that were evaluated and considered by the Board of
Directors of Sun Growth in the decision to recommend the Reorganization to the
stockholders include the following:
5
<PAGE>
1. COMPATIBLE INVESTMENT PORTFOLIOS. Sun Growth's assets are currently
invested exclusively in short-term obligations that are permissible investments
for the Money Market Series.
2. LOWER EXPENSE RATIO. During the five fiscal years ended December 31,
1995, the Money Market Series' expense ratio (the ratio of expenses to average
net assets) has been between .58% and .60%. Sun Growth's expense ratio has been
1.50% for each of the five fiscal years ended December 31, 1995 and would have
been substantially higher in the absence of the Adviser's agreement to reimburse
Sun Growth for expenses incurred in excess of 1.50% of average net assets.
3. MORE FAVORABLE EXPENSE REIMBURSEMENT. MFS has agreed that if aggregate
annual expenses and costs of Sun Growth (including interest, taxes, and
portfolio brokerage expenses) exceed 1.50% of the first $30 million of its
average net assets for any calendar year, plus 1% of its remaining average net
assets, if any, for that year, it will pay the amount of the excess. MFS has a
similar obligation to reimburse the Money Market Series for expenses exceeding
0.60% of the average daily net assets of the Money Market Series for the year.
4. INVESTMENT PERFORMANCE. The Board of Directors considered the superior
investment performance of the Money Market Series in comparison to that of Sun
Growth. The total return for Sun Growth and the Money Market Series for the last
five years are set forth below.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,*
---------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sun Growth 4.17% 2.40% 1.64% 1.70% 4.54%
Money Market Series 5.44% 3.69% 2.59% 3.30% 5.79%
</TABLE>
* The total return information shown above does not reflect expenses that apply
to Variable Accounts A and B and to the Contracts; inclusion of these charges
would reduce the total return figures for all periods shown.
5. INVESTMENT ADVISORY FEES. The investment advisory fees paid to MFS are
the same for both funds (0.50% of average daily net assets). While Sun Growth's
Management Agreement provides for lower fees if Sun Growth's assets exceed
$200,000,000, the assets of the Fund are less than $1 million and are
diminishing.
6. INVESTMENT ADVISER. MFS serves as the investment adviser to both Funds
and both Funds have the same portfolio manager.
7. TAX CONSIDERATIONS. The disposition of Sun Growth's assets pursuant to
the Reorganization will not be taxable for Federal income tax purposes to
stockholders of Sun Growth or to Contract Owners.
PRINCIPAL TERMS OF THE AGREEMENT; DESCRIPTION OF SECURITIES TO BE ISSUED
Certain provisions of the Agreement are summarized below. Reference is made
to the Agreement (Exhibit A) for a complete statement of the terms and
conditions of the proposed transaction, and the following statements regarding
the Agreement are qualified in their entirety by such reference.
The Money Market Series will acquire from Sun Growth, in exchange for shares
of the Money Market Series, substantially all of the assets of Sun Growth at the
closing of the transaction (the "Closing," and the date thereof, the "Closing
Date"). Sun Growth will retain a cash reserve for payment of all known expenses
and liabilities of Sun Growth.
The number of shares of the Money Market Series to be issued in exchange for
the assets of Sun Growth at the Closing will be based upon the net asset value
per share of the shares of the Money Market Series and the aggregate value of
the assets of Sun Growth transferred to the Money Market Series, in each case as
of the close of trading on the New York Stock Exchange on the business day next
preceding the Closing Date (the "Valuation Date"). Such values will be computed
by State Street Bank and Trust Company in the manner set forth in the Series
Trust's prospectus under "Net Asset Value, Dividends and Distributions -- Money
Market Series." As soon as possible after the Closing, Sun Growth will dissolve
and will distribute to its stockholders of record as of the close of business on
the Closing Date all of the Money
6
<PAGE>
Market Series shares received by it at the Closing by transferring to an account
with the Money Market Series for each stockholder of Sun Growth that number of
Money Market Series shares to which such stockholder is entitled. All issued and
outstanding shares of Sun Growth will simultaneously be cancelled on the books
of Sun Growth.
Sun Growth will, at or prior to the Closing Date, use its best efforts to
discharge or establish adequate reserves for the discharge of its known
liabilities. The Money Market Series will assume all liabilities of Sun Growth
other than known liabilities. Any balance of the reserve described above
remaining after payment of such liabilities will be delivered to the Money
Market Series within six months after the Closing Date in exchange for a number
of Money Market Series shares determined as provided above. However, since the
reserve for liabilities will, to the extent possible, equal Sun Growth's
estimated liabilities, it is not anticipated that Sun Growth stockholders will
receive further Money Market Series shares.
Following the Reorganization, the assets of Sun Growth and the Money Market
Series will be combined, and Variable Accounts A and B, the sole stockholders of
Sun Growth, will become shareholders of the Money Market Series. Each Variable
Account will hold a number of shares of the Money Market Series having an
aggregate net asset value equal to the aggregate net asset value of the shares
of Sun Growth held by such Variable Account prior to the Reorganization.
Certificates representing shares of the Money Market Series received in the
exchange will not be issued.
The Agreement includes the following conditions precedent to consummation of
the acquisition: (I) TO THE OBLIGATIONS OF SUN GROWTH, the receipt by Sun Growth
of an opinion of its counsel, Messrs. Covington & Burling, to the effect set
forth herein under "Federal Income Tax Consequences"; and (II) TO THE
OBLIGATIONS OF BOTH FUNDS, the favorable vote of Sun Growth's stockholders
approving the Reorganization, the effectiveness of the Series Trust's
registration statement under the Securities Act of 1933 with respect to the
Reorganization and the delivery at the Closing of certain officers' certificates
and of legal opinions.
Prior to the transfer of assets contemplated by the Agreement, Sun Growth
will declare and distribute to its stockholders substantially all its
undistributed net investment income and realized capital gains.
The Closing Date under the Agreement will be a date agreed upon by Sun
Growth and the Series Trust within ten (10) days after approval of the
Reorganization by Sun Growth's stockholders, but not later than December 31,
1996. The Agreement provides for its termination if the Closing has not occurred
by that date, unless the parties agree on a later date.
The expenses of the Reorganization will be borne by Sun Life (U.S.).
The Board of Directors' resolution authorizing consummation of the
Reorganization which is being submitted for stockholder approval authorizes Sun
Growth, subject to approval of the Board of Directors, to amend the Agreement if
deemed necessary, except that no such amendment may change the manner in which
the exchange is determined, the tax treatment of the Reorganization, or other
similarly basic elements of the Reorganization affecting Sun Growth's
stockholders. The Board of Directors currently knows of no such amendments that
will be necessary, but has conferred such authority on the officers of Sun
Growth in order to avoid the expense of a further stockholders' meeting if such
an amendment proves necessary for consummation of the Reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Money Market Series
and Sun Growth as of June 30, 1996, and on a pro forma basis as of that date
after giving effect to the acquisition of assets at net asset value.
<TABLE>
<CAPTION>
MONEY PRO FORMA
MARKET SERIES SUN GROWTH COMBINED*
--------------- ------------ ---------------
<S> <C> <C> <C>
Net Assets $ 328,229,961 $ 684,765 $ 328,914,726
Net Asset Value Per Share $ 1.00 $ 3.94 $ 1.00
Shares Outstanding 328,229,961 173,828 328,914,726
</TABLE>
* If the Reorganization had taken place on June 30, 1996, each stockholder of
Sun Growth would have received 3.94 shares of the Money Market Series for each
share of Sun Growth stock. Portfolio changes or
7
<PAGE>
changes in the market value of securities held by Sun Growth and/or the Money
Market Series occurring prior to consummation of the Reorganization could
significantly alter the number of Money Market Series shares to be issued in
the exchange.
FEDERAL INCOME TAX CONSEQUENCES
The obligations of Sun Growth and the Series Trust under the Agreement are
conditioned upon receipt by Sun Growth and the Series Trust at or prior to the
Closing of an opinion of counsel, Messrs. Covington & Burling, to the effect
that for Federal income tax purposes, (i) the transaction contemplated by the
Agreement will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended, and Sun Growth
and the Money Market Series will each qualify as "a party to the
reorganization," (ii) no gain or loss will be recognized by Sun Growth as a
result of the transaction, (iii) no gain or loss will be recognized by the
stockholders of Sun Growth upon receipt by them of shares of the Money Market
Series in exchange for shares of Sun Growth, (iv) the basis of the shares of the
Money Market Series received by the stockholders of Sun Growth pursuant to such
exchange will be the same as the basis of the Sun Growth stock in their
respective hands immediately prior to the exchange, and (v) provided that the
shares of Sun Growth stock constitute capital assets in the hands of
stockholders of Sun Growth, the holding period of the shares of the Money Market
Series received by the stockholders of Sun Growth pursuant to the exchange will
include the holding period of shares of Sun Growth held by them prior to the
exchange.
DESCRIPTION OF SECURITIES TO BE ISSUED
A description of the shares of the Series Trust, including the Money Market
Series thereof, is contained under the caption "Description of Shares, Voting
Rights and Liabilities" in the Series Trust Prospectus (Exhibit B), which is
incorporated herein by reference. A further description of the Money Market
Series shares also is included in the Series Trust Prospectus under the caption
"Net Asset Value, Dividends and Distributions -- Money Market Series."
COMPARATIVE INFORMATION ABOUT THE FUNDS
INVESTMENT RESTRICTIONS. The investment restrictions of Sun Growth are set
forth in the SAI. The investment restrictions of the Money Market Series are set
forth in the Series Trust SAI. The restrictions of the Funds differ in the
following respects:
(1) Sun Growth may not purchase securities of foreign issuers; the Money
Market Series may purchase securities of foreign issuers in accordance
with its investment objectives.
(2) Sun Growth may not purchase the securities of any issuer if such
purchase would cause more than 5% of either the outstanding voting
securities or the securities of any class of such issuer to be held by
Sun Growth. The Money Market Series may purchase up to 10% of any class
of securities of any issuer (for this purpose, all indebtedness of an
issuer is deemed a single class).
(3) Sun Growth may not purchase the securities of any company with a record
of less than three years' continuous operation (including that of
predecessors) if such purchase would cause Sun Growth's aggregate
investments in such companies to exceed 5% of Sun Growth's total
assets. No such restriction applies to the Money Market Series.
(4) Sun Growth may not mortgage, pledge or hypothecate more than 15% of the
market value of its assets (and as a matter of operating policy will
not mortgage, pledge or hypothecate any of its portfolio securities).
No such restrictions apply to the Money Market Series.
(5) Both Funds may borrow money only for emergency purposes; Sun Growth may
borrow for such purposes up to 5% of its total assets, while the Money
Market Series may borrow up to 1/3 of its total assets in order to meet
redemption requests.
(6) Neither Fund may purchase securities that are not readily marketable;
however, the Money Market Series excludes from this prohibition the
investment of up to 10% of its total assets in repurchase agreements
maturing in more than seven days.
8
<PAGE>
CORPORATE ORGANIZATION. Sun Growth is organized as a Delaware corporation,
and as such its stockholders cannot be held personally liable for the
obligations of the corporation. The Series Trust, by contrast, is organized as a
"Massachusetts Business Trust." Under Massachusetts law, shareholders of the
Series Trust may, under certain circumstances, be held personally liable as
partners for its obligations. However the Series Trust's Declaration of Trust
contains an express disclaimer of shareholder liability for acts or obligations
of the Series Trust and provides for indemnification and reimbursement of
expenses out of the Series Trust's property for any shareholder held personally
liable for the obligations of the Series Trust. The Series Trust's Declaration
of Trust also provides that it shall maintain appropriate insurance for the
protection of the Series Trust, its shareholders, trustees, officers, employees
and agents covering possible tort and other liabilities. Thus the risk of
shareholder financial loss on account of shareholder liability would be limited
to circumstances in which both the Series Trust cannot meet its obligations and
the Series Trust's insurance coverage is inadequate.
DETERMINATION OF NET ASSET VALUE. Net asset value of shares of the Money
Market Series is determined as described in the Series Trust Prospectus at page
55. Net asset value of Sun Growth shares is determined by dividing the value of
Sun Growth's assets (including interest and dividends accrued but not collected)
less total liabilities (including accrued expenses but excluding capital stock
and surplus) by the number of shares outstanding. A security listed or traded on
an exchange is valued at its last sale price on that exchange prior to the time
when the assets are valued. Lacking any sales on that day, the security is
valued at the last bid price reported. All other securities for which
over-the-counter market quotations are readily available are valued on the basis
of the last current bid price. When market quotations are not readily available,
such securities are valued at fair value as determined in good faith by Sun
Growth's Board of Directors. Other assets are valued at fair value as determined
in good faith by Sun Growth's Board of Directors.
ALLOCATION OF BROKERAGE. Specific decisions to purchase or sell securities
for both the Money Market Series and Sun Growth are made by each Fund's
portfolio manager. The primary consideration in placing portfolio security
transactions for both funds is "best execution," i.e., execution at the most
favorable price and in the most effective manner possible. The policies and
practices of the Series Trust and Sun Growth are substantially similar, with the
following two exceptions. First, although the Adviser may place portfolio
transactions of either Fund with brokers or dealers who provide the Adviser with
supplemental investment and statistical information, in the case of Sun Growth
only, such supplemental information must be provided at no additional cost.
Second, in the case of Sun Growth, the Adviser may not allocate brokerage
business on the basis of the sale of Sun Growth's shares, but in the case of the
Money Market Series, it may consider the sale of certain contracts participating
in the investment experience of the Series Trust, and thus the sale of Series
Trust shares through the allocation of purchase payments under such contracts,
as a factor in the selection of broker-dealers to execute the Series Trust's
portfolio transactions. The Series Trust's practices with respect to allocation
of brokerage on portfolio transactions are described in the Series Trust's
Prospectus and in the Series Trust SAI under the captions "Portfolio
Transactions" and "Portfolio Transactions and Brokerage Commissions,"
respectively.
INFORMATION ABOUT THE SERIES TRUST
Information about the Series Trust is included in the Series Trust
Prospectus and in the Series Trust SAI filed with the SEC, both of which are
incorporated herein by reference. A copy of the Series Trust Prospectus
accompanies this Prospectus/Proxy Statement as Exhibit B; a copy of the Series
Trust SAI may be obtained without charge by contacting Cheri M. Lamie, Sun Life
Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02181, telephone (800) 225-3950.
INFORMATION ABOUT SUN GROWTH
Sun Growth is an open-end diversified management investment company or
"mutual fund" incorporated on October 16, 1981 under the laws of the State of
Delaware. Sun Growth's common stock provides the investment medium for Contracts
participating in Variable Accounts A and B and has never been
9
<PAGE>
available for direct purchase by the public. The discontinuance of sale of the
Contracts and subsequent diminution in net assets of Sun Growth are described
above under the caption "Background and Reasons for the Reorganization" above.
CONDENSED FINANCIAL INFORMATION -- SUN GROWTH*
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR):
Net asset value - beginning of year $ 3.98 $ 3.95 $ 3.96 $ 4.08 $ 4.04
Income from investment operations -
Net investment income $ 0.17 $ 0.10 $ 0.06 $ 0.07 $ 0.18
Distributions from net investment income (0.11) (0.07) (0.07) (0.19) (0.14)
--------- --------- --------- --------- ---------
Net asset value - end of year $ 4.04 $ 3.98 $ 3.95 $ 3.96 $ 4.08
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total return 4.17% 2.40% 1.64% 1.70% 4.54%
Ratios (to average net assets)/Supplemental data Section:
Expenses ## 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income 4.17% 2.42% 1.51% 1.75% 4.35%
Net assets, end of year (000's omitted) $ 711 $ 731 $ 801 $ 865 $ 950
Section The Adviser did not impose a portion of its fee for all years shown. If these fees had been incurred by Sun
Growth, the net investment income per share and the ratios would have been:
Net investment income (expense) $ 0.05 $ 0.01 $ (0.06) $ (0.19) $ (0.02)
Ratios (to average net assets):
Expenses ## 4.42% 3.78% 4.30% 7.72% 6.04%
Net investment income (expense) 1.25% 0.14% (1.29)% (4.47)% (0.19)%
## For fiscal years ending after September 1, 1995, Sun Growth's expenses are calculated without reduction for fees paid
indirectly.
</TABLE>
* The condensed financial information for the five years ended December 31,
1995 has been audited by Deloitte & Touche LLP.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives and policies of Sun Growth are described above
under the caption "Background and Reasons for the Reorganization." Sun Growth's
investment restrictions are set forth in the SAI.
MANAGEMENT OF SUN GROWTH
The Board of Directors of Sun Growth provides broad supervision over the
business and affairs of Sun Growth, while the officers of Sun Growth are
responsible for its day to day operations. The same individuals serve as
Directors of Sun Growth and Trustees of the Series Trust and with one exception
the officers of both Funds are the same. MFS is the investment adviser of Sun
Growth and in such capacity manages Sun Growth's investment portfolio. The
Series Trust Prospectus contains additional information about MFS, which is
incorporated by reference herein.
Pursuant to a Management Agreement the Adviser carries out the investment
policies of Sun Growth, manages its portfolio, pays certain Sun Growth expenses
and performs certain other services in return for a management fee. The Adviser
is authorized, subject to control by Sun Growth, to determine which securities
are to be bought and sold, and in what amounts. Sun Growth will pay the Adviser,
as full compensation for all
10
<PAGE>
services rendered, all expense payments made and all facilities furnished, a
monthly fee computed by using the following annual rates and based on the
average daily net asset values of Sun Growth during each month.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C> <C>
First $ 200,000,000 0.50%
Next $ 300,000,000 0.40%
Next $ 500,000,000 0.35%
Amount over $ 1,000,000,000 0.30%
</TABLE>
As of June 30, 1996 the total net assets of Sun Growth were $684,765.
If aggregate annual expenses and costs of Sun Growth, including the fee
received by the Adviser for managing Sun Growth, but excluding taxes, interest
and portfolio brokerage commissions, exceed 1.50% of the first $30,000,000 of
the average net assets of Sun Growth for any calendar year plus 1% of its
remaining average net assets, if any, for that year, the Adviser will pay the
amount of the excess. Sun Growth's expenses for 1993, 1994 and 1995 exceeded the
expense limitation and the Adviser made reimbursement of expenses of $23,691,
$17,420 and $20,711, respectively.
PORTFOLIO MANAGER
Geoffrey L. Kurinsky has served as Sun Growth's portfolio manager since
1992. Mr. Kurinsky began his career at MFS in 1987 in its Fixed Income
Department. A graduate of the University of Massachusetts and Boston
University's School of Management, he was named Assistant Vice President of MFS
in 1988, Vice President in 1989 and Senior Vice President in 1993. Mr. Kurinsky
also serves as portfolio manager of the Money Market Series.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the portfolio securities and cash of Sun
Growth. Sun Growth acts as its own transfer and dividend paying agent. The
custodian performs no managerial or policy-making functions for Sun Growth.
DESCRIPTION OF COMMON STOCK
Sun Growth has authorized capital consisting of 3,000,000 shares of common
stock, $1 par value. Each share of common stock is entitled to one vote at all
meetings of stockholders, either in person or by proxy. Each share has equal
rights with every other share as to dividends, earnings, voting, assets and
redemption. Shares are fully paid and non-assessable and have no preemptive or
conversion rights. Shares may be issued as full or fractional shares and each
fractional share has proportionately the same rights, including voting, as are
provided for a full share. Shares of Sun Growth have non-cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of directors can elect 100% of the directors if they choose to do
so, and, in such event the holders of the remaining less than 50% of the shares
voting for the election of directors will not be able to elect any person or
persons to the Board of Directors.
INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Any dividends from Sun Growth's income and realized capital gains, if any,
are normally distributed to the shareholders annually. All such income dividends
and capital gain distributions are automatically reinvested in additional Sun
Growth shares at their net asset value on the payment date.
TAX FEATURES
It is Sun Growth's policy to distribute substantially all of its net
investment income and net realized gains. Through such distributions and by
meeting certain other requirements, Sun Growth has qualified and intends to
qualify for the tax treatment accorded to "regulated investment companies" under
the applicable provisions of Subchapter M of the Internal Revenue Code. This
means that in each year in which Sun Growth so qualifies, it will be exempt from
federal income tax on the amounts so distributed.
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<PAGE>
PURCHASE AND REDEMPTION OF SUN GROWTH SHARES
Shares of Sun Growth are sold to and redeemed by Variable Accounts A and B
at the net asset value per share as next computed after a purchase or redemption
order is received by Sun Growth. There is no sales or redemption charge to
Variable Accounts A and B. Payment for shares redeemed will be made within seven
days after evidence of ownership of the shares is tendered to Sun Growth.
However, Sun Growth may suspend the right of redemption or postpone the date of
payment upon redemption during any period when: (a) trading on the New York
Stock Exchange is restricted as determined by the SEC or such exchange is closed
for other than weekends or holidays; (b) an emergency exists, as determined by
the SEC, as a result of which: (i) disposal by Sun Growth of securities owned by
it is not reasonably practicable; or (ii) it is not reasonably practicable for
Sun Growth fairly to determine the value of its net assets; or (c) the SEC by
order so permits for the protection of shareholders of Sun Growth.
The amount paid upon redemption of shares may be more or less than the cost
of the shares redeemed, depending upon the net asset value at the time of
redemption.
AVAILABLE INFORMATION
The Series Trust and Sun Growth are subject to the informational
requirements of the Investment Company Act of 1940 and in accordance therewith
file reports, proxy statements and other information with the SEC. Reports,
proxy statements and other information filed by the Series Trust and Sun Growth
can be inspected and copied at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's offices
at 5757 Wilshire Boulevard, Suite 500 East, Los Angeles, California 90036, and
copies of such material can be obtained at prescribed rates from the Public
Reference Section of the SEC, Washington, D.C. 20549.
VOTING INFORMATION
Each holder of common stock of Sun Growth on , 1996 will be
entitled to vote at the Special Meeting, and each share of such common stock
shall be entitled to one vote. Approval of the Reorganization requires the
affirmative vote of the holders of a majority of the shares of common stock of
Sun Growth outstanding and entitled to vote.
At , 1996, no director of officer of Sun Growth owned shares of
Sun Growth or a Contract.
Approval of the Reorganization by the shareholders of the Series Trust will
not be sought, as such approval is not required by applicable law.
The Board of Directors of Sun Growth, including all of the directors who are
not "interested persons" as that term is defined in the Investment Company Act
of 1940, has unanimously approved the Reorganization and has concluded that the
Reorganization is in the best interests of the stockholders of Sun Growth and
that the interests of the stockholders of Sun Growth will not be diluted as a
result of the Reorganization. ACCORDINGLY, SUN GROWTH'S BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS OF SUN GROWTH VOTE FOR THE PROPOSAL RELATING TO
THE REORGANIZATION.
The entire cost of the proxy solicitation is being borne by Sun Life (U.S.).
In addition to solicitation by mail, officers and employees of Sun Life (U.S.)
may solicit proxies by telephone, facsimile transmission or personal contact.
INTEREST OF MFS IN THE TRANSACTION
As described above under "Background and Reasons for the Reorganization," if
the Reorganization is consummated, MFS would no longer be required to bear the
expenses in excess of the expense limitation which would be incurred by Sun
Growth if it continues its operations.
12
<PAGE>
OTHER INFORMATION ABOUT THE TRANSACTION
LEGAL OPINION
Covington & Burling has issued an opinion concerning the federal tax
consequences of the Reorganization. See "Federal Income Tax Consequences" above.
OTHER MATTERS
The Board of Directors of Sun Growth knows of no other matters which may
come before the meeting. If, however, any other matters do arise at the meeting,
the persons named in the enclosed proxy form will vote as their best judgment
dictates.
By Order of the Board of Directors of
Sun Growth Variable Annuity Fund, Inc.
Bonnie S. Angus
SECRETARY
October , 1996
13
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 1st
day of October, 1996, by and between the SUN GROWTH VARIABLE ANNUITY FUND, INC.,
a Delaware corporation (hereinafter called the "Fund"), and the MFS/SUNLIFE
SERIES TRUST, a Massachusetts business trust (hereinafter called the "Trust"),
for itself and on behalf of the Money Market Series thereof.
WITNESSETH
WHEREAS, the Trust and the Fund are registered, open-end management
investment companies; and
WHEREAS, the Trust is authorized to issue its shares of beneficial interest
in separate series, including the Money Market Series, each of which series
maintains a separate and distinct portfolio of assets; and
WHEREAS, the Fund's securities are assets of the character in which the
Money Market Series of the Trust is permitted to invest; and
WHEREAS, the parties hereto desire to provide for the reorganization and
liquidation of the Fund through the acquisition by the Money Market Series of
substantially all the assets of and the assumption of the liabilities of the
Fund, in exchange solely for shares of beneficial interest of the Money Market
Series, the dissolution of the Fund pursuant to Section 275 of the Delaware
General Corporation Law ("DGCL") and the distribution to its shareholders of
such shares of the Money Market Series, all upon the terms and conditions
hereinafter set forth in this Agreement and all pursuant to the provisions of
Section 368(a)(1)(C) of the United States Internal Revenue Code of 1986, as
amended (the "Code");
NOW THEREFORE, in consideration of the mutual premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS. Subject to the terms and conditions contained herein, at
the closing provided for in paragraph 3 hereof (the "Closing), all of the assets
of the Fund, including, without limitation, portfolio securities, dividends and
interest receivable, cash and other assets, free and clear of all liens,
encumbrances, rights, restrictions and claims (the "Fund Assets"), less a cash
reserve for the payment of known expenses and liabilities of the Fund as
described in paragraph 2 hereof, shall be delivered by State Street Bank and
Trust Company, as Custodian of the Fund ("Fund Custodian"), to State Street Bank
and Trust Company, as Custodian of the Trust ("Trust Custodian"), in exchange
for and against delivery to the Fund by the Trust, of a number of shares of the
Money Market Series, including fractional shares, determined by dividing the
aggregate value of the Fund Assets so delivered, by the net asset value of a
share of the Money Market Series, in each case as determined as provided in
paragraph 2.
2. VALUATION AND CASH RESERVE. (a) The net asset value of shares of the Money
Market Series and the aggregate value of the Fund Assets to be transferred
shall, in each case, be determined as of the close of trading on the New York
Stock Exchange on the business day next preceding the Closing Date (the
"Valuation Date"). The net asset value of shares of the Money Market Series
shall be computed by the Trust Custodian in the manner set forth in the Trust's
then-current prospectus or statement of additional information under the
Securities Act of 1933 (the "1933 Act"). The aggregate value of the Fund Assets
to be transferred shall be computed by the Trust Custodian in the same manner as
securities held by the Money Market Series are valued in determining the net
asset value of shares of the Money Market Series. All computations shall be made
under the supervision of Massachusetts Financial Services Company ("MFS"). The
determination of the Trust Custodian shall be conclusive and binding on all
parties in interest.
(b) The Fund shall retain a cash reserve in an amount determined on the
Valuation Date for the payment of all known expenses and liabilities of the
Fund. Any balance remaining after the Fund's payment of such expenses and
liabilities shall be delivered to the Money Market Series within six (6) months
after the Closing Date.
3. THE CLOSING. (a) The Closing pursuant to this Agreement shall be held at the
offices of the Trust in Boston, Massachusetts, at 11:00 a.m. (Boston time), on a
business day (the "Closing Date") to be mutually
14
<PAGE>
agreed upon within ten (10) days after the approval of the reorganization by the
Fund's stockholders, but in no event later than December 31, 1996. All acts
taking place at the Closing Date shall be deemed to take place simultaneously as
of the close of business on the Closing Date unless otherwise herein provided.
(b) If on the Valuation Date (i) the New York Stock Exchange shall be closed
to trading or trading thereon shall be restricted; or (ii) trading or the
reporting of trading on said Exchange shall be disrupted so that accurate
appraisal of the value of the shares of the Money Market Series or of the Fund
Assets is impracticable in the opinion of either party, the Closing Date shall
be postponed until the first business day after the day when trading shall have
been fully resumed and reporting restored; PROVIDED, that if trading shall not
be fully resumed and reporting restored within thirty (30) days following such
Valuation Date, this Agreement may be terminated by either party upon written
notice to the other party, in which event neither party shall have any liability
to the other.
4. DELIVERY OF FUND ASSETS AND TRUST SHARES. (a) Portfolio securities shall be
(i) presented by the Fund Custodian to the Trust Custodian for examination no
later than five (5) business days preceding the Valuation Date and (ii)
delivered by the Fund Custodian to the Trust Custodian, for the account of the
Money Market Series, at the Closing. Such securities shall be duly endorsed
prior to the Closing in proper form for transfer and in such condition as to
constitute a good delivery thereof at the Closing in accordance with the custom
of brokers and shall be accompanied by all necessary state stock transfer stamps
or a check for the appropriate purchase price thereof. Portfolio instruments and
securities deposited with a securities depository, as defined in Rule 17f-4
under the Investment Company Act of 1940, as amended (the "1940 Act"), shall be
delivered prior to the Closing by book entry in accordance with the customary
practices of such depositories and the Trust Custodian. Cash shall be delivered
prior to the Closing in the form of currency or shall be transferred by wire
transfer of federal funds. All other assets delivered by the Fund shall be
accompanied by all appropriate instruments of transfer and any necessary
instructions.
(b) If on the Closing Date the Fund is unable to make delivery under this
paragraph 4 to the Trust Custodian of any of its portfolio securities for the
reason that any of such securities purchased by the Fund prior to the Closing
Date have not yet been delivered to it by the Fund's broker or brokers, the Fund
shall deliver to the Trust Custodian by or on the Closing Date with respect to
said undelivered securities instruments of assignment and additional
documentation reasonably satisfactory to the Trust. The Fund will pay or cause
to be paid to the Money Market Series any dividends, distributions, rights,
interest or other assets received on or after the Closing Date with respect to
Fund Assets transferred to the Money Market Series hereunder. Such assets shall
be deemed included in Fund Assets transferred to the Money Market Series on the
Closing Date and shall not be separately valued.
(c) In lieu of delivering certificates for the shares of the Money Market
Series to be transferred hereunder, at the Closing the Trust shall credit to the
Fund's account on the share record books of the Trust that number of shares of
the Money Market Series required by paragraph 1 hereof to be delivered to the
Fund. The Trust shall issue and deliver a confirmation evidencing the shares of
the Money Market Series to be credited on the Closing Date to the Secretary of
the Fund, or provide evidence satisfactory to the Fund that such shares of the
Money Market Series have been credited to the Fund's account on the books of the
Money Market Series.
5. LIQUIDATION AND DISSOLUTION OF THE FUND; DISTRIBUTION OF TRUST SHARES. (a)
As soon after the Closing as is conveniently practicable (the "Liquidation
Date"), the Fund shall voluntarily dissolve pursuant to Section 275 of the DGCL
and distribute pro rata to its stockholders of record, determined as of the
close of business on the Closing Date, all of the shares of the Money Market
Series received by it at the Closing by transferring to each stockholder account
that number of shares of the Money Market Series to which such stockholder's
proportionate ownership of stock of the Fund entitles him. The Trust will
establish appropriate shareholder accounts on its share record books
representing the respective pro rata number of shares of the Money Market Series
transferred to such Fund stockholders. All issued and outstanding stock of the
Fund will simultaneously be canceled on the books of the Fund. The Trust shall
not issue certificates representing the shares of the Money Market Series in
connection with such exchange.
(b) As soon as practicable after the Closing, and in any event within six
(6) months thereafter, the Fund shall (i) file a certificate of dissolution of
the Fund in accordance with Section 275 of the DGCL and (ii) pay or make
provision for all of its debts and taxes, and deliver to the Money Market Series
any balance of the cash reserve retained pursuant to paragraph 2(b). The Trust
shall immediately thereafter credit those persons
15
<PAGE>
appearing on the stock records of the Fund as of the close of business on the
Closing Date as stockholders of the Fund with any additional shares of the Money
Market Series (or fractions thereof) to be issued in exchange for such balance.
6. LIABILITIES OF THE FUND; EXPENSES. (a) At or prior to the Closing Date, the
Fund shall have discharged or have established adequate reserves for the
discharge of all of its known liabilities and at the Closing Date shall deliver
to the Trust a schedule setting forth all known but then undischarged
liabilities and, if applicable, showing the reserve established for each such
liability. At the Closing, the Money Market Series shall assume all liabilities
of the Fund other than as set forth in such schedule.
(b) Sun Life Assurance Company of Canada (U.S.) shall bear all expenses in
connection with the transactions contemplated by this Agreement, including the
fees and disbursements of the respective attorneys and auditors.
7. REGISTRATION STATEMENT. The Trust agrees that it will, promptly after the
execution and delivery of this Agreement, prepare and file with the SEC a
Registration Statement on Form N-14, including as part thereof a
Prospectus/Proxy Statement (the "Registration Statement") complying in all
respects with the requirements of the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), the 1940 Act, and all applicable rules and
regulations thereunder, covering the shares of the Money Market Series to be
issued hereunder and relating to the meeting of Fund stockholders to be called
to consider and act upon the transactions contemplated herein. The Fund agrees
to provide the Trust with information applicable to it and its stockholders
reasonably necessary for the preparation of the Registration Statement (the
"Fund Information"), and the Trust agrees to use reasonable effort to have the
Registration Statement declared effective.
8. REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund hereby represents and
warrants to the Trust and agrees with the Trust, which representations and
warranties will be true and correct on the Closing Date as though made on and as
of the Closing Date, that:
(a) The Fund is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has corporate power to
own all of its properties and assets and to carry on its business as now
being conducted. The Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted. The Fund has the necessary power to enter
into this Agreement and to consummate the transactions contemplated herein.
(b) The Fund is registered under the 1940 Act as an open-end, diversified
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) Statements of assets and liabilities, statements of operations and
statements of changes in net assets of the Fund for the years ended December
31, 1995,1994 and 1993 and the schedules of investments at December 31,
1995, 1994 and 1993 (indicating their book cost and market value), having
been audited by Deloitte & Touche LLP, independent auditors, and prepared in
accordance with generally accepted accounting principles, consistently
applied, have been furnished to the Trust. Said statements of assets and
liabilities and schedules fairly present the financial position and
investments of the Fund as of their respective dates, and there are no known
contingent liabilities of the Fund as of such dates not disclosed therein.
Said statements of operations and changes in net assets fairly present the
results of the Fund's operations and changes in its net assets for the
periods covered thereby.
(d) Except as shown on the financial statements referred to in paragraph
8(c) hereof and those incurred in the ordinary course of the Fund's business
as an investment company, the Fund has no known liabilities of a material
amount, contingent or otherwise. There are no material legal or
administrative proceedings or investigations currently pending or to its
knowledge threatened against the Fund or any of its properties or assets.
The Fund knows of no facts which might form the basis for the institution of
such proceedings, and is not a party to or subject to any order, decree or
judgment of any court or governmental body enjoining it in respect of, or
the effect of which is to prohibit, in any material respect, the disposition
of any of its assets or the conduct of its business. Prior to or on the
Closing Date, the Fund will advise the Trust in writing of all material
liabilities, contingent or otherwise, remaining undischarged on the Closing
Date, whether or not incurred in the ordinary course of business.
16
<PAGE>
(e) The Fund has filed all federal, state and local tax returns and reports
required by law to have been filed and has paid all taxes required to be
paid in respect of the periods covered by such returns and has paid all
assessments received by it. All tax liabilities of the Fund have been
adequately provided for on its books and no tax deficiency or liability of
the Fund has been asserted, and no question with respect thereto has been
raised by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
(f) No shares of capital stock of the Fund have been issued during the five
years preceding the date hereof, other than in connection with reinvestment
of distributions. All issued and outstanding stock of the Fund is, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. All of the issued and outstanding stock of the Fund
will, at the time of the Closing, be held by the persons and in the amounts
set forth in the records of its transfer agent on the Closing Date. The Fund
does not have outstanding any options, warrants or other rights to subscribe
for or purchase any of the stock of the Fund, nor is there outstanding any
security convertible into any of the stock of the Fund.
(g) The Fund has no material contracts or other commitments outstanding,
other than this Agreement, its investment advisory agreement with MFS, its
contracts with its transfer agent and custodian, and other contracts in the
ordinary course of business, and no material breach of the Fund's
obligations exist under any such contract.
(h) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Fund of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act or state securities laws
(which term includes the laws of the District of Columbia and Puerto Rico).
(i) The Fund Information, on the effective date of the Registration
Statement, (i) will comply in all material respects with the provisions of
the 1933 Act, the 1934 Act, the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the stockholders' meeting referred to in Paragraph 11(a) hereof, and on the
Closing Date, the Registration Statement, as amended or supplemented by any
amendment or supplement filed by the Trust, will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
apply only to statements in or omissions made in reliance upon and in
conformity with information furnished by the Fund as provided in paragraph 7
hereof.
(j) Since December 31, 1995, there has not been:
(A) Any change in the business, results of operations, assets, financial
condition, or the manner of conducting the business of the Fund, other
than changes in the ordinary course of its business, changes in value of
the Fund's portfolio investments in the ordinary course of business or
changes resulting from redemption of stock of the Fund, that has had or
may have a material adverse effect on the business, results of
operations, assets or financial condition of the Fund;
(B) any issuance of shares of capital stock of any class of the Fund,
other than as contemplated by and described in its offering materials;
(C) any issuance by the Fund of an option to purchase or other right to
acquire stock of the Fund to any person;
(D) any entering into, amendment or termination of any material contract
or agreement by the Fund, except as otherwise contemplated by this
Agreement;
(E) any amendment of the Certificate of Incorporation of the Fund;
(F) any grant or imposition of any lien, claim, charge or encumbrance
upon any asset of the Fund other than a lien for taxes not yet due and
payable; or
(G) any pending or threatened litigation by or against the Fund, except
as disclosed to the Trust.
17
<PAGE>
(l) The Fund has no present intention of redeeming shares of the Money
Market Series following the Closing;
(m) As promptly as practicable, but in any case within sixty (60) days after
the Closing, the Fund shall furnish the Trust with a statement of the
earnings and profits, or losses, of the Fund for federal income tax
purposes, which will be carried over to the Trust pursuant to Section 381 of
the Internal Revenue Code.
(n) The Fund will certify and furnish to the Trust a list of names of the
record owners, as of the close of business on the Closing Date, of all the
outstanding shares of capital stock of the Fund, together with such other
stockholder records as the Trust may reasonably require in order to
establish shareholder accounts and effect the share transfers as provided in
paragraph 5.
(o) The Fund is not, and the execution, delivery and performance of this
Agreement will not result, in material violation of its Certificate of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Fund is a party or by
which it is bound.
(p) The execution, delivery and performance of this Agreement have been duly
authorized prior to the Closing Date by all necessary action on the part of
the Board of Directors of the Fund and, except for obtaining approval of the
stockholders of the Fund, no other corporate acts or proceedings by the Fund
are necessary to authorize this Agreement and the transactions contemplated
herein. Subject to the approval of the stockholders of the Fund, this
Agreement constitutes the valid and legally binding obligation of the Fund
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, and to general principles of
equity and the discretion of the court, regardless of whether the
enforceability is considered in a proceeding in equity or at law.
9. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust hereby represents and
warrants to the Fund and agrees with the Fund, which representations and
warranties will be true and correct on the Closing Date as though made on and as
of the Closing Date, that:
(a) The Trust is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has
the power to carry on its business as it is now being conducted, and the
Money Market Series is duly organized as a series of the Trust. The Trust
has all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted.
The Trust has the necessary power to enter into this Agreement and to
consummate the transactions contemplated herein.
(b) The Trust is registered under the 1940 Act as an open-end, diversified
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) Statements of assets and liabilities, statements of operations and
statements of changes in net assets of the Money Market Series for the years
ended December 31, 1995, 1994 and 1993, and schedules of investments
(indicating their book costs and market values) at December 31, 1995, 1994
and 1993, having been audited by Deloitte & Touche LLP, independent
auditors, and prepared in accordance with generally accepted accounting
principles, consistently applied, have been furnished to the Fund. Said
statements of assets and liabilities and schedules fairly present the
financial position and investments of the Money Market Series as of their
respective dates, and there are no known contingent liabilities of the Money
Market Series as of such dates not disclosed therein. Said statements of
operations and changes in net assets fairly present the results of the Money
Market Series' operations and changes in its net assets for the periods
covered thereby.
(d) Except as shown on the financial statements referred to in paragraph
9(c) hereof and those incurred in the ordinary course of the Trust's
business as an investment company, the Money Market Series has no known
liabilities of a material amount, contingent or otherwise, and there are no
material legal, administrative or other proceedings or investigations
currently pending or to its knowledge threatened against the Money Market
Series or any of its properties or assets. The Trust knows of no facts which
might form the basis for the institution of such proceedings, and is not a
party to or subject to any order,
18
<PAGE>
decree or judgment of any court or governmental body enjoining it in respect
of, or the effect of which is to prohibit, in any material respect, the
disposition of any of the assets or the conduct of the business of the Money
Market Series.
(e) The current prospectus and statement of additional information of the
Trust relating to the Money Market Series conform in all material respects
to the applicable requirements of the 1933 Act, the 1940 Act and the rules
and regulations of the SEC thereunder and do not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(f) The Trust has filed on behalf of the Money Market Series all federal,
state and local tax returns and reports required by law to have been filed
and has paid all taxes required to be paid in respect of the periods covered
by such returns and has paid all assessments received by it. All tax
liabilities of the Money Market Series have been adequately provided for on
its books and no tax deficiency or liability of the Money Market Series has
been asserted, and no question with respect thereto has been raised by the
Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(g) All of the Money Market Series' issued and outstanding shares have been
offered for sale and sold in conformity with all applicable federal
securities laws and to the best of its knowledge and belief have been
offered and sold in conformity with all applicable state securities laws.
(h) The Trust has no material contracts or other commitments outstanding,
other than this Agreement, its investment advisory agreement with MFS, its
contracts with its custodian, and other contracts in the ordinary course of
business, and no material breach of the Trust's obligations exist under any
such contract.
(i) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act or state securities laws
(which term shall include the laws of the District of Columbia and Puerto
Rico).
(j) On the effective date, the Registration Statement, other than Fund
Information, (i) will comply in all material respects with the provisions of
the 1933 Act, the 1934 Act, the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the stockholders' meeting referred to in Paragraph 11(a) hereof, and on the
Closing Date, the Registration Statement, as amended or supplemented by any
amendment or supplement filed by the Trust, other than Fund Information,
will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(k) The shares of the Money Market Series to be issued pursuant to this
Agreement have been duly authorized and, when issued and delivered pursuant
to this Agreement, will be legally and validly issued and will be fully paid
and nonassessable by the Money Market Series, and no shareholder of the
Money Market Series will have any preemptive right of subscription or
purchase in respect thereof.
(l) Since December 31, 1995 there has not been:
(A) Any change in the business, results of operations, assets, financial
condition or the manner of conducting the business of the Money Market
Series, other than changes in the ordinary course of its business,
changes in value of the Money Market Series' portfolio investments in
the ordinary course of business, and changes resulting from redemption
of shares of the Money Market Series, that has had a material adverse
effect on the business, results of operations, assets or financial
condition of the Money Market Series; or
(B) any issuance of shares of the Money Market Series, other than as
contemplated by and described in the Trust's prospectus as from time to
time in effect under the 1933 Act.
(m) The Trust is not, and the execution, delivery and performance of this
Agreement will not result, in material violation of its Declaration of Trust
or of any agreement, indenture, instrument, contract, lease or other
undertaking to which the Trust is a party or by which it is bound.
19
<PAGE>
(n) The Trust will have full right, power and authority to sell, assign,
transfer and deliver the shares to be transferred by it hereunder.
(o) The execution, delivery and performance of this Agreement have been duly
authorized prior to the Closing Date by all necessary action, if any, on the
part of the Trustees of the Trust, and no other acts or proceedings by the
Trust are necessary to authorize this Agreement and the transactions
contemplated herein. This Agreement constitutes the valid and legally
binding obligation of the Trust enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto, and to
general principles of equity and the discretion of the court, regardless of
whether the enforceability is considered in a proceeding in equity or at
law.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Fund and the Trust contained in this Agreement shall survive
the closing for a period of six years and shall thereupon terminate. The Trust
shall have no rights of indemnification against the Fund or against any
stockholder of the Fund.
11. STOCKHOLDERS' MEETING; CONDITIONS AND OBLIGATIONS OF BOTH PARTIES.
(a) The Fund will hold a meeting of its stockholders not later than December
31, 1996 for the purpose of considering, acting upon and approving the
transactions contemplated by this Agreement in accordance herewith.
(b) The obligations of both parties hereunder shall be subject to the
following conditions:
(i) The holders of a majority of the shares of capital stock of the
Fund issued and outstanding shall have approved the transactions
contemplated herein at a meeting duly called and held on or before
the Closing Date.
(ii) No action or proceeding before any court or other governmental
body shall have been instituted or threatened which seeks to
restrain, prohibit or invalidate the transactions contemplated by
this Agreement.
(iii) The Registration Statement shall have become effective under
the 1933 Act and no stop order suspending effectiveness of the
Registration Statement shall have been issued and, to the best
knowledge of the parties, no investigation or proceeding for that
purpose shall have been instituted, or be pending, threatened or
contemplated under the 1933 Act.
(iv) All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities
(including those of the SEC and of state Blue Sky and securities
authorities, including "no-action" positions of such federal or
state authorities) necessary to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been
obtained except where failure to obtain such consents, orders and
permits would not involve the risk of a material adverse effect on
the assets or properties of the Trust or the Fund.
(v) The Fund and the Trust shall have received, at or prior to the
Closing, an opinion of counsel, Messrs. Covington & Burling, to the
effect that for federal income tax purposes, (i) the transaction
contemplated by this Agreement will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended, and the Fund and the Money Market Series
will each qualify as "a party to the reorganization," (ii) no gain
or loss will be recognized by the Fund as a result of the
transaction, (iii) no gain or loss will be recognized by the
stockholders of the Fund upon receipt by them of shares of the Money
Market Series in exchange for shares of the Fund, (iv) the basis of
the shares of beneficial interest of the Money Market Series
received by the stockholders of the Fund pursuant to such exchange
will be the same as the basis of Fund stock in their respective
hands immediately prior to the exchange and (v) provided that shares
of Sun Growth stock constitute capital assets in the hands of
stockholders of Sun Growth, the holding period of the shares of
beneficial interest of the Money Market Series received by
stockholders of the Fund pursuant to the exchange will include the
holding period of the stock of the Fund held by them prior to the
exchange.
20
<PAGE>
12. CONDITIONS OF OBLIGATIONS OF THE FUND. The obligations of the Fund
hereunder shall be subject to the satisfaction prior to or on the Closing Date
of the following conditions:
(a) That the Trust shall have furnished the Fund with a statement of the
Money Market Series' net assets, together with a list of portfolio holdings,
with values determined in the same manner as such assets and portfolio
holdings are valued in determining the net asset value per share of shares
of the Money Market Series under paragraph 2 hereof, all as of the Closing
Date, certified on the Trust's behalf by its Chairman (or Secretary) and
Treasurer (or any Assistant Treasurer), and a certificate of both such
officers, dated the Closing Date, that there has been no material adverse
change in the financial position of the Money Market Series since December
31, 1995, other than changes in its portfolio securities since that date,
changes in the market value of its portfolio securities, or changes due to
redemptions.
(b) That the Trust shall have furnished to the Fund a statement dated the
Closing Date, signed by the Trust's Chairman (or Secretary) and Treasurer
(or any Assistant Treasurer) certifying that as of the Closing Date all
representations and warranties of the Trust made in this Agreement are true
and correct in all material respects as if made at and as of the Closing
Date, and that the Trust has complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
13. CONDITIONS OF OBLIGATIONS OF THE TRUST. The obligations of the Trust
hereunder shall be subject to the satisfaction prior to or on the Closing Date
of the following conditions:
(a) That the Fund shall have furnished the Trust with a statement of the
Fund's net assets, together with a list of portfolio holdings setting forth
the Federal income tax basis thereof, all as of the Closing Date, certified
on the Fund's behalf by its President (or any Vice President) and Secretary
(or Treasurer) and a certificate of both such officers, dated the Closing
Date, that there has been no material change in the financial position of
the Fund since December 31, 1995, other than changes in its portfolio
securities since that date, changes in the market value of its portfolio
securities or changes due to redemptions.
(b) That the Fund shall have furnished to the Trust a statement, dated the
Closing Date, signed by the Fund's President (or any Vice President) and
Secretary (or Treasurer), certifying that as of the Closing Date all
representations and warranties of the Fund made in this Agreement are true
and correct in all material respects as if made at and as of the Closing
Date, and that the Fund has complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(c) That prior to or on the Closing Date, the Fund shall have declared a
dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to its stockholders all of its
investment company taxable income for any taxable year ending in 1996
(computed without regard to any deduction for dividends paid) and all of its
net capital gains realized in any taxable year ending in 1996 (after
reduction for any capital loss carry forward).
14. NOTICES. All notices required under this Agreement shall be given in
writing to the Fund or to the Trust, as applicable, at One Sun Life Executive
Park, Wellesley Hills, Massachusetts 02181, Attention: Bonnie S. Angus, or at
such other place as shall be specified in written notice given by either party
to the other party to this Agreement and shall be validly given if mailed by
certified mail, postage prepaid and return receipt is obtained.
15. TERMINATION OF AGREEMENT; WAIVER. This Agreement and the transactions
contemplated hereby may be terminated and abandoned by mutual consent of the
respective Boards of the Fund and the Trust at any time prior to the Closing
Date. If the transactions contemplated by this Agreement have not been
consummated by December 31, 1996, this Agreement shall automatically terminate
on that date unless the parties mutually agree upon a later date. If this
Agreement is terminated and the exchange contemplated hereby is abandoned, this
Agreement shall become void and have no effect, without any liability on the
part of any party hereto or the trustees, directors, officers or shareholders of
the Trust or of the Fund, in respect of this Agreement. At any time prior to the
Closing Date, either party may waive any condition to its obligations hereunder
if such waiver will not have a material adverse effect on the benefits intended
under this Agreement to the shareholders of the Trust or of the Fund, as the
case may be.
21
<PAGE>
16. BROKER OR FINDER'S FEE. Each of the Fund and the Trust represents that
there is no person who has dealt with it, who by reason of such dealings is
entitled to any finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
17. LIMITATION OF LIABILITY. A copy of the Declaration of Trust of the Trust is
on file with the Secretary of State of the Commonwealth of Massachusetts. It is
expressly agreed and notice is hereby given, and the parties hereto acknowledge
and agree, that this instrument is executed on behalf of the Trustees of the
Trust, as Trustees and not individually, that the obligations under or arising
out of this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust,
individually, but bind only the trust property of the Money Market Series of the
Trust, as provided in the Declaration of Trust of the Trust.
18. MISCELLANEOUS PROVISIONS. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof, and merges and supersedes all prior discussions, agreements, and
understandings of every kind and nature between them relating to the subject
matter hereof. Neither party shall be bound by any condition, definition,
warranty or representation, other than as set forth or provided in this
Agreement or as may be set forth in a later writing signed by the party to be
bound thereby. All covenants, agreements, representations and warranties made
under this Agreement and any certificates delivered pursuant to this Agreement
shall be deemed to have been material and relied upon by each of the parties
notwithstanding any investigation made by such party or on its behalf. This
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns, but no assignment or transfer hereof of any
rights or obligations hereunder shall be made by any party without the written
consent of the other party. This Agreement is executed in the Commonwealth of
Massachusetts and shall be governed and carried out in accordance with the laws
of the Commonwealth of Massachusetts. This Agreement may be executed in any
number of counterparts, each of which, when executed and delivered, shall be
deemed to be an original, but all taken together shall constitute one Agreement.
IN WITNESS WHEREOF, the Fund and the Trust have caused this Agreement and
Plan of Reorganization to be executed and attested on its behalf by its duly
authorized representatives as of the date first above written.
SUN GROWTH VARIABLE ANNUITY FUND, INC.
BY: s/ David D. Horn
--------------------------------------
David D. Horn, Vice President
MFS/SUN LIFE SERIES TRUST
on its own behalf and on behalf of the
Money Market Series
BY: s/ Bonnie S. Angus
--------------------------------------
Bonnie S. Angus, Secretary & Clerk
22
<PAGE>
PART B
Attached hereto and made a part of hereof is the Statement of Additional
Information dated October , 1996.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER __, 1996
ACQUISITION OF THE ASSETS OF
SUN GROWTH VARIABLE ANNUITY FUND, INC.
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02181
(617) 237-6030
BY AND IN EXCHANGE FOR SHARES OF
MFS/SUN LIFE SERIES TRUST
500 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 954-5000
This Statement of Additional Information dated October ____, 1996 is not a
prospectus. A combined Prospectus/Proxy Statement, dated October ____, 1996
relating to the above-referenced transaction may be obtained from Cheri M.
Lamie, Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181, telephone (800) 225-3950. This Statement
of Additional Information should be read in conjunction with such
Prospectus/Proxy Statement.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Additional Information About MFS/Sun Life Series Trust 1
Additional Information About Sun Growth Variable Annuity Fund, Inc. 1
Investment Restrictions 1
Sun Growth's Directors and Officers 3
Directors' Compensation Table 4
Investment Adviser 4
Independent Auditors 4
Financial Statements of the Series Trust 4
Financial Statements of Sun Growth 4
</TABLE>
ADDITIONAL INFORMATION ABOUT MFS/SUN LIFE SERIES TRUST
The Statement of Additional Information of MFS/Sun Life Series Trust (the
"Series Trust") dated May 1, 1996, is incorporated herein by reference. A copy
of the Statement of Information may be obtained from the Cheri M. Lamie, Sun
Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02181, telephone (800) 225-3950.
ADDITIONAL INFORMATION ABOUT
SUN GROWTH VARIABLE ANNUITY FUND, INC.
INVESTMENT RESTRICTIONS
Sun Growth Variable Annuity Fund, Inc. ("Sun Growth") is subject to the
following investment restrictions which are considered to be fundamental
policies and which may not be changed or eliminated without the approval of the
lesser of (a) 67% or more of the voting securities present at a meeting if the
holders of more than 50% of the outstanding voting securities of Sun Growth are
present or represented by proxy; or (b) more than 50% of the outstanding voting
securities of Sun Growth.
In summary, these restrictions provide that Sun Growth may not:
1. Purchase the securities of any issuer if such purchase would cause more
than 5% of the value of its total assets to be invested in the securities
of any one issuer (excluding from this limitation securities issued or
guaranteed by the United States of America or any instrumentality
thereof).
1
<PAGE>
2. Purchase the securities of any issuer if such purchase would cause more
than 5% of either the outstanding voting securities or the securities of
any class of such issuer to be held by Sun Growth.
3. Invest in companies for the purpose of influencing management or
exercising control.
4. Purchase the securities of another "investment company" as defined in
the Investment Company Act of 1940, provided that Sun Growth may enter
into a transaction for the purpose of effecting a merger, consolidation,
acquisition of assets or other reorganization.
5. Purchase the securities of any company with a record of less than three
years' continuous operation (including that of predecessors) if such
purchase would cause Sun Growth's aggregate investments in such companies
to exceed 5% of Sun Growth's total assets taken at market value.
6. Borrow money, except that the right is reserved to borrow money from
banks for emergency purposes, provided that no borrowing may exceed 5% of
the total assets of Sun Growth taken at cost.
7. Mortgage, pledge or hypothecate more than 15% of the market value of its
assets.*
8. Act as a securities underwriter or purchase securities which are subject
to legal or contractual restrictions on resale or are otherwise not
readily marketable.
9. Invest more than 25% of the value of its total assets in the securities
of issuers which conduct their principal business activities in the same
industry.
10. Purchase or sell commodities or commodity contracts.
11. Purchase or sell interests in oil, gas, or other mineral exploration or
development programs, or purchase or sell interests in real estate
including interests in real estate investment trusts, except when such
interests are an incidental part of assets acquired through merger,
consolidation, acquisition of assets or other reorganization.
12. Make loans, except by the purchase of a portion of an issue of bonds or
other obligations of types commonly offered publicly.
13. Purchase any security on margin, although it may obtain such short-term
credits as are necessary for the clearance of purchases and sales of
securities.
14. Participate on a joint or a joint and several basis in any security
trading account.
15. Make short sales of securities except where Sun Growth (1) owns an equal
amount of such securities, or (2) by virtue of ownership of convertible
or exchangeable securities (or otherwise) has the right to obtain an
equal amount of the securities sold short without the payment of further
consideration; and, it will retain such securities so long as it is in a
short position as to them; and such short sales will be used by Sun
Growth only for the purpose of deferring recognition of gain or loss for
federal income tax purposes.
16. Purchase or sell puts, calls, straddles or spreads.
17. Purchase or sell securities of foreign issuers except when such
securities are an incidental part of assets acquired through merger,
consolidation, acquisition of assets or other reorganization.
18. Purchase or retain the securities of any issuer if those officers and
directors of Sun Growth or its Adviser who own individually more than
1/2 of 1% of the securities of such issuer together own more than 5% of
the securities of such issuer.
- ------------------------
* Although Sun Growth has the right to pledge, mortgage or hypothecate up to 15%
of the market value of its assets, it will not, as a matter of operating policy,
pledge, mortgage or hypothecate any of its portfolio securities.
2
<PAGE>
SUN GROWTH'S DIRECTORS AND OFFICERS
The Board of Directors of Sun Growth manages the business and affairs of Sun
Growth. The officers of Sun Growth supervise the day to day operations of Sun
Growth. The following chart identifies each of the directors and officers of Sun
Growth, their positions with Sun Growth and their principal occupations during
the past five years.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL
NAME AND ADDRESS SUN GROWTH OCCUPATION
- ---------------------------------- ---------------- ------------------------------------------------------------
<S> <C> <C>
John D. McNeil* President, Chairman and Director of Sun Life (Canada)
150 King Street West Director
Toronto, Ontario, Canada
Samuel Adams Director Partner, Warner & Stackpole
75 State Street
Boston, Massachusetts
Geoffrey Crofts Director Professor Emeritus, University of Hartford
74 Scott Drive
Bloomfield, Connecticut
David D. Horn* Director, Senior Vice President and General Manager for the United
One Sun Life Executive Park Vice President States of Sun Life (Canada)
Wellesley Hills, Massachusetts
Garth Marston Director Chairman (Retired), The Provident Institution for Savings
90 Beacon Street
Boston, Massachusetts
Derwyn F. Phillips Director Vice Chairman (Retired), The Gillette Company
One Cliff Street
Marblehead, Massachusetts
Bonnie S. Angus* Secretary Assistant Vice President of Sun Life (U.S.) and Sun Life
One Sun Life Executive Park (Canada)
Wellesley Hills, Massachusetts
W. Thomas London* Treasurer Senior Vice President and Assistant Treasurer of
500 Boylston Street Massachusetts Financial Services Company (MFS)
Boston, Massachusetts
James O. Yost* Assistant Vice President of MFS
500 Boylston Street Treasurer
Boston, Massachusetts
</TABLE>
* "Interested persons" (as defined in the Investment Company Act of 1940) with
respect to MFS, whose address is 500 Boylston Street, Boston Massachusetts
02116.
All of the directors of Sun Growth also are Trustees of the Series Trust and
are members of the Boards of Managers of 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, which are variable
accounts established by Sun Life (U.S.) in connection with the sale of certain
combination fixed/variable annuity contracts.Mr. McNeil and Ms. Angus are also
the chairman and the secretary, respectively, of the Series Trust and these
variable accounts, and Messrs. London and Yost are the treasurer and assistant
treasurer, of the Series Trust, respectively.
No Director or Officer beneficially owned shares of Sun Growth on the date
of this Statement of Additional Information.
3
<PAGE>
DIRECTORS' COMPENSATION TABLE
<TABLE>
<CAPTION>
DIRECTOR FEES TOTAL DIRECTOR FEES
FROM FROM SUN GROWTH
DIRECTOR SUN GROWTH* AND FUND COMPLEX*
- --------------------------------------------------------- ------------- --------------------
<S> <C> <C>
Samuel Adams $ 3,300 $ 26,200
Geoffrey Crofts 3,300 26,200
David D. Horn 0** 0**
John D. McNeil 0** 0**
Garth Marston 3,300 26,200
Derwyn F. Phillips 3,000 23,500
</TABLE>
- ---------
*For the year ended December 31, 1995.
**Messrs. Horn and McNeil are affiliated with MFS and receive no compensation
from Sun Growth.
INVESTMENT ADVISER
Information about MFS, the investment adviser of Sun Growth, is contained in
the Series Trust's Prospectus under the caption "Investment Adviser." The
investment advisory fee, calculated on the basis of 0.50% of the average daily
net asset value during each month, was $4,227 for 1993, $3,855 for 1994 and
$3,613 for 1995.
INDEPENDENT AUDITORS
Sun Growth's financial statements are audited annually by a firm of
independent certified public accountants. The firm of Deloitte & Touche LLP
served as Sun Growth's independent auditor since its incorporation and has been
appointed to examine the financial statements of Sun Growth for the present
fiscal year.
FINANCIAL STATEMENTS OF THE SERIES TRUST
The financial statements incorporated in this Statement of Additional
Information by reference from the Series Trust's Annual and Semi-Annual Reports
to shareholders for the year ended December 31, 1995 and the six months ended
June 30, 1996, respectively, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
FINANCIAL STATEMENTS OF SUN GROWTH
The financial statements incorporated in this Statement of Additional
Information by reference from Sun Growth's Annual Report to shareholders for the
year ended December 31, 1995 has been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
4
<PAGE>
-1-
PART C
OTHER INFORMATION ABOUT THE REGISTRANT
ITEM 15 INDEMNIFICATION
The Declaration of Trust of the Registrant provides that the
Registrant will indemnify its Trustees and Officers against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of their offices with the Trust, unless it is finally adjudicated or, in
case of a settlement, it has been determined by fair and reasonable means, that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Registrant. However, no indemnification will
be paid to any Trustee of Officer for any liability to the Registrant or its
shareholders which arose by reason of his wilful misfeasance, bad faith, gross
negligence or reckless disregard of his duties.
The Trustees and the Officers are insured, at the expense of the
Registrant, against certain liabilities, including liabilities under the
Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Act may
be permitted to trustees, officers, and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust 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 trustees, officers, or controlling persons of the Registrant in
connection with the successful defense of any act, suit, or proceeding) is
asserted by such trustees, officers, or controlling persons in connection with
the shares 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 of 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.
Insofar as indemnification for liabilities may be permitted pursuant
to Section 17 of the Investment Company Act of 1940 for trustees, officers, and
controlling persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware of the position of
the Securities and Exchange Commission as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that in addition to
complying with the applicable provisions of the Declaration of Trust or
otherwise, in the absence of a final decision on the merits by a court or other
body before which the proceeding was brought, that an indemnification payment
will not be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority vote of
a quorum of non-party trustees who are not interested persons of the Registrant
or (ii) by independent legal counsel in a written opinion that the indemnitee
was not liable for an act of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties. The Registrant further undertakes that
advancement of expenses incurred in the defense of a proceeding (upon
<PAGE>
-2-
undertaking for repayment unless it is ultimately determined that
indemnification is appropriate) against an officer, trustee, or controlling
person of the Registrant will not be made absent the fulfillment of at least one
of the following conditions: (i) the indemnitee provides security for his
undertaking; (ii) the Registrant is insured against losses arising by reason of
any lawful advances; or (iii) a majority of a quorum of disinterested non-party
trustees or independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee will be entitled to
indemnification.
ITEM 16 EXHIBITS
<TABLE>
<S> <C>
*1.1 Copy of Declaration of Trust of Registrant.
**1.2 Copy of Amendment to Declaration of Trust and Restated
Declaration of Trust of Registrant.
++1.3 Amendment to Declaration of Trust of Registrant.
+++1.4 Amendment to Declaration of Trust of Registrant.
++++1.5 Amendment to Declaration of Trust of Registrant.
++++1.6 Amendment to Declaration of Trust of Registrant.
+++++1.7 Amendment to Declaration of Trust of Registrant.
*2. By-Laws of Registrant
++++++4. Agreement and Plan of Reorganization dated
October 1, 1996, between Registrant and
Sun Growth Variable Annuity Fund, Inc.
**6.1 Investment Advisory Agreement between Registrant and
Massachusetts Financial Services Company dated May 24,
1985.
</TABLE>
<PAGE>
-3-
<TABLE>
<S> <C>
**9.1 Custodian Agreement between Registrant and State Street
Bank and Trust Company dated May 24, 1985.
***9.2 Amendment dated July 23, 1986 to Custodian Agreement
filed as Exhibit 9.1
+9.3 Shareholder Servicing Agent Agreement between
Registrant and Massachusetts Financial Service Center,
Inc.
+11. Opinion and Consent of Covington & Burling as to the
legality of the securities being registered.
12. Opinion and Consent of Covington Burling RE: Tax Matters
14. Consent of Deloitte & Touche LLP
16. Powers of Attorney
17.1 Form of Proxy
17.2 Voting Instructions Card
*17.3 Rule 24f-2 Declaration
___________
* Incorporated by reference from the Registrant's
Registration Statement, File No. 2-83616, filed
September 9, 1983.
** Incorporated by reference from Amendment No. 1 to the
Registrant's Registration Statement, File No. 2-83616,
filed March 25, 1985.
*** Incorporated by reference from Amendment No. 4 to the
Registrant's Registration Statement, File No. 2-83616,
filed September 30, 1986.
+ Incorporated by reference from Post-Effective Amendment
No. 2 to the Registrant's Registration Statement, File
No. 2-83616, filed February 25, 1986.
++ Incorporated by reference from Post-Effective Amendment
No. 13 to the Registrant's Registration Statement, File
No. 2-83616, filed October 26, 1993.
+++ Incorporated by reference from Post-Effective Amendment
No. 15 to the Registrant's Registration Statement, File
No. 2-83616, filed September 2, 1994.
++++ Incorporated by reference from Post-Effective Amendment
No. 17 to the Registrant's Registration Statement, File
No. 2-83616, filed August 23, 1995.
+++++ Incorporated by reference from Post-Effective Amendment
No. 18 to the Registrant's Registration Statement, File
No. 2-83616, filed April 10, 1996.
++++++ Incorporated by reference from Exhibit A to the
Prospectus/Proxy Statement contained in Part A
hereof.
</TABLE>
<PAGE>
-4-
ITEM 17 UNDERTAKINGS
The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which
is a part of this Registration Statement by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) of the Securities Act
of 1933, the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
The undersigned Registrant agrees that every prospectus that is
filed under paragraph 1 above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
<PAGE>
-5-
SIGNATURES
As required by the Securities Act of 1933, this registration
statement has been signed on behalf of the registrant in the Town of
Wellesley and Commonwealth of Massachusetts, on the 7th day of
October, 1996.
MFS/Sun Life Series Trust
(Registrant)
By: /s/ John D. McNeil*
-----------------------
John D. McNeil, Chairman
As required by the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities indicated on
October 7, 1996.
SIGNATURES TITLE
John D. McNeil* Chairman, Principal Executive
- ---------------------------------- Officer, and Trustee
JOHN D. MCNEIL
W. Thomas London* Treasurer, Principal Financial
- ---------------------------------- Officer, and Principal Accounting
W. THOMAS LONDON Officer
Samuel Adams* Trustee
- ----------------------------------
SAMUEL ADAMS
Geoffrey Crofts* Trustee
- -----------------------------------
GEOFFREY CROFTS
Trustee
- -----------------------------------
GARTH MARSTON
David D. Horn* Trustee
- ------------------------------------
DAVID D. HORN
Derwyn F. Phillips* Trustee
- ------------------------------------
DERWYN F. PHILLIPS
By /s/ Bonnie S. Angus
-------------------------
BONNIE S. ANGUS
ATTORNEY-IN-FACT
* Executed by Bonnie S.
Angus on behalf of those
indicated pursuant to
Powers-of-Attorney filed herewith
<PAGE>
October 7, 1996
EXHIBIT 12
MFS/Sun Life Series Trust
One Sun Life Executive Park
Wellesley Hills, Massachusetts
Sun Growth Variable Annuity Fund, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Re: Exchange of Assets of Sun Growth Variable Annuity Fund, Inc. for
Voting Shares of the Money Market Series of the MFS/Sun Life Series Trust
Ladies and Gentlemen:
You have requested our opinion concerning certain United States Federal
income tax consequences of a proposed exchange of assets of Sun Growth Variable
Annuity Fund, Inc. ("Sun Growth") for shares of the Money Market Series of the
MFS/Sun Life Series Trust (the "Series Trust"). As to questions of fact material
to the opinions expressed herein, we have reviewed, relied upon and assumed the
facts stated and representations made in the Series Trust's preliminary
registration statement on Form N-14 dated October 7, 1996 (the "Registration
Statement"), including the combined prospectus/proxy statement, supplemental
proxy materials, and the Agreement and Plan of Reorganization forming parts
thereof.
This opinion is expressly conditioned upon the facts as set out below.
Further, this opinion assumes and is conditioned upon the fact that, for all
periods through and including the Closing Date (as defined below), the Money
Market Series and Sun Growth have qualified and each will continue to qualify as
a "regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), and have complied and will continue to comply
with the requirements of Subchapter M (including in particular Sections 851(a),
851(b) and 852(a) thereof). (All section references herein are to the Code and
the regulations promulgated thereunder.)
FACTS
Sun Growth and the Money Market Series of the Series Trust are regulated
investment companies subject to taxation under Subchapter M of the Code. The
Series Trust and Sun Growth have entered into an Agreement and Plan of
Reorganization (the "Agreement"), pursuant to which all of the assets of Sun
Growth (including, without limitation, portfolio securities, dividends and
interest receivable, cash and other assets), less that amount of cash necessary
to discharge known liabilities of Sun Growth, as described below, will be
transferred to the Money Market Series of the Series Trust in exchange solely
for voting shares of the Money Market Series. (The date on which this exchange
occurs is referred to herein as the "Closing Date.") As soon as practicable
after the Closing Date, Sun Growth will dissolve and distribute to its
stockholders in liquidation, in accordance with each stockholder's proportionate
ownership of Sun Growth, all of the Money Market Series shares received by Sun
Growth in the exchange. At the same time all issued and outstanding shares of
Sun Growth will be cancelled.
To comply with the distribution requirements of Subchapter M, immediately
prior to the transfer of assets contemplated by the Agreement, Sun Growth will
declare and distribute to its stockholders a cash dividend (the "Closing Date
Dividend") of substantially all of its undistributed net investment income and
realized capital gains, if any, earned since December 31, 1995. (All such
amounts earned prior to that date have already been distributed.) It is possible
that Sun Growth will need to liquidate portfolio assets in order to pay the
Closing Date Dividend. It is anticipated that the total amount of the Closing
Date Dividend will be less than five percent of Sun Growth's total net assets
immediately prior to the distribution.
Sun Growth intends to retain a cash reserve for the payment of its known
expenses and liabilities on the Closing Date. Because Sun Growth has few known
liabilities, it is anticipated that the amount of cash retained to meet such
liabilities will be minimal and in no case more than five percent of its total
assets. Any balance remaining after the payment of expenses and liabilities will
be delivered to the Money Market Series
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 2
within six months after the Closing Date in exchange for additional Money Market
Series shares. Such additional shares will then be distributed to the former Sun
Growth stockholders.(1) The Money Market Series will assume any liabilities of
Sun Growth unknown as of the Closing Date.
Neither the Series Trust nor Sun Growth will pay any expenses in connection
with the carrying out of the transactions contemplated by the Agreement. Rather,
these expenses will be borne directly by Sun Life Assurance Company of Canada
(U.S.) ("Sun Life of Canada (U.S.)"), the parent of the investment adviser to
the Series Trust and Sun Growth.
Both the Series Trust and Sun Growth were established by Sun Life of Canada
(U.S.) as vehicles for investment by variable accounts established by Sun Life
of Canada (U.S.) which, in turn, fund benefits under variable contracts issued
by Sun Life of Canada (U.S.) and certain of its affiliates. All of Sun Growth's
shares currently are owned by Sun Life of Canada (U.S.) through two of its
variable accounts, Sun Life of Canada (U.S.) Variable Accounts A and B
("Variable Accounts A and B"). Sun Life of Canada (U.S.) established the Series
Trust to fund certain other variable accounts established by Sun Life of Canada
(U.S.) and its affiliates. The Series Trust issues nineteen separate series of
shares, including the Money Market Series.
The Board of Directors of Sun Growth will submit the transactions
contemplated by the Agreement to the Sun Growth stockholders for approval at a
special meeting called for that purpose. Sun Life of Canada (U.S.) will solicit
voting instructions with respect to all of the Sun Growth shares from owners of
and payees under the variable contracts funded by Variable Accounts A and B (the
"Contract Owners") and will vote the shares of Sun Growth in accordance with the
instructions given by the Contract Owners. All shares of Sun Growth will be
voted, and shares for which no instructions are received from Contract Owners
will be voted in the same proportion as the shares for which instructions have
been given.
Sun Life of Canada (U.S.), the Series Trust and Sun Growth have represented
that the following statements are true as of the date hereof and will be true as
of the Closing Date:
1. The fair market value of the shares of the Money Market Series
received by each Sun Growth stockholder will be approximately equal to the
fair market value of the shares of Sun Growth surrendered in the exchange.
2. There is no plan or intention on the part of the stockholders of Sun
Growth, and to the best of the knowledge of Sun Life of Canada (U.S.) and
Sun Growth, there is no plan or intention on the part of the Contract
Holders, to sell, exchange, or otherwise dispose, or to cause the sale,
exchange or other disposition, of a number of Money Market Series shares
received in the transaction that would reduce the ownership of Money Market
Series shares by the stockholders of Sun Growth to a number of shares having
a value, as of the date of the transaction, of less than fifty percent of
the value of all of the formerly outstanding shares of Sun Growth as of the
same date. For purposes of this representation, shares of Sun Growth
exchanged for cash or other property or exchanged for cash in lieu of
fractional shares of the Money Market Series will be treated as outstanding
Sun Growth stock on the date of the transaction. Shares of Sun Growth and of
the Money Market Series held by Sun Growth stockholders and otherwise sold,
redeemed or disposed of prior or subsequent to the transaction also will be
considered in making this representation.
3. The Money Market Series will acquire at least ninety percent of the
fair market value of the net assets and at least seventy percent of the fair
market value of the gross assets held by Sun Growth immediately prior to the
transactions. For purposes of this representation, all amounts paid by Sun
Growth to stockholders who receive cash or other property and all
redemptions and distributions (except for regular, normal dividends) made
immediately preceding the transfer of any assets to the
- ------------------------
(1) Since the reserve for liabilities will equal, as nearly as possible, Sun
Growth's known liabilities, it is not expected that the Sun Growth stockholders
will in fact receive any additional Money Market Series shares.
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 3
Money Market Series will be included as assets of Sun Growth held
immediately prior to the transactions. For purposes of this representation,
amounts retained to meet liabilities, the Closing Date Dividend and other
dividends declared in anticipation of the transactions will be treated as
assets held by Sun Growth immediately prior to the transactions.
4. The reserve for liabilities retained by Sun Growth will be equal, as
nearly as possible, to Sun Growth's known liabilities on the Closing Date.
5. Sun Life of Canada (U.S.) will pay or assume only those expenses of
Sun Growth that are solely and directly related to the transactions in
accordance with the guidelines established in Rev. Rul. 73-54, 1973-1
C.B.187, and the total amount of Sun Growth's reorganization expenses paid
by Sun Life of Canada (U.S.), together with the total liabilities of Sun
Growth assumed by the Money Market Series, will not, in any event, exceed
twenty percent of the gross fair market value of Sun Growth's assets.
6. The Series Trust has no plan or intention to reacquire any of the
shares of the Money Market Series issued in the transactions.
7. The Money Market Series has no plan or intention to sell or
otherwise dispose of any assets of Sun Growth acquired in the transactions,
except for dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code.
8. Sun Growth will distribute the stock, securities and other property
it receives in the transactions, and its other properties, if any, in
pursuance of the Plan of Reorganization.
9. The liabilities of Sun Growth assumed by the Money Market Series and
the liabilities to which the transferred assets of Sun Growth are subject
were incurred by Sun Growth in the ordinary course of its business.
10. Following the transactions, the Money Market Series will continue
the historic business of Sun Growth or use a significant portion of Sun
Growth's historic business assets in its business.
11. There is no intercorporate indebtedness existing between the Series
Trust and Sun Growth that was issued, acquired, or will be settled at a
discount.
12. The Series Trust does not own, directly or indirectly, nor has the
Series Trust owned during the past five years, directly or indirectly, any
shares of Sun Growth.
13. Neither of Sun Growth or the Money Market Series is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Internal
Revenue Code.(2)
14. The fair market value of the assets of Sun Growth transferred to the
Money Market Series will equal or exceed the sum of the liabilities assumed
by the Money Market Series, plus the amount of liabilities, if any, to which
the transferred assets are subject.
15. Sun Growth is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
You have requested our opinion to the effect that, for federal income tax
purposes, (1) the transaction contemplated by the Agreement will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code, and Sun
Growth and the Money Market Series will each qualify as "a party to the
reorganization," (2) no gain or loss will be recognized by Sun Growth as a
result of the transaction, (3) no gain or loss will be recognized by the Sun
Growth stockholders upon their receipt of shares of the Money Market Series in
exchange for their Sun Growth shares, (4) the basis of the Money Market Series
shares received by the Sun Growth stockholders pursuant to such exchange will be
the same as the basis of the
- ------------------------
(2) Under Section 368(a)(2)(F), a merger involving two or more "investment
companies" is not a reorganization with respect to any such investment company.
By its terms, however, this exclusion does not apply to regulated investment
companies, such as Sun Growth and the Money Market Series.
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 4
Sun Growth stock in their respective hands immediately prior to the exchange,
and (5) provided that the shares of Sun Growth constitute capital assets in the
hands of the Sun Growth stockholders, the holding period of the Money Market
Series shares received by the Sun Growth stockholders pursuant to the exchange
will include the holding period of the Sun Growth shares held by them prior to
the exchange.
DISCUSSION
Under Section 368(a)(1)(C), the term "reorganization" includes the
acquisition by one corporation, in exchange solely for all or part of its voting
stock, of "substantially all" of the properties of another corporation, and the
subsequent liquidation of the latter corporation. Although the Series Trust is
organized as a business trust under Massachusetts law, it is treated as a
corporation for federal income tax purposes. SEE Treas. Reg. SectionSection
1.7701-2 and 1.7701-4(b); PLR 8506073 and PLR 8502022. Moreover, the Money
Market Series of the Series Trust is treated as a separate corporation for tax
purposes. SEE Section 851(h). Thus, the requirements for a "C" reorganization
must be applied to the Money Market Series as the Acquiring Party.
The proposed transactions comply with the statutory requirements of a "C"
reorganization. Under the Agreement, the Money Market Series will transfer
solely voting shares to Sun Growth in exchange for the assets acquired from Sun
Growth. For purposes of determining whether the Money Market Series exchanged
"solely" voting shares, liabilities of Sun Growth assumed by the Money Market
Series are disregarded. SEE Section 368(a)(1)(C); Treas. Reg. Section
1.368-2(d)(1). Further, the payment by Sun Life of Canada (U.S.) of all expenses
of the Reorganization should not preclude compliance with the "solely for voting
stock" requirement. SEE Rev. Rul. 73-54, 1973-1 C.B. 187 (payment of acquired
party's reorganization expenses by acquiring party does not constitute
consideration in addition to voting stock).(3)
Based upon the representation that the assets transferred by Sun Growth will
comprise at least ninety percent of the fair market value of its net assets and
seventy percent of its gross assets held immediately prior to the transfer, Sun
Growth will transfer "substantially all" of its properties to the Money Market
Series in the Reorganization as required by Section 368(a)(1)(C). SEE Rev. Proc.
77-37, Section 3.01, 1977-2 C.B. 501; Rev. Proc. 86-42, Section 7.05(3), 1986-2
C.B. 722. The small amount of liquid assets retained by Sun Growth to pay off
its known liabilities should not be considered in determining whether
"substantially all" of its properties have been transferred. SEE Rev. Rul.
57-518, 1957-2 C.B. 253.
Further, the distribution by Sun Growth of its 1996 income immediately prior
to the exchange should not preclude compliance with the "substantially all"
requirement. The determination of whether "substantially all" of the assets are
acquired is based upon all of the facts and circumstances of the transaction.
The Service has stated that for advance ruling purposes "redemptions and
distributions (except for regular, normal distributions) made by the corporation
immediately preceding the transfer and which are part of the plan of
reorganization will be considered as assets held by the corporation immediately
prior to the transfer." SEE Rev. Proc. 77-37, Section 3.01. As a regulated
investment company under Subchapter M, Sun Growth is required to distribute
annually at least 90 percent of its net dividend and interest income. SEE
Section 852(a). For valid business reasons, Sun Growth has in fact distributed
in prior taxable years all of its income, including long-term capital gains.
Because Sun Growth's taxable year will end at the time of the Reorganization,
Sun Growth must distribute at least 90 percent of its 1996 ordinary income prior
to the asset sale in order to qualify as a regulated investment company for
1996. A distribution at that time of all of its income, including long-term
capital gains, would conform to Sun Growth's consistent past practice. As such,
we
- ------------------------
(3) Even if the payment of Sun Growth's Reorganization expenses were deemed, in
whole or in part, to be consideration in addition to voting stock, based upon
the representations of Sun Life of Canada (U.S.), the Series Trust and Sun
Growth that the total amount of such expenses, plus the Closing Date Dividend
and all Sun Growth liabilities assumed by the Money Market Series, will not
exceed twenty percent of the gross fair market value of Sun Growth's assets, we
believe that the payment by Sun Life of Canada (U.S.) of the expenses of the
Reorganization will not disqualify the Reorganization from treatment as a
Section 368(a)(1)(C) reorganization. See Section 368(a)(2)(B).
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 5
think that the proposed dividend should be considered a "regular, normal
distribution" within the contemplation of Rev. Proc. 77-37, in which case it
would be eliminated from the "substantially all" computation. SEE Rev. Proc.
86-42 Section 7.05(3).
A further relevant circumstance is the fact that in the past all of Sun
Growth's stockholders have elected to reinvest their dividends in Sun Growth.
Assuming this pattern continues, all of the assets "distributed" with respect to
such stockholders will in fact remain in corporate solution at the time of the
exchange and will be acquired by the Money Market Series in satisfaction of the
"substantially all" computation.
However, even assuming that the cash reserve retained to pay liabilities and
the Closing Date Dividend are treated as assets held by Sun Growth immediately
prior to the transaction, Sun Growth has represented that the assets transferred
by it will comprise at least ninety percent of the fair market value of its net
assets and seventy percent of its gross assets held immediately prior to the
transfer, which, for this purpose, includes these items. Thus, the transfer
would satisfy the "substantially all" standard set out by the Service for
advance ruling purposes. SEE Rev. Proc. 77-37, Section 3.01; Rev. Proc. 86-42,
Section 7.05(3).
In addition to complying with the express statutory terms of Section
368(a)(1)(C), the following additional elements specified in Treasury
Regulations SectionSection 1.368-1(a) and (d) must be present to permit a
transaction to qualify as a reorganization: (1) a valid business purpose for the
transaction; (2) "continuity of interest" in the acquiring corporation on the
part of the stockholders of the acquired corporation; and (3) "continuity of
business enterprise," I.E., the acquiring corporation must either (a) continue
the acquired corporation's historic business or (b) use a significant portion of
the acquired corporation's historic assets in its business.
In the case of the proposed transaction, we are of the opinion that all of
the requirements of SectionSection 1.368-1(a) and (d) will be satisfied. With
respect to the business purpose for the transaction, we understand that it is
expected to afford the stockholders of Sun Growth the advantages of economies of
scale that will result in lower expenses, thereby potentially increasing the Sun
Growth stockholders' net return.
The Service has stated that, for purposes of obtaining an advance ruling,
the "continuity of interest" requirement will be deemed to be satisfied where
there is a continuing interest through stock ownership in the acquiring
corporation on the part of the former stockholders of the acquired corporation
equal in value to at least 50 percent of the value of all of the formerly
outstanding stock of the acquired corporation. SEE Rev. Proc. 77-37, Section
3.02. We understand that Sun Life of Canada (U.S.) believes that it is unlikely
that a substantial number of the Contract Owners plan or intend to cause the
disposition or exchange of the Money Market Series shares received by Sun Growth
in the transaction. Based upon this understanding and upon the representations
of Sun Life of Canada (U.S.) that neither of Variable Accounts A and B has any
plan or intention to dispose of, and, to its knowledge, the Contract Owners do
not have any plan or intention to cause the disposition of, any of the Money
Market Series shares Sun Growth will receive in the proposed transaction, we
think that the continuity of interest requirement will be met.
With respect to the "continuity of business enterprise" test, the Series
Trust has represented that the Money Market Series will continue Sun Growth's
business and will use all of the assets acquired from Sun Growth in its
business. Accordingly, we think the continuity of business enterprise test will
be met.
Since all of the above requirements will be satisfied, the transaction
should qualify as a "C" reorganization. Section 368(b)(2) provides that the term
"party to a reorganization" includes both the transferor and the transferee
where properties are transferred pursuant to a reorganization. Thus, both Sun
Growth and the Money Market Series will be "parties to the reorganization."
Section 361(a) provides that no gain or loss shall be recognized if one
party to a reorganization exchanges property pursuant to a plan of
reorganization solely for the stock of another party to the reorganization.
Section 357(a) provides, with certain exceptions not relevant here, that the
general rule of Section 361 applies even where the transferee assumes
liabilities of the transferor. Section 361(b) requires a company acquired
pursuant to a 368(a)(1) reorganization to recognize gain up to the amount of
boot
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 6
received in the transaction unless the acquired company distributes such boot to
its shareholders or creditors "in pursuance of the plan of reorganization."
Because any amount of boot deemed to have been transferred to Sun Growth in
connection with the Reorganization will be distributed to Sun Growth's
stockholders in accordance with the requirements of Section 368(a)(1)(C), the
gain recognition requirements of Section 361(b) will not apply to the
transaction. Accordingly, no gain or loss will be recognized by Sun Growth as a
result of the transfer of its assets pursuant to the proposed transaction.
Section 354(a)(1) provides that no gain or loss will be recognized if stock
in a party to a reorganization is, pursuant to a plan of reorganization,
exchanged solely for stock in another party of the reorganization. The surrender
of Sun Growth shares by Sun Growth's stockholders in exchange for the shares of
the Money Market Series received by Sun Growth pursuant to the Reorganization
falls within the non-recognition provisions of Section 354(a). SEE ALSO, Section
368(a)(2)(G). Thus, no gain or loss will be recognized by the Sun Growth
stockholders upon their receipt of the shares of the Money Market Series in
exchange for their Sun Growth shares. SEE Rev. Rul. 73-54, 1973-1 C.B. 187; Rev.
Rul. 57-518, 1957-2 C.B. 253; Rev. Rul. 55-59, 1955-1 C.B. 35; PLR 8541112; PLR
8925088. Similarly, no gain or loss will be recognized by such stockholders as a
result of their receiving additional Money Market Series shares pursuant to the
later transfer to the Money Market Series of any excess cash retained by Sun
Growth to meet known liabilities. SEE Rev. Rul. 71-364, 1971-2 C.B. 182; PLR
9148038; PLR 8946024.
Further, no gain or loss will be recognized by the Money Market Series upon
the receipt by it of the assets of Sun Growth (including any cash retained
initially by Sun Growth to pay liabilities but later transferred to the Money
Market Series) solely in exchange for Money Market Series shares (including
fractional shares). SEE Section 1032; Rev. Rul. 71-364, 1971-2 C.B. 182.
Section 358(a) provides that, where no gain or loss is recognized under a
Section 354 exchange, the exchanging stockholder assumes a basis in the stock
received equal to the stockholder's basis in the stock exchanged. Accordingly,
the basis of the Money Market Series shares received by the Sun Growth
stockholders will be the same as their basis in the Sun Growth stock held
immediately prior to the exchange.
Section 1223(1) provides that the holding period of stock received in a
tax-free exchange includes the holding period of stock exchanged therefor.
Assuming that the Sun Growth shares were capital assets in the hands of the Sun
Growth stockholders, under this provision the holding period of the Money Market
Series shares received by such stockholders will include the holding period of
the Sun Growth shares held by them prior to the exchange.
CONCLUSION
Based on the foregoing, it is our opinion that, for Federal income tax
purposes, (1) the transaction contemplated by the Agreement will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C), and Sun Growth and
the Money Market Series will each qualify as a "party to the reorganization,"
(2) no gain or loss will be recognized by Sun Growth as a result of the
transaction, (3) no gain or loss will be recognized by the stockholders of Sun
Growth upon receipt by them of shares of the Money Market Series in exchange for
shares of Sun Growth, (4) the basis of the shares of common stock of the Money
Market Series received by the stockholders of Sun Growth pursuant to such
exchange will be the same as the basis of Sun Growth stock in their respective
hands immediately prior to the exchange, and (5) provided the shares of Sun
Growth stock are capital assets in the hands of the stockholders of Sun Growth,
the holding period of the shares of the Money Market Series stock received by
the stockholders of Sun Growth pursuant to the exchange will include the holding
period of shares of Sun Growth held by them prior to the exchange.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement with respect to the proposed transactions.
<PAGE>
MFS/Sun Life Series Trust
Sun Growth Variable Annuity Fund, Inc.
October 7, 1996
Page 7
This opinion is being furnished to you in connection with the Agreement and
the filing of the Registration Statement. It is not to be quoted, in whole or in
part, except in the Registration Statement, and it is not to be referred to or
relied upon in any other transaction and may not be filed with any governmental
agency (except as set forth above) or other person without our prior written
consent.
The opinions expressed herein are as of the date hereof, and we assume no
obligation to update or supplement such opinions to reflect any facts or
circumstances that may hereafter come to our attention or any changes in the law
that may hereafter occur.
No opinion is expressed as to the federal income tax consequences of any
aspects of the proposed transaction or of any related transactions other than
those aspects specifically covered above.
Very truly yours,
COVINGTON & BURLING
<PAGE>
Exhibit 14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of MFS/Sun Life Series Trust on Form N-14 of our report dated August 2,1996,
appearing in the Semi-Annual Report to Shareholders of MFS/Sun Life Series
Trust for the six months ended June 30, 1996, our report dated February 2,
1996, appearing in the Annual Report to Shareholders of Sun Growth Variable
Annuity Fund, Inc. for the year ended December 31, 1995, and our report dated
February 2, 1996, appearing in the Annual Report to Shareholders of MFS/Sun
Life Series Trust for the year ended December 31, 1995. We also consent to
the reference to us under the heading "Condensed Financial Information -- Sun
Growth" in the Prospectus, which is a part of such registration statement,
and the references to us under the headings "Financial Statements of the
Series Trust" and "Financial Statements of Sun Growth" in the Statement of
Additional Information, which is also a part of such registration statement.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 7, 1996
<PAGE>
EXHIBIT 16
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Samuel Adams, whose signature appears
below, constitutes and appoints Bonnie S. Angus, David D. Horn and David N.
Brown, and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign a Registration
Statement on Form N-14 of MFS/Sun Life Series Trust, and any amendments thereto,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ SAMUEL ADAMS
------------------------------------
Samuel Adams
October 4, 1996
<PAGE>
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Geoffrey Crofts, whose signature appears
below, constitutes and appoints Bonnie S. Angus, David D. Horn and David N.
Brown, and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign a Registration
Statement on Form N-14 of MFS/Sun Life Series Trust, and any amendments thereto,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ GEOFFREY CROFTS
------------------------------------
Geoffrey Crofts
October 7, 1996
<PAGE>
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that David D. Horn, whose signature appears
below, constitutes and appoints Bonnie S. Angus and David N. Brown, and each of
them, his attorneys-in-fact, each with the power of substitution, for him in any
and all capacities, to sign a Registration Statement on Form N-14 of MFS/Sun
Life Series Trust, and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ DAVID D. HORN
------------------------------------
David D. Horn
October 7, 1996
<PAGE>
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Derwyn F. Phillips, whose signature
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and David
N. Brown, and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign a Registration
Statement on Form N-14 of MFS/Sun Life Series Trust, and any amendments thereto,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ DERWYN F. PHILLIPS
------------------------------------
Derwyn F. Phillips
October 4, 1996
<PAGE>
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John D. McNeil, whose signature appears
below, constitutes and appoints Bonnie S. Angus, David D. Horn and David N.
Brown, and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign a Registration
Statement on Form N-14 of MFS/Sun Life Series Trust, and any amendments thereto,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ JOHN D. MCNEIL
------------------------------------
John D. McNeil
October 4, 1996
<PAGE>
MFS/SUN LIFE SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that W. Thomas London, whose signature
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and David
N. Brown, and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign a Registration
Statement on Form N-14 of MFS/Sun Life Series Trust, and any amendments thereto,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ W. THOMAS LONDON
------------------------------------
W. Thomas London
October 4, 1996
<PAGE>
EXHIBIT 17.1
SUN GROWTH VARIABLE ANNUITY FUND, INC.
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02181
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints David D. Horn and Bonnie S. Angus as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote as designated below, all the shares of stock of Sun Growth
Variable Annuity Fund, Inc. held of record by the undersigned on October ,
1996 at the Special Meeting of Stockholders of the Fund (the "Meeting") to be
held on __________, 1996, or any adjournment thereof.
1. Proposal to:
(a) authorize the transfer of the assets and liabilities of Sun Growth
Variable Annuity Fund, Inc. (the "Fund") to the Money Market Series of
MFS/Sun Life Series Trust in exchange for shares of the Money Market
Series, all in accordance with an Agreement and Plan of Reorganization
dated October 1, 1996 between the Fund and MFS/Sun Life Series Trust (the
"Agreement"); and
(b) subject to the consummation of the aforesaid transfer, to authorize
the dissolution of the Fund and the distribution on a pro rata basis to
the stockholders of the Fund of all shares of the Money Market Series
received by the Fund in accordance with the terms of the Agreement.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
The Directors recommend that you vote "FOR" Proposal No. 1. As to any other
matter, said Proxies shall vote in accordance with their best judgment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSAL No. 1.
DATED __________________________, 1996
______________________________________
Signature of Stockholder
______________________________________
Signature of Stockholder
Please sign exactly as name appears
hereon. Executors, administrators,
trustees, etc., should so indicate
when signing. Corporations should show
full corporate name and title of
authorized signing officer.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
EXHIBIT 17.2
VOTING INSTRUCTIONS
INSTRUCTIONS OF VARIABLE ANNUITY CONTRACT OWNER/PAYEE
FOR VOTING SHARES OF SUN GROWTH VARIABLE ANNUITY FUND, INC.
The Proxy for which voting instructions are being requested is
solicited by the Board of Directors of Sun Growth Variable Annuity Fund, Inc.
The undersigned, being the owner of or payee under a variable annuity
contract issued by Sun Life Assurance Company of Canada (U.S.), hereby instructs
the Insurance Company to cause the shares of Sun Growth Variable Annuity Fund,
Inc. allocable to the account identified hereon to be voted at the special
meeting (the "Meeting") of stockholders of Sun Growth Variable Annuity Fund,
Inc. on ____________, 1996, and at any adjournment thereof, in the manner
directed below with respect to the matters described in the notice and
accompanying prospectus/proxy statement for said meeting.
1. Proposal to:
(a) authorize the transfer of the assets and liabilities of Sun Growth
Variable Annuity Fund, Inc. (the "Fund") to the Money Market Series of
MFS/Sun Life Series Trust in exchange for shares of the Money Market
Series, all in accordance with an Agreement and Plan of Reorganization
dated October 1, 1996 between the Fund and MFS/Sun Life Series Trust (the
"Agreement"); and
(b) subject to the consummation of the aforesaid transfer, to authorize
the dissolution of the Fund and the distribution on a pro rata basis to
the stockholders of the Fund of all shares of the Money Market Series
received by the Fund in accordance with the terms of the Agreement.
FOR / / AGAINST / / ABSTAIN / /
2. In its discretion, upon such other business as may properly come before
the Meeting.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) WILL FOLLOW VOTING INSTRUCTIONS ONLY
IF THEY ARE RECEIVED AT LEAST ONE DAY PRIOR TO THE DATE OF THE MEETING. IF NO
INSTRUCTIONS ARE SPECIFIED, SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) WILL
VOTE THE SHARES IN THE SAME PROPORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE
RECEIVED FROM PERSONS HAVING SUCH RIGHT.
DATED __________________________, 1996
______________________________________
Signature of owner/payee
Please date and sign exactly as name
appears hereon. Executors,
administrators, trustees, etc., should
so indicate when signing.
