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MFS GOVERNMENT MORTGAGE FUND
Supplement to the Current Prospectus
The Prospectus is revised as follows to reflect that payment by the
Fund of the 0.10% distribution fee has been suspended indefinitely:
1. EXPENSE SUMMARY
Shareholder Transaction Expenses: Class A Class B
Maximum Initial Sales Charge Imposed on Purchases
of Fund Shares (as a percentage of offering price) 4.75% 0.00%
Maximum Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption proceeds,
as applicable) See Below(1) 4.00%
Annual Operating Expenses (as a percentage of average daily net assets):
Management Fees 0.45% 0.45%
Rule 12b-1 Fees 0.25%(2) 1.00%(3)
Other Expenses (4) 0.29% 0.29%
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Total Operating Expenses 0.99% 1.74%
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(1) Purchases of $1 million or more and certain purchases by retirement plans
are not subject to an initial sales charge; however, a contingent deferred
sales charge ("CDSC") of 1% will be imposed on such purchases in the event
of certain redemption transactions within 12 months following such
purchases (see "Information Concerning Shares of the Fund -Purchases").
(2) The Fund has adopted a distribution plan for its shares in accordance with
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act") (the "Distribution Plan"), which provides that it will pay
distribution/service fees aggregating up to (but not necessarily all of)
0.35% per annum of the average daily net assets attributable to Class A
shares. Payment of the 0.10% per annum Class A distribution fee has been
suspended indefinitely and will only be implemented on such date or dates
as the Trustees of the Trust may determine (see "Information Concerning
Shares of the Fund - Distribution Plan" in the Prospectus). Distribution
expenses paid under the Distribution Plan, together with the initial sales
charge, may cause long-term shareholders to pay more than the maximum sales
charge that would have been permissible if imposed entirely as an initial
sales charge.
(3) The Fund's Distribution Plan provides that it will pay distribution/service
fees aggregating up to 1.00% per annum of the average daily net assets
attributable to Class B shares (see "Information Concerning Shares of the
Fund - Distribution Plan" in the Prospectus). Distribution expenses paid
under the Distribution Plan, together with any CDSC payable upon redemption
of Class B shares, may cause long-term shareholders to pay more than the
maximum sales charge that would have been permissible if imposed entirely
as an initial sales charge.
(4) The Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund with its
custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Fund's expenses). Any such fee reductions are not
reflected under "Other Expenses."
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Example of Expenses
An investor would pay the following dollar amounts of expenses on a $1,000
investment in the Fund, assuming (a) a 5% annual return and (b) redemption at
the end of each of the time periods indicated (unless otherwise noted):
Period Class A Class B
(1)
1 year $57 $ 58 $ 18
3 years 78 85 55
5 years 100 114 94
10 years 163 185(2) 185(2)
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1. Assumes no redemption.
2. Class B shares convert to Class A shares approximately eight years after
purchase; therefore, years nine and ten reflect Class A expenses.
The purpose of the expense table above is to assist investors in
understanding the various costs and expenses that a shareholder of the Fund will
bear directly or indirectly. More complete descriptions of the following Fund
expenses are set forth in the following sections in the Prospectus: (i) varying
sales charges on share purchases - "Purchases"; (ii) varying CDSCs "Purchases";
(iii) management fees - "Investment Adviser"; and (iv) Rule 12b-1 (i.e.,
distribution plan) fees - "Distribution Plan."
The "Example" set forth above should not be considered a representation
of past or future expenses of the Fund; actual expenses may be greater or less
than those shown.
2. DISTRIBUTION PLAN
Information on page 21 of the Prospectus under "Class A Distribution
Plan" is hereby supplemented as follows: "Payment of the 0.10% per annum Class A
distribution fee has been suspended indefinitely and will only be implemented on
such date or dates as the Trustees of the Trust may determine (see "Information
Concerning Shares of the Fund - Distribution Plan" in the Prospectus)." In
addition, the last sentence of the second paragraph under this caption is hereby
amended to replace the reference to "0.35%" with "0.25%."
Information on page 22 of the Prospectus regarding "Current Level of
Distribution and Service Fees" is hereby amended to reflect that current
distribution and service fees for Class A shares of the Fund are 0.25% (rather
than 0.35%) per annum.
The date of this Supplement is August 28, 1997.
